ESG Measures and Financing Major Projects
Still, the European Central Bank is fining certain financial institutions for their failure to act according to their stated ESG objectives, and the US Securities and Exchange Commission has also started to penalize financial corporations for misstatements on ESG performance. Some cases of “greenwashing” may be obvious, but without the data-based approaches to quantify ESG performance that are beginning to appear, strict regulations would be premature. In any case, ESG improvements at the corporate level will inevitably be slow, given that major organizations are difficult to transform. Where quick impacts could be expected is in the ESG performance of investments in new assets—infrastructure, brownfields, real estate, etc. Limiting the ESG risks and improving the ESG positive impact of their projects could accelerate the sustainability progress of corporations, of investment portfolios, and of the whole of society.
With good data and analysis, project developers, investors, and financiers can better take the ESG aspects of a project into account. For project developers, it may open up more sources of financing and potentially reduce its cost. For investors and financiers, ESG due diligence at the time they are considering projects can help them reduce ESG-related risks and better take into account plans and designs that are more environmentally friendly and socially beneficial.
Author: Mateu Turró