The challenges of ESG and the role of Greece 2.0

The importance of the “Greece 2.0” plan for the green transition and the challenges that ESG issues highlight for businesses were analyzed by distinguished speakers during the international conference entitled “The Future of Sustainable Finance”, organized today by the Hellenic Capital Market Commission in Karatza Palace.

According to the Deputy Minister of Finance, Theodoros Skylakakis, “Greece 2.0” is a valuable development tool for the domestic economy, especially today, as we face the effects of the pandemic, the war and the energy crisis, three external factors, which affect the entire planet. “Already, the National Plan for Recovery and Sustainability has included projects worth more than 10.2 billion euros, while at the same time its lending program provides extremely favorable conditions, at a time when the major central banks around the world are raising interest rates.”

Mr. Skylakakis argued that after the start of the war, the data regarding the green transition have completely changed, which is why we must reconsider all policies. “We have a new reality that Europe has not discussed and has not sufficiently realized,” said the Deputy Finance Minister, stressing that the green transition is the best economic investment we can make at the moment. He estimated that the growth this year will be higher than the budget.

The key points of the “Greece 2.0″ plan were also mentioned by the Financial Advisor to the Prime Minister, Mr. Alexis Patelis. The plan proposes a sustainable economic model for the country. Private investments that contribute to the green transition have access to the low-interest loans of the Recovery Fund. In addition, a large part of the subsidies is directed to the energy upgrading of buildings, the strengthening of the electricity network and the electrification. At the same time, extensive action in the fields of training, active employment policies and respect for diversity promotes equal opportunities. ”

For his part, Carmine Di Noia, Director of the OECD’s Office of Financial and Business Affairs, outlined the OECD’s goals for sustainable funding. “We want to help shape policy to create a framework for the private sector and financial markets that will contribute to the path to zero,” he said. Referring to the setting of green economic standards, Di Noia said: “From an international point of view, we should seek to avoid fragmentation in global capital markets. Regional standards should ultimately seek global consensus as far as possible. “In this way we can ensure the operation of the flow of capital worldwide, for the benefit of countries and their citizens.”

Particularly interesting and at the same time sharp for the European Union strategy in the green transition was the discussion coordinated by Mr. Nikos Vettas, General Director of the Foundation for Economic and Industrial Research (IOBE). According to the President of SEV, Mr. Dimitris Papalexopoulos, the ESG issues in the coming years highlight real opportunities and challenges for businesses. “In any case, it is advisable to approach them effectively and with a broader business logic, and not to treat them procedurally as a formal obligation,” the BSE president stressed. He explained that there is a triangle we are trying to balance and it consists of climate change, the availability of energy at an affordable price and the competitiveness of Greek companies. “The triangle became more difficult because we rushed, while the war came. The planning was done with some data that has changed. In Brussels, this triangle is being discussed more actively, but I am not optimistic that there will be immediate results,” he said. Papalexopoulos.

Sustainable development through ESG criteria is a priority for MYTILINEOS, underlined the President and CEO of the company, Evangelos Mytilineos. He was critical of the EU. regarding its rush to carbonize without proper preparation, without taking into account security of supply, without the necessary infrastructure, and without taking into account the cost of the energy transition, something that has only now become apparent due to geopolitical developments. He stressed, however, that the ESG criteria, in addition to the “E” pillar regarding the environment in relation to energy, there are two other pillars that remain important and the company remains committed, considering it important to become a priority for all companies, Finally, he noted the need for a single certification body for the performance of companies based on the ESG criteria so that information is not fragmented and facilitates the investment community, and praised the Commission’s initiative to , stressing, however, that any decisions must be taken immediately to be credible.

The CEO of Alpha Bank, Mr. Vassilis Psaltis, spoke about the interaction of four factors that shape the strategy of the Banks within the ESG. According to him, the Banks are called to take into account: the supervisory requirements, as they have been formed so far, the “value” that the market gives to companies that are aware of the environment, the national interest and the need to support the real economy and entrepreneurship.

