The opportunities and the ‘thorns’ of the green transition

Developing clear policies to address the challenges ahead is a key condition for achieving a fair and inclusive green transition. The last part of the international conference entitled “The Future of Sustainable Finance”, organized by the Hellenic Capital Market Commission at the Karatza Palace, occupied the opportunities, challenges and problems related to sustainable financing.

During the discussion moderated by Mr. Costas Botopoulos, Constitutionalist, former Chairman of the Hellenic Capital Market Commission, Mr. Jean Paul Servais, Chairman of the Financial Services and Markets Authority (FSMA Belgium) and Vice Chairman of the Board of IOSCO focused on the problem of green washing , saying that a clear framework is needed to address it. “Green washing has been around for many years, it needs to improve the quality of notifications and better control. We need to create a global baseline to tackle the phenomenon, we need to give clear rules to investors for sustainability,” he said.

Ms. Chiara Mosca, Commissioner of the Italian Securities and Exchange Commission (CONSOB), argued that “sustainability shapes corporate behavior. Now, the NF revelation seems to have played a role in this cultural transformation.The ESG-related issue supports shareholder engagement and the monitoring of non-financial performance, company policies and objectives. transparency in corporate governance, regulators are looking for common standards for Sustainability Reports. ”

Lee White, Executive Director of the IFRS Foundation, emphasized that a blueprint for disclosures, risks and opportunities for investors had been drawn up. Drafts, which may by the end become models for businesses in the field of sustainability. As he said, the information that may prove useful for investors, in their effort to make the green transition should be disclosed.

Mr. Giannos Kontopoulos, CEO of Hellenic Stock Exchanges, then took the podium, pointing out that ESG helps companies in five ways. It is one of the biggest trends, with 9 out of 10 listed companies taking action. The Stock Exchange, he said, has taken significant initiatives in recent years for the ESG, providing businesses with the right tools to boost information. There is a continuous improvement of the observance of the criteria by the Greek companies, which gradually incorporate the ESG criteria. Mr. Kontopoulos estimated that the future around ESG is bright and it is the right time for companies to think about reforming their operating model, in order to respond to modern data. “Our job is information. If it is reliable, we will have helped the ecosystem,” he added.

Taking the floor by Mr. Kontopoulos, the President and CEO of the Hellenic Development Bank-HDB, Mrs. Athena Hadjipetrou, referred to the role of HDB as the only Development Bank in the country that can leverage public and private funds for a truly sustainable development with innovative, hybrid and targeted financing schemes, as well as its contribution to the expansion of the circle of companies financed by the wider financial system – among others – with an innovative for the Greek data, a single platform “Know your Customer” (KYC) that will act as a link between companies and Banks.

Mr. Theofanis Mylonas, Chairman of the Board of Directors and CEO of Eurobank Asset Management AEDAK argued that the challenges for fund managers are many but today we are talking about the evolution of a war. “War and ESG are not compatible concepts. At the same time, the other big call is for the non-homogenized results of ESG criteria assessment companies. Conclusion: the goal remains, but the road seems a bit longer and more difficult,” he added.

Mr. Panagiotis Giannopoulos, Vice President of the Accounting Standardization and Auditing Committee (ELTE), stated that “the new EU Corporate Sustainability Reporting Directive (CSRD) aims at a better future for people and the planet. From 2024 All large companies should publish ESG information that is complete, comparable and reliable for investors and other users of financial statements. “.

Mr. Ioannis Bratakos, President of the Athens Chamber of Commerce and Industry (EVEA) said that the new EU directive changes the data for small and medium-sized enterprises, as by 2026 they should have adopted the standards. He estimated that there is enough time to take the necessary steps towards the green transition. “Chambers can start a business briefing on the new criteria,” he added.

Mr. Athanasios Kouloridas, Chairman of the Board of Directors of the Association of Listed Companies (EN.E.S.ET.) said that the ESG is a supply for companies in the ongoing economic war. He noted that companies should adopt new operating models and meet the requirements of consumers and investors. He argued that above all it should be understood that in sustainable business goodwill can be created and reliable standards are needed, as well as the gradual integration of sustainability criteria.

