Sustainable finance, synergy between public and private is essential

The “Italian Business and Biodiversity Working Group” was inaugurated during the Business and Nature Summit

During the European “Business and Nature Summit” in October, the conference dedicated to the creation of sustainable business models that place biodiversity at the centre, experts once again highlighted the importance of synergy between finance and sustainabilityeven given the short time available to contain global warming to within 1.5°.

Currently the volume of so-called green investments amounts to 154 billion dollars a yeara figure that will have to triple by 2030reaching 484 billion dollars per year to respect the parameters set by the Paris Agreements and other supranational and international agreements.

During the event it was highlighted how these investments not only generate environmental benefits, but also significant economic opportunities, including 395 million new jobs and $10 trillion in additional revenue by 2030. The European summit “Business and Nature Summit”, co-organised by the Forum for Sustainable Finance together with the European Commission, the European Platform for Business and Biodiversity, Etifor and the Lombardy Region, recognized the financial operators play a crucial role in increasing these investments and implementing effective actions to protect the climate and biodiversity.

The director general of the Forum, Francesco Bicciato, said: “The financial sector is particularly vulnerable to the consequences of the loss of biodiversity, but at the same time it represents one of the fundamental actors that can contribute to its preservation. During the European ‘Business and Nature’ summit , in which we were co-organizers, fundamental ideas emerged that we will integrate into our work next year to offer a concrete and significant contribution.”

Finance and sustainability: challenges for the future

Analysis of the discussions highlighted the need to address the challenges and opportunities associated with investing in biodiversity, including:

– request more precise data;

new technologies for measuring and monitoring results;

– increase in public-private synergy;

– increase in transparency by companies.

The summit also highlighted the essential role of policy makers and investors in gaining a deeper understanding of biodiversity and its impacts. Politics represents the only driver for establishing a regulatory framework that obliges companies to communicate the sustainable actions taken.

In this sense, the results obtained by companies in the European Union are tangible, which represents the most active organization in terms of ESG regulations worldwide.

Another important aspect that has emerged is the need to develop an ecosystem of actors who collaborate to accelerate action in favor of biodiversity. The synergy between the public and private sectors is fundamental to push companies to adopt a path towards an economy with a positive impact on nature.

In line with this perspective, the Forum for Sustainable Finance collaborated with Etifor and the Lombardy Region to found the “Italian Business and Biodiversity Working Group”, which aims to raise public awareness of the economic importance of biodiversity, to promote public-private partnerships for the conservation of ecosystems as well as to align corporate strategies with international best practices.

The effectiveness of the interaction between public and private is largely demonstrated by the numbers. In fact, when companies also embrace the ESG cause, the synergy between sustainability and finance generates excellent results as is happening for Italian listed companies, where ESG factors increasingly influence top management compensation.

The data emerges from the 2022 Consob Report on Non-Financial Reporting, which underlines the importance of this integration to make the ecological transition a concrete reality. According to the report, in 2022 environmental, social and governance factors contributed to determining the compensation of CEOs in 127 companies with ordinary shares traded on the Euronext Milan market, equal to 58.5% of the total. This represents a increase of 11.5% compared to the 106 companies in 2021.

The report highlights how sustainability issues influence the remuneration of the Board of Directors, especially in the financial sector, involving 65% of companies in the sector. This is followed by the industrial sector, with 56% of the companies involved, and the services sector, with 58% of the companies involved.

This is a positive sign for the ecological transition, which requires the commitment of all stakeholders to achieve long-term sustainability goals.

The integration between sustainability and finance can also generate greater transparency and corporate responsibility, improving investor and consumer confidence, another key element that emerged from the European “Business and Nature Summit”.

More ESG, more stock market returns

Greater transparency in turn generates an important economic return, especially for listed companies.

In fact, as emerges from the recent Kroll report “ESG and global investor returns”, the best performing companies at an ESG level recorded average annual stock returns of 12.9% compared to 8.6% for companies with lower ESG ratings. In practice, the most sustainable companies have returned almost 50% more on the stock market than those less committed to sustainability.

The report by Kroll, a leading company in the provision of solutions dedicated to risk management and financial consultancy, highlighted an excellent ROI (Return on investment) for those who have invested in companies very active in the field of sustainability.

A good summary of the summit was made by the general director of Etifor | Valuing Nature, Alessandro Leonardi, took stock, as reported by “The only practicable path to face the challenge of protecting and restoring biodiversity consists in focusing on public-private alliances, innovation and L’collective alignment with international best practices to safeguard the natural capital on which we all depend. For this reason – he announced – today we are launching the ‘Italian Corporate and Biodiversity Working Group’, an entity capable of providing high-level know-how, consultancy and concrete initiatives open to any private organization and the financial world that wishes to actively contribute , undertaking virtuous paths with positive and tangible impacts for the community”.