There are many social parallels between climate change and covid-19, and also a potential business opportunity.
Populations most affected by climate change have also been, in many cases, the most vulnerable to the coronavirus, and banks can address some of these challenges through certain real estate or infrastructure financing, said Elsa Palanza, global director of sustainability and Barclays Plc’s ASG, in an online panel hosted by the Institute of International Finance.
There is a “perfect storm where vulnerable people take hits from all sides,” Palanza said. Now is the time to “imagine how we can create new opportunities to serve these communities“, He said.
As an example, Barclays recently provided 15-year financing to a social housing company to build affordable, energy-efficient residences for those who would not otherwise have access to such housing, Palanza said. The deal is part of a greater focus among financial firms on social issues, he said.
While a growing number of banks and fund managers say they consider environmental, social and governance issues when investing or lending, in reality the three pillars of ESG have never been the same. Before covid-19, which exposed the lack of paid benefits and safety nets for many workers, the “S” was something of a blind spot.
The whole ESG topic, which groups disparate problems into categories A, S and G, could actually be somewhat pointless and confusing, said Ben Caldecott, director of the sustainable finance program at the University of Oxford.
The “S” is “the least defined,” but it is a focus of attention and will be “better defined” in the future based on how companies treat their employees and supply chains, said Ewout Steenbergen, executive vice president and chief executive officer. S&P Global Finance, on an independent panel of the IFI.