This was followed by a discussion on market trends around ESG issues, moderated by Christos Hadjiemmanuel, Professor of International and European Studies at the University of Piraeus and Visiting Professor of Law at the London School of Economics (LSE). According to Victor van Hoorn, Executive Director, European Sustainable Investment Forum (EUROSIF), since the adoption of the Sustainable Financial Reporting Regulation (SFDR) at the end of 2019, the market for ESG and viability investment funds at Eurosif has changed dramatically. “The SFDR was designed to provide transparency through disclosures. Since its implementation in March 2021, the framework has often been used as a template or label. In the absence of EU policy intervention to adapt the SFDR, the strict SFDR will remain a challenge for financial market participants (FMPs), “he said, adding that the ambiguity of current SFDR product categories could lead to:” a) reputation risks that could discredit sustainable market fragmentation, hindering the cross-border distribution of sustainable investment products and forcing FMPs to adapt to different national standards.

Carey Evans, Managing Director of the BlackRock Global Public Policy Group, spoke of the biggest change in history, arguing that countries’ commitments to reduce global warming are not enough. “The transition will not be linear, with the aim of getting rid of coal we will go through various cycles and the pilots will have to manage many challenges. There will be a significant economic shift in the next 30 years, he added, adding that any company can anticipate developments. it will become more resilient. ”

About tectonic changes, which began ten years ago, spoke Mr. Periklis Mazarakis, CEO of Trispan Capital, noting that gradually more and more companies are incorporating ESG criteria in their design. He said any large institutional investor has high expectations on sustainability issues. “ESG is not a button you press and it is applied immediately, it is done gradually,” he added.

Financial support for sustainable investments and activities in general has been a priority for many years for the Greek banking system, according to Ms. Charoula Apalagaki, General Secretary of the Hellenic Banking Association (EET). “The Greek banking system was adequately prepared for the new demanding environment both in terms of supervision and in terms of substance. In the context of sustainable development, the protection of the environment is paramount and thus the mission with which the EU entrusted the financial system is a goal with which the Greek banking system is familiar, however, the active participation of the public sector and cooperation with businesses is required. transition “said Mrs. Apalagaki.

For his part, Chris Aesop, President of the Association of Institutional Investors (ETH) and CEO of ALPHA TRUST, pointed out that after many consecutive years where ESG investments had the lead and cash flows to them fed their good returns, in 2022 It turns out to be a particularly difficult year, with yields lagging mainly due to those they do not have, such as hydrocarbon companies, defense systems, etc. “Amid concerns about inflation, war and demanding valuations of companies that promote sustainability, ESG “A / K have declined globally, but at lower levels than in the wider market. I firmly believe that ESG investments, no matter how challenged in the current investment environment, will remain strong among us and are in the right direction,” he added.

The President of the Athens Stock Exchange Members Association (SMEHA), Mr. Spyros Kyritsis, referred to the ever-increasing interest on the part of domestic stock exchange companies regarding ESG issues regarding the listed companies on the ATHEX. He stressed the importance of their access to an information framework that will have transparency, rules and comparability, so that they can make the necessary analyzes and suggestions to their clients, investors, institutions or individuals. He estimated that in the coming years there will be increasing investment interest for listed companies that adopt and effectively promote the fulfillment of the ESG criteria.

In the last panel of the conference, chaired by the lawyer, Mr. Anastasios Virvilios, member of the Expert Committee of the Hellenic Capital Market Commission, the speakers referred to the transparency requirements and the notifications of ESG risks. Professor George Skiadopoulos (QMUL, University of Piraeus, Member of the ESMA Financial Advisory Committee) spoke about the challenges faced by ESG policy makers. He referred to his recent scientific research demonstrating the need for authorities to intervene to integrate climate risk into stock valuations, and analyzed the disadvantages of ESG ratings and the SEC’s recommendations for addressing institutional investors’ green washing and implementation difficulties.

Ms. Eleni Vokou, an expert on the ESF Committee on ESG, spoke on the requirements of transparency of sustainable investments and environmentally sustainable investments, at the level of financial products and at the level of companies, within the framework of the SFDR Regulation and the Classification.

Patrik Karlsson, Senior Policy Officer – European Securities and Markets Authority (ESMA) referred to product disclosures related to the classification and disclosures of entities related to the classification by asset managers.

Finally, Ms. Pilar Guitterez, Head of Reporting and Transparency Unit European Banking Authority (EBA), analyzed the Delegated Regulation that specifies the non-financial information transparency requirements of the Classification Regulation, with specific reference to bank liabilities. He also spoke about the EBA Implementing Technical Standards for ESG Risk Disclosures (EBA ITS on Pillar 3 disclosures on ESG risks).