Sustainable financing has become increasingly common, as demonstrated by the latest data gathered by Schroder's Global Investors Study 2020. According to the study, 47% of global investors already opt for sustainable investment funds. Moreover, after the experience of the covid-19 pandemic, many more people have realised that the green transition is the only way out of the economic and humanitarian crisis.
It’s clear that investments and economic growth increasingly revolve around sustainable development. Proof of this can be found in the Sustainable Development Goals (SDGs), the US officially rejoining the Paris Agreement, the more than 17 trillion dollars of investment with environmental, social and corporate governance criteria in Europe, and the more than 11 trillion invested by the United States (with an increase of 20% over 2019 according to the latest report from the Organisation for Economic Cooperation and Development (OECD).
The industry of the present and future should base its business model on talent, skills and the necessary knowledge to build projects that advocate respect for the environment and care for the planet.
Sustainable finance refers to economic initiatives that support projects aiming to mitigate climate change or have a positive impact on the planet.
These types of projects are being spearheaded by a new generation of entrepreneurs who are well aware of the battle to curb climate change. Sometimes, projects like this cannot get ahead due to a lack of funding and difficulties finding investors interested in this type of initiative. For example, according to data provided by the International Monetary Fund for Spain, it would take an investment increase of 4 trillion extra dollars per year to comply with the SDGs of the 2030 Agenda.
Luckily, more and more investors are following the ESG criteria when it comes to funding a project, not only to ensure profitability but also to champion ethical and sustainable industry.
For an investment to be considered responsible and ethical, it must include environmental, social and corporate governance considerations in its analysis and decision-making processes. For this to be possible, companies have to provide reliable and transparent data when communicating information about their operations in their sustainability reports.
It's important to be clear what each of these ESG criteria implies, in addition to the usual investment criteria such as profitability and risk:
These three criteria help investors to match with companies that share their same values. A pioneering project working in line with the SDGs and seeking solutions for current problems will not only benefit the environment and society in general, but will also offer an excellent investment opportunity thanks to its profitability.
Financing is one of the biggest challenges entrepreneurs face today. Many projects come to a halt halfway through or don't make it out of the starting blocks due to a lack of the financing needed to get started, since many entrepreneurs don't have access to the necessary funds.
Luckily, there are progressively more investors looking to put their money in promising sustainable projects, well-conceived initiatives that only need an injection of cash to get them going. Nowadays, there are many forms of sustainable financing. Some of the most popular are:
In addition to the above, there are other means of funding, such as factoring, where a larger company lends money to a smaller one in return for future returns on assets; crowdfunding, where entrepreneurs can raise the money they need by means of micro-donations on a platform; or venture capital funds, a type of high-risk investment fund where companies make long-term investments in projects that have growth potential.
To support sustainable development, Banco Santander, together with Oxentia Foundation, is spearheading the global Santander X Environmental Challenge, whose goal is to encourage initiatives that are sustainable and innovative and which have a positive impact on the environment. The 6 winning companies will be awarded € 120,000 to develop their solutions to curb climate change and improve people's social conditions. They will also be provided with mentoring and visibility on Grupo Santander social media channels. Projects that would like to participate can do so in one of the two available categories:
Do you believe in a more sustainable future and have a project that can play a part in improving the planet? Sign up for the global Santander X Environmental Challenge and get the funding you need to develop your sustainable project. Make the most of this chance!