A growing number of investors are demanding sustainability targets be attached to financing, making it risky for steel companies without a zero carbon transition strategy, says Claire Coustar, Global Head of ESG, FIC at Deutsche Bank.
Regulatory and political impetus has driven the shift towards Environmental Social and Governance (ESG) financing instruments over the last decade. What started with green bonds and then social bonds has in the last couple of years moved on to sustainability bonds, where banks provide loans for companies committing to certain ESG performance indicators, Coustar said at a meeting organised by technology supplier Primetals on Tuesday.
Investors are demanding, as part of their due diligence and investment criteria, to know what investees’ carbon transition plans are. At the end of this year, moreover, the European Central Bank will carry out a climate stress test on eurozone banks.
“Investors realise that in certain sectors the technology is not there yet to fully map out the path to carbon zero in 2050,” Coustar observed at the event attended by Kallanish. They are however looking for details of what a company’s decarbonisation plan is for the next five years, followed by the period after that, she added.
Adam Smith Germany