Leading the Charge in Sustainable Banking: Insights from Markus Ecker

Because it combines the business aspects with a good cause. Basically, it is very attractive for each of us in the bank, but also for all our customers and investors, if you can achieve a positive effect for the environment or society through the business. Part of the definition of Sustainable Finance is to set up financing for a sustainable purpose. The construction of a wind farm, for example, or a particularly energy-efficient building. Another part of our product range is products that influence a customer’s sustainability behavior, for example by linking the size of the margin to the customer achieving a certain sustainability target.

Yes, exactly, that is an essential part of our consulting, to first explain to the customer what best practice is, where he may have deficits in comparison and what he can or must do to be compliant with market expectations. The banks do this for several motives. First, because it's good for business. Not only in the sense of closing deals, but also regarding the long-term customer relationship.
We believe that a customer who is concerned with the environment and with social aspects, with sustainability, is also economically sustainable and therefore a better risk for the bank. The second aspect is the role that politics has given us at the European level. The European Commission has invested a lot of energy in defining what a sustainable transaction is. This is the so-called EU taxonomy. And at the same time, metrics have been defined in relation to the proportion of sustainable assets in a bank's portfolio. So, we're not doing this purely for our own benefit, we're helping to achieve Europe-wide targets and meeting the regulator's requirements.

That's right, they all do it. Our advantage is that we are able to advise the customer better than others, especially in Eastern Europe or the non-EU countries. We have a unique selling point here because we know the local environment and market conditions better than others. And probably also because we raise the issue proactively. We met with a client in Romania, a recycling company, whose CEO has been on every panel discussion in the country on sustainability because he is personally interested in the topic. And we were the first bank to seriously talk with him about sustainability. There's no question that this did our position good.

Ideally, one merges into the other. ESG Advisory is a very good tool for strengthening customer relationships, often leading to the conclusion of a financing product with a sustainability component. My colleagues use it to strengthen the sales teams in all of RBI’s business areas. But that's not all: we also advise customers on sustainability issues and point out any deficits.

Both, although the focus is increasingly on customers who want to go into detail. That is also fundamentally our strength; we have to impart basic knowledge only to very few customers. Two or three years ago, this was still an issue sometimes, but today the discussions with our experts are already very much focused on the specific and defined needs of the respective company.

First and foremost, we have colleagues who have been doing this for years and were already dealing with the topic when it was not yet en vogue. In advisory for financial institutions, we have the great advantage that our clients are advised by colleagues who have already structured Green Bonds for RBI. It makes a difference if you were involved in structuring the first Green Bond for RBI and personally have gained all the experience that the client can expect.

No, there is no basic demarcation here. Green Bonds are issued by both groups of customers, but in the case of corporates, of course, only by the very large ones. For banks, a bond is the typical refinancing instrument, while corporate customers are more likely to use the classic loan with its various forms and tend to finance themselves via this channel. A Green Bond is a refinancing instrument, the basis, for financing green projects. The issuer raises money with the promise to investors to use the funds for very specific sustainable categories.

You can read about that and many other things in the Sustainability Report, which I highly recommend as an important source of information. It is one of the best of its kind on the market.

As part of the ESG Competence Center, we established a network of ESG Ambassadors in the network banks very early on. Today, there are people working in every country who are passionate about the topic and promote it both internally and externally. And we train more than 1,000 colleagues across the Group every year. Ultimately, we are also increasing our expertise by stipulating that all network banks should issue their own Green Bonds wherever possible. The fact that the issue of Green Bonds has such a strong presence in the CEE region is certainly due to our network banks. As a group, we are the largest Green Bond issuer in the region. And one must not forget that a green investment in CEE has far greater leverage than in Western Europe because, for example, the energy mix is much poorer.

The most important thing is that since the end of March we have had a Climate and Environmental Business Strategy approved by the Board of Management, which was drawn up by colleagues from all board areas and business units. It's great to see that everyone is pulling in the same direction. Then there is the integration of Retail ESG Strategy into Sustainable Finance. Once again, it has become clear that there are only advantages to pooling expertise and creating a central competence center. Our colleagues in Retail benefit from the experience we have gained in Corporate Banking and we can use the Retail knowledge when advising financial institutions. We therefore see ourselves as a role model for “Think RBI”.

I particularly like the impact on people, my colleagues. They don't just earn money for the bank, which is their actual job, but they are in the nice position of knowing that what they do, the products they structure, the knowledge they pass on is making a positive contribution that is sustainable in the long term and in the truest sense of the word. It gives meaning to what they do professionally, and people who work in this field really appreciate that. That applies to me, too, of course.