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CaixaBank outlines its sustainability commitments

Eugenio Solla, chief sustainability officer at CaixaBank, speaks to The Banker about the Spanish bank’s track record in sustainable finance and how it embeds sustainability criteria in all its activities. 
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CaixaBank outlines its sustainability commitments

Q: To what extent are sustainability and environmental, social and governance (ESG) considerations a strategic priority for CaixaBank?

A: Responsibility for the environment and social engagement is in our DNA. Since our inception, we have focused on the socio-economic development of the region and the well-being of its people. In alignment with this foundational mission, our 2019–2021 Strategic Plan includes sustainability as one of its five main pillars: to be a leader in responsible management by promoting responsible and sustainable funding, and maintaining our commitment to financial inclusion.

CaixaBank is one of the most committed financial institutions in the world when it comes to sustainability. In 2021, for the 10th consecutive year, the bank was included in the Dow Jones Sustainability World Index, ranking 11th among the top 24 banks. It is also the only Spanish bank in CDP Worldwide’s ‘A List’ for climate change, the highest recognition from an organisation that analyses bank climate commitment and performance.

As a strategic priority for the bank, ESG has now been reinforced and upscaled in 2021. In March, CaixaBank appointed a chief sustainability officer (CSO), and member of the management committee, who reports directly to the CEO. The approved structure of the bank’s sustainability unit consists of four areas: sustainability strategy and monitoring; sustainable business and products coordination; sustainability risks (the former corporate directorate for environmental risk management); and ESG communication.

Q: What is the role of the bank’s sustainability unit?

A: The sustainability unit will play a key role in: making sense of the external environment and bringing insight back into the institution; helping the organisation reconfigure its strategy; and providing thought leadership and helping to align teams by engaging, educating and connecting people.

CaixaBank operates under a comprehensive Socially Responsible Banking Plan, which features five key principles of action to drive the bank’s contribution to the UN Sustainable Development Goals (SDGs). Furthermore, through our activity, the bank backs environmentally friendly initiatives and projects, which contribute to preventing and mitigating climate change, fostering the transition to a carbon-neutral economy.

Since our inception, CaixaBank has grown by adding value to society, playing a key role in channelling financial resources, seeking to bring a positive social and environmental impact — such as by issuing social and environmental bonds, and marketing investment funds with responsible investment criteria.

Q: What is CaixaBank’s track record in sustainable finance?

A: The bank mobilised €31.37bn in sustainable financing in 2021 — 151% more than the previous year. We ended the year in the sixth position in Refinitiv’s ranking of sustainable financing in Europe — the highest-ranked Spanish bank in the list.

When it comes to bonds issuance, CaixaBank participated as bookrunner in the issuance of 18 ESG bonds in 2021, resulting in the placement of €16.2bn. In addition, the bank issued four of its own bonds under the framework of the Green and Social Bond Principles to support the SDGs, representing 79% of CaixaBank’s new debt issuance in the year.

Our commitment to the environment is ongoing. This is why we continuously work on new, differential business opportunities that combine utility and service for our customers; profitability and positive results on the balance sheet; and effective social and environmental impacts.

Q: Why does sustainability matter for CaixaBank?

A: CaixaBank’s track record shows that sustainability embedded in a bank’s day-to-day business operations, particularly from a social viewpoint, is absolutely compatible with enhancing financial results. We see sustainability as the backbone of our role in society, of our commitment to the region in which we operate, and ultimately with the aim of leaving future generations with a more inclusive and environmentally viable planet. This purpose coincides with what our stakeholders expect from a company such as ours.

The enormous ESG challenges have increased the importance of sustainability. It is evolving from a social responsibility topic to a new dimension that needs to be proactively managed as part of the regular banking activity and must be included within the bank’s strategy and business model. In addition to the appointment of a CSO, the structure of the governing bodies has also been updated accordingly.

For example, the appointments committee has been renamed the appointments and sustainability committee, assuming supervision in this field. In addition, the sustainability committee has been created and reports both into the management committee and the global risk committee. In short, the ongoing dialogue and the concern to satisfy the interests of our customers and shareholders, meet the needs of society and be up to the challenges we face are the driving force behind CaixaBank’s progress in all ESG aspects.

Q: How do you embed sustainability and ESG objectives into CaixaBank’s initiatives, products and services?

A: Through our 2019–2021 Socially Responsible Banking Plan, we are reorienting our activity based on engagement and the challenges that socio-economic transformation entails for our customers, to align our business with their needs and expectations. This includes advice and reordering financing policies, with a view to facilitate the transition to a sustainable economy, in neutrality, equity and responsibility. In other words, by supporting them in their ESG needs.

For example:

  • MicroBank, which specialises in microfinance and finance with social impact, has granted more than 107,000 microloans this year for a total volume of more than €950m;
  • We have specialised sustainability teams in our corporate and institutional divisions, as well as ESG certified private banking assessors;
  • We consider ESG factors in our lending business;
  • We launched the ‘SI Impact Solutions Range’, a new range of investment funds and pension plans with the highest sustainability rating accompanied by BlackRock;
  • We recently launched an ESG advisory service to help corporate and institutional customers to analyse and establish a sustainable strategy and positioning.

By accompanying the efforts banks are making with those that are being made by the public administration — for example through the NextGenerationEU Funds — the social transformation we are going to see will be historic. Of the €150bn that Spain will receive, €56bn will go towards the ecological transition. CaixaBank expects to manage a minimum of 25% [of those funds].

The Spanish banking sector is already prepared to be the facilitator of impact investing and CaixaBank has a comprehensive plan seeking to facilitate customer access to these funds, since we are facing a unique opportunity to attack the chronic vulnerabilities of the domestic economy.

Q: What are the risks that need to be managed for a bank to conduct a successful ESG and sustainability driven agenda? How has CaixaBank addressed these challenges?

A: The core risks we face in the financial sector are related to the rapidly increasing regulatory and supervisory requirements, the quantification and management of climate and social risks, and the definition and establishment of unique and comparable metrics. It is important to establish homogeneous metrics to establish transparency when reporting on results, and to conduct external audits.

CaixaBank is swiftly addressing these challenges by including sustainability in the bank’s governance and senior management through representation on the management committee. This implies there is a particular focus on these topics, which are being addressed at the highest management level ensuring a resilient business model.

Furthermore, the bank is integrating ESG criteria into its corporate policies and into the bank’s own strategy through the Strategic Plan and the 2019–2021 Socially Responsible Banking Plan, enabling the incorporation of sustainability criteria within all relevant processes of the bank. In parallel, we have made specific and ambitious commitments that help drive that strategy, such as the Net-Zero Banking Alliance for carbon dioxide emission neutrality by 2050, and the Partnership for Carbon Accounting Financials for the measurement and disclosure of funded emissions.

Q: What advice do you have for other financial services leaders to progress their sustainability agenda?

A: The financial sector is taking giant leaps to support the challenge of the vast socio-economic transformation we are undergoing.

Financial institutions should ensure that an internal sustainability governance framework is defined, that the top management is involved in sustainability, that it adopts the highest ESG standards and is open to the stakeholders’ feedback.

They must also be aware of, and responsible for, their fundamental role in channelling capital, to facilitate impact investing and funding in projects and business initiatives that enable us to progress as a sustainable society. Society is demanding that we take a leading role in this process and we must respond with commitment, innovation and transparency.

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