Banks Sign-Up to EU Green Recovery Alliance
(8 May 2020 – Europe) Over 50 CEOs from leading banks have joined the European Union’s (EU) ‘Green Recovery Alliance’ initiative established by the European Parliament.
Signatories of the alliance are committed to supporting the fight against climate change and biodiversity loss post the COVID-19 pandemic, all of which plays a key role in Europe’s economic policy. Already committed to this alliance are banks and financial institutions such as BNP Paribas, Santander, AXA and Allianz. Ultimately, the objective of the alliance is for banks, businesses and government officials to come together and prioritise sustainability in their recovery plans and accelerate the global economy’s transition to net zero emissions.
A growing body of research has highlighted how listed companies with strong environmental credentials outperform the wider stock market. HSBC has released evidence that suggests ‘greener’ shares relatively impressive performance is largely holding true throughout the coronavirus crisis presenting a good defensive opportunity for investors facing a worsening economic crunch. The bank published a research note in late March by Co-Head of Environmental, Social and Governance (ESG) research at HSBC, Ashim Paun, that detailed how within the stock market turmoil, shares of companies focused on climate change or ESG issues outperformed as the virus spread.
The note argues that while the environment has been directly affected by the COVID-19 pandemic through reduced air travel, home working, online deliveries and temporarily lower industrial emissions, there are also signs that ESG factors provide useful guidance for investors looking to understand how companies and sectors are exposed to the crisis. The new analysis joins other studies that show firms with strong ESG ratings tend to outperform their peers. Consequently, the past year has seen the launch of a wave of new ESG funds and market research services, designed to provide investors with more detailed information on how well positioned companies are to manage climate risks and the transition towards a net-zero emission economy.
“All of these players, including the two largest European insurance companies, three of the largest Spanish and French banks, and European investment funds from ten European countries, recognise the importance of aligning economic recovery after the coronavirus crisis with the ecological transition in order to save our economy and transform it” said a statement from the alliance.
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