Sustainable Finance

The topic of Sustainable Finance is relevant for financial institutions as well as for Micro Enterprises, SMEs and Large Enterprises. Financial institutions are being pressured by national and European regulation to report on how they are investing and lending money to companies with good sustainability practices. To do this, companies need to have processes in place and report non-financial information: through sustainability reports, KPI summary reports for smaller companies, or even ‘Sustainable Fact Sheets’ that provide a generic picture of the company’s sustainability practices, and key indicators.

COMPANIES ESG INFORMATION

At Systemic, we help:

  • The Financial Sector to identify how it can obtain the necessary information and develop its own sustainability strategies, to not only comply with regulations (SDFR, EU Taxonomy, Delegated Act Article 8, CSRD, among others), but also to do so with a strategic positioning (TCFD, etc.).
  • Micro Enterprises, SMEs and Large Enterprises to include good sustainability practices in their projects, so that they are aligned with the European Union Taxonomy; to frequently disclose sustainability and climate KPIs; and to implement internal procedures and policies to demonstrate their sustainable management practices to funders.

FINANCIAL INSTITUTIONS

  • Sustainability Strategy in line with the SDGs;
  • Respond to new sustainability legislation: SDFR, EU Taxonomy, Governance, Green Labels, etc;
  • Reporting following the Delegated Act of Article 8 of the EU Taxonomy (Green Asset Ratio and alignment of loans with the EU Taxonomy);
  • Integration of ESG risks in loan and investment analysis;
  • Report following TCFD recommendations;
  • Analysis and identification of exposure to high GHG sectors, i.e. with high climate risks.

LARGE COMPANIES, SMEs and SMALL AND MEDIUM-SIZED ENTERPRISES

  • Sustainability strategy aligned with SDGs;
  • Calculation of Sales Volume, OPEX and CAPEX aligned with EU Taxonomy;
  • Calculation of GHG Scope 1, 2 and 3;
  • Identification and implementation of systems for the periodic reporting of sustainability-related information;
  • Prepare sustainability reporting requirements, which will cover listed SMEs as of 2026, and which will put pressure on the remaining SMEs;
  • Support in the development of business models that incorporate sustainability issues and are aligned with the environmental objectives and targets of the European Commission.

Tomorrow’s world is determined by the investments we made yesterday and the investments we make today.
The European Union and the most important international financial organisations, such as the World Economic Forum, the International Monetary Fund, the OECD, and Central Banks have been developing regulation and initiatives that aim to change financial markets, promote the movement of capital towards sustainable projects, and discourage investments and loans to projects that are not aligned with European environmental, social, and governance objectives.
These organisations implement these initiatives because:

1

They recognise that Environmental, Social and Governance issues, and in particular the climate-related risks, pose a financial risk to businesses and the global financial system. For this reason, they understand that it is necessary to guarantee the integration of those risks in financial analyses to ensure a medium and long-term economic stability.

2

They that the financial system can be an important driver in the transition towards Sustainability, due to its ability to shape the future through investments. For this reason, they are creating regulations and initiatives that encourage the redirection of financial flows towards projects that meet European environmental and social objectives and with the Sustainable Development Goals, to the detriment of projects that do not take these components into account.

EU Taxonomy

  • Will have to report the % Turnover, CAPEX and OPEX in line with the sustainability objectives defined by the EU Taxonomy.

SFDR Regulation

  • Must disclose how sustainability risks are integrated into financial analysis and financial products.

Capital Requirements Regulation (CRR)

  • Environmental risks will be included in calculations of banking and insurance prudential ratios.

European Directive CSRD

  • Will have to identify sustainability-related risks in sustainability reports in line with the TCFD recommendations
  • Will face pressure from corporate clients to be more sustainable;
  • Access to finance for projects not aligned with sustainability objectives may be affected.

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