“Banking institutions are, on the one hand, the blood donors of business and, on the other, the most closely monitored sector of the economy with the greatest demands for transparency and accountability. “Climate change, formulating a financing strategy that is compatible with low carbon emissions and a sustainable growth model, taking on the credit risk for investments with these characteristics,” said Mr. Psaltis.

Regarding the broader ESG framework, Mr. Psaltis insisted on the need for good corporate governance, noting that “corporate accountability in a broader context of social partners, in addition to that of its shareholders, is a mega trend, globally. Aligning the principles of a company with the expectations of society is an increasingly critical factor in a world where both customers and employees have choices and easily exercise them. “Governance of our clients, establishing criteria that evaluate their rules for their board structures, how serious the control structures are, if they publish financial statements in a timely manner and if they have recorded plans for the succession of the management”.

In his own speech from the conference, Mr. Gikas Hardouvelis, Chairman of the Board of Directors of the National Bank, stressed that the increased regulatory requirements lead banks to upgrade their internal risk management framework and support the green transition initiatives of borrowers. “In the current context, the 2022 climate stress test is not an exercise of success or failure, nor does it have direct consequences for the required minimum levels of banks’ equity. In the future, however, climatic and environmental risks may affect the level of capital requirements,” he said. Mr. Hardouvelis added: “We must emphasize that there is a need to substantially improve the quality of data for sustainability. Here, there is still work to be done. Most importantly: There is a lack of data to assess and monitor risks for both regulatory authorities and banks “.

The next panel, chaired by the second Vice President of the Hellenic Capital Market Commission, Ms. Anastasia Stamou, dealt with the global dimension of sustainable financing and the initiatives taken by countries. Christopher Allen, DG ECFIN Resident Adviser in Athens, European Commission, argued that ESG-based securities would be an important source of future investment financing for Greek companies. As he said, “the forthcoming Corporate Sustainability Reporting Directive could be an important opportunity for companies already operating in ESG throughout the economy. Banks and financial institutions need to increasingly ensure active ESG risk management. EU ESG framework as “first body” increasingly influences international benchmarks ”

Mr. George Hantzinikolaou, Chairman of the Board of Directors of Piraeus Bank, described the central role of the banking system in tackling the challenge of climate change, as it affects the flow of resources directed to growth, globally, nationally and at business level. “In this regard, banks are adapting their operations, reshaping their strategies and redistributing their resources. In this way, they are supporting the structural transformation of businesses and the economy to achieve sustainable growth for the benefit of society,” he added.

Mr. Dimitris Tsakonas, General Manager of ODDIH, noted that the funds raised from the issuance of the Greek green bond will be used for specific sustainable development projects. He added that for this reason a ministerial committee has been set up which is necessary for reasons of cooperation of public sector bodies. He also referred to the technical and geopolitical challenges such as market instability, which create problems in the issuance of the green bond, but stressed that its issuance will improve the “brand name” of Greece in international markets and that after 2-3 generations the whole the economy will be green.

Nicholas Pfaff, Deputy CEO and Head of Sustainable Financing at the International Capital Market Association (ICMA), highlighted ICMA’s important role in developing standards for green financing, such as green bonds. He noted that the creation and updating of ESG funding standards is an ongoing process in which ICMA participates with 400 members and observers and eight working groups worldwide. Mr Pfaff emphasized that these principles were already being used by the EU. for bond issuance and are held by both the public and private sectors. He also noted that the guidelines for green securitization are being updated, new KPIs are being created and the aim is to provide all publishers with the resources and opportunities to be able to certify their green development strategies. In conclusion, he added that it is necessary to have a formal model in Europe that will work properly and which will be in line with the guidelines for green funding.

Ms. Anastasia Stamou, Second Vice President of the Hellenic Capital Market Commission, stressed that sustainable financing has a large dimension in exile, as the goals are common across the globe. At the same time, he noted that joint regulatory actions and policies, cooperation of policies, stakeholders and regulators are needed in order to achieve the goals of sustainability, as the concept of sustainable financing creates economic value which is a wider social value.