The Importance of Sustainable Investment Banking

Written by Charlotte Hamilton on 24/06/2022

Importance of sustainable investment banking

More and more investment banks are becoming completely "green", basing their founding practices and principles on improving sustainability. Recently as governments have stressed the significance of environmental conservation and rehabilitation during the 2020s. COP26 reshaped global business agendas with the core principle aim of attaining Net Zero status by 2023. Therefore, organisations having rapidly evolving business needs focusing on sustainability efforts. The growing amount of sustainable investment banks help organisations meet these needs.

As the achievement of COP26's goals is projected to cost $6.9 trillion annually until 2030, the head of United Nations Environment Programme Finance Initiative addresses the significance of the Financial sector in this race to succeed in COP26's goals, stating:

“If we want to meet global sustainability challenges, we absolutely need the support of the private sector, there just isn’t enough public money out there, especially in the wake of COVID-19, to finance the massive structural changes our societies desperately need.”

According to McKinsey, at both institutional and consumer levels, banks are confronted with increasing demands to be more sustainable. Furthermore, banks are beginning to acknowledge that investing in fossil fuel energy and other environmentally damaging projects is not as economically sustainable or viable as before.

Companies that participate in sustainable banking are ultimately securing future financial stability globally.

Below as a spotlight we picked three companies who are currently market leaders in sustainable banking due to their massive and inspirational projects in the ESG space.

Green Investment Group

 

Currently active in over 25 global markets and a UK-based market leader, Green Investment Group set out with a “mission to accelerate the green transition”. They have committed or arranged £2.9bn in the global portfolio of over 250 projects.

Some of their exciting 2020 projects included:

·  Financing affordable green housing in Kenya- the aim of delivering 10,000 energy and waste efficient home

·  Providing UK wide solar power- working with Tesco to generate 10% of their energy needs by 2030

·  Accelerating Taiwan’s offshore wind industry- powering the equivalent of two million Taiwanese homes

BeyondNetZero

Collaborating with charities such as WWF, BeyondNetZero are committed to global sustainability. Their recent projects included:

  • Helped EcoVadis (ESG reporting software company) reach unicorn level as a startup by investing $500m with Astorg
  • Invested $295m with partners into o9 (ESG supply chain software company)
  • Invested $260m with partners into Sun King (solar power energy company)

Triodos Bank

 

Amongst the COVID difficulties Triodos Bank continued to thrive with a net profit growth of $23.4 million from the same period last year. In 2021, their projects :

· Co-financed 586 projects in the sustainable energy sector which generated the equivalent of the electricity needs of 6 million households worldwide

· Financed the equivalent of 34 million meals through organic farming and food sector

· Financed 33,000 hectares of nature and conservation land, representing around 440m2 of nature and conservation land per customer

· Provided 59,000 people with accommodation via social housing projects financed

 

Banks like Green Investment Bank, BeyondNetZero and Triodos continue to confirm the success of sustainable investment banking. As we witness the rapid evolution of ESG investment banking, Osmii are beginning to wonder if there will be a increase in the number of completely "green" banks?

 

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