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SUSTAINABLE FINANCE: WHAT IS AND WHAT IS ITS PURPOSE?

Dear Brothers and Sisters,

We want to consider today a concept that is being discuss often, namely the concept of ‘sustainable finance’. Knowing the link between finance and sustainability today is key for understanding the current economic and social situation and its future developments.

Let’s start from the basic concept: sustainable finance arises from the application of the concept of sustainable development to financial activity, with the aim of creating long-term value in the economic, social and environmental fields.

The recent global health crisis linked to the spread of Covid-19 and the consequent negative impact on the economy, have pushed once again to re-evaluate the way to approach the environment, the economy and investment strategies: this is where the concept of sustainable finance comes into play. The need to restart business activities and give impetus to the global economy has in fact led to incentivizing the use of sustainable policies that provide for the integration of environmental, social and governance criteria (the so-called ESG criteria, acronym for Environmental- Social-Governance).

Indeed, investing in more sustainable and inclusive growth models and with a long-term perspective, will allow not only to limit adverse impacts, but also to create new investment opportunities that can bring additional value to businesses.

The development of sustainable finance requires a process of transformation, in which the synergy between institutions, companies and financial operators becomes fundamental to start a recovery process capable of involving different areas – from the economic-financial one to the health and social one, with sustainability as a reference basis.

With this in mind, national governments and European institutions have for some time now implemented a series of initiatives aimed at encouraging ‘greener’ investment policies. This scheme includes, for example, the Green New Deal, introduced in Italy by the latest budget law, with the aim of relaunching a more sustainable economy, as is sought in Europe with the EU Green Deal and with the UN 2030 Agenda.

The impact of Covid has had devastating effects on the global economy, to the point that even the largest companies, considered solid and not vulnerable, have experiences difficulties. Some sectors, however, have managed to benefit from the current context by directing their strategies and investments towards a sustainable approach. As also illustrated by the MSCI and Morningstar indices, the more ‘sustainable’ stocks have proved more resilient to the effect of the pandemic. Italy, which has recently moved more clearly towards sustainable finance, has also achieved positive numbers at the beginning of the year, recording a total of 2.8 billion euros in sustainable funds.

During this times of economic and health uncertainty, the sustainable investment sector is sparkling greater interest in investors.

If this topic interests you and you want to know more, please do contact us at info@fiatlux.legal.

Fiat Lux Legal

Avv. Federica Loreti[/vc_column_text][/vc_column][/vc_row]