The evolving relationship between BNP Paribas and key client ENGIE España epitomises the innovative way in which banks and corporates are collaborating and pioneering new sustainable finance solutions to lead the energy transition. Miguel Bascones, CFO, Procurement and IT Director at ENGIE España and Viktor Ivanov, Head of Sustainability for Transaction Banking EMEA at BNP Paribas, provide an overview of their work together, which led to an award-winning green guarantee facility.
Q: Can you outline ENGIE España’s commitment to sustainability? What has been the impact of the pandemic – if at all – on the company’s ESG strategy?
Bascones: ENGIE España is strongly committed to sustainability. Our sustainability management model is based on comprehensive stakeholder management and on the ENGIE Group’s purpose of being a leader in the energy transition towards a carbon-neutral economy.
We believe that corporate management based on the 17 Sustainable Development Goals (SDGs) of the 2030 Agenda creates new business opportunities, improves relations with stakeholders and promotes innovation.
In particular, ENGIE España has a strong impact on SDG 7 (affordable and clean energy), SDG 13 (climate action), as well as SDG 11 (sustainable cities and communities), where it is a key player in shaping the cities and territories of the future.
Agendas around the world are still being dictated by the Covid-19 pandemic, which is a reminder of a great, unresolved challenge – that of climate change. Society has realised that the lessons learned from the health crisis can be used to better respond to the climate emergency.
Many voices are emerging from all areas of society claiming that this is the moment to promote a green, resilient and inclusive economic recovery, which is no longer merely an objective, but a means to end the health crisis.
Ensuring that the energy transition is at the core of the economic recovery strategy is one of the key priorities of the European Union, and particularly the European Green Deal, which has recently been boosted by the recovery fund – a commitment to the energy transition as the main axis to stimulate the economy after the pandemic and fight against climate change.
In terms of decarbonisation, the objectives of the EU Recovery Plan are at the core of ENGIE’s strategy, where our priorities are firstly to decarbonise energy production and accelerate the development of renewable energies, namely solar, wind, photovoltaic and hydrogen, and secondly to help our customers consume less and better energy.
Our strategy for a carbon neutral transition is sustainable, in response to the demand for green energy production, and supports our customers in their own energy transition. It serves everyone, contributing to the responsible development of cities and regions. It is competitive, creating the conditions for healthy and sustainable growth and generating value for all our stakeholders, as well as forward-looking, using innovative technologies and digital solutions to design new products, optimise production costs and improve energy performance.
Q: What is the company’s relationship with BNP Paribas, and how has this developed – perhaps in terms of the types and terms of transactions – given the shift towards ESG considerations in supply chains globally?
Bascones: BNP Paribas is ENGIE Group’s go-to financial entity reference, providing the necessary financial support for greater flexibility, such as options for early payment discounts or lengthening payment cycles, thereby freeing up working capital and promoting better financial health.
Ivanov: ENGIE is a strategic client, one that we are supporting globally with our range of solutions, geographical reach and expertise, as the company addresses the energy challenges of the coming decades and implements its energy transition plan to become carbon neutral. BNP Paribas’ support of ENGIE is multifaceted and includes assisting the firm with its green finance approach, the scope of which continues to broaden and innovate.
ENGIE is widely considered a corporate leader in the green finance and green bond markets, and the recent work that we have been doing with ENGIE España on its green guarantee line is indicative of the way that the bank is supporting the company with an increasingly far-reaching range of financial solutions.
The evolving relationship that the bank has with ENGIE is reflective of two broader trends: one, that companies are looking to expand the breadth of their sustainable finance solutions and the ways in which they leverage bank support to realise their ESG strategies. This could, for example, be a diversification from instruments such as green loans and bonds to trade-related guarantees, as has been the case with ENGIE España. The other trend is the recent increased focus on ESG performance in the wider corporate value chain and an awareness of the associated reputational and operational risks. ENGIE demonstrates exemplary leadership by playing an instrumental role in the transformation of the value chains in the countries in which the company delivers its projects.
Q: BNP Paribas is providing ENGIE España with a green guarantee line: can you outline the features of the deal? What benefits does it bring to the company?
Bascones: The facility will be used for the issuance of trade-related guarantees linked to projects that will provide environmental benefits, and which comply with the definition of Eligible Green Projects as per ENGIE’s Green Financing Framework.
These projects must fall into at least one of the Eligible Project categories, which include renewable energy production, energy storage, transmission and distribution infrastructure, energy efficiency and clean transportation, among others.
The benefits this solution brings to ENGIE are multifold. It aligns our financial solutions and instruments with the objective of being a global force for sustainable development and ensures that all our actions reflect this. It also enables further progress in our ambition to accelerate the transition towards a carbon-neutral economy, through reduced energy consumption and more environmentally friendly solutions. It furthermore supports our business of renewable energy, with a positive impact on the SDGs, as noted earlier. Finally, it contributes to the Group’s ambition of leading the energy and climate transition.
Ivanov: The facility leverages all the work that ENGIE has previously done in terms of defining what is ‘green’ by means of its Green Financing Framework, so the governance processes and related checks and balances are already in place. ENGIE España can align with the framework for its own activities, which means that facilities such as this green guarantee line can be easily implemented. It brings legitimacy and robustness to the sustainability approach, which is especially beneficial for projects that are more granular.
Moreover, a facility such as this one, which supports activities deep within the company’s operations, is a useful indicator to stakeholders – including investors and consumers – that ENGIE España is truly committed to its pioneering role in the carbon neutrality transition. We are very pleased that the solution was awarded ‘Best Sustainable Trade Finance Solution’ for 2021 by TMI.
Q: How do you see the trend towards a greater focus on ESG developing even further? What role will finance play in supporting that?
Bascones: Socially responsible investment necessitates a new framework for companies, investors and consumers.
Financiers are becoming increasingly critical, and within organisations the roles of the CFO and finance team are expanding to cover more than just the reporting of financials.
At a fundamental level, finance can help power an organisation’s ESG agenda in four areas. Firstly, corporate strategy, where ESG drivers can be incorporated into the strategy to drive ownership, accountability and organisational influence across the business. Secondly, investments: companies that can demonstrate a commitment to ESG are in a better position to secure capital investments. Thirdly, reporting: to demonstrate to stakeholders by means of continuous, ongoing reporting that ESG efforts are producing results, and finally, risk: the opportunities that come with recognising and managing ESG risks.
Ivanov: There is certainly a link between the development of new and innovative sustainable finance solutions and the fact that companies’ financial departments are becoming increasingly involved in ESG strategies as they become a firm-wide priority.
This broader conversation and engagement with internal, as well as external, stakeholders is extending the scope and type of sustainable finance solutions that companies are willing and able to develop and leverage. It’s this kind of multi-pronged approach that will help lead to even more pioneering solutions.