Innovation will drive sustainable finance in 2021

BNP Paribas experts discuss the role of sustainable finance for a responsible recovery - and how we innovate to connect issuers and investors' needs.

The financial sector will play a vital role in a post Covid-19 recovery and a decarbonised world. BNP Paribas is shaping its approach to support clients’ needs and accelerate innovation in sustainable finance, to ensure the Bank continues playing a crucial role.

For this year’s Sustainable Bonds Insight, Environmental Finance magazine spoke with BNP Paribas specialists on how the push factors of 2020 to scale up innovation in sustainable finance solutions will continue to shape 2021. Here are our top six takeaways:

1. Finance plays a vital role in a responsible recovery

Constance Chalchat, Head of Company Engagement CIB, on clients’ commitments: “Despite the ongoing economic and social impacts of the Covid-19 pandemic, we are continuing to witness how investors and corporates are ramping up commitments towards tackling environmental and social challenges, while recognising the vital role finance has to play in a responsible recovery.”


2. Transition is going mainstream

Frederic Zorzi, Global Head of Primary Markets, on transition finance: “In terms of a rebalancing, we will likely see some issuers move from traditional financing to transition financing through these approaches. Overall, the objective remains to improve environmental impact and futureproof the business model towards a progressive strategy that aligns to a low carbon economy.”


3. Transition finance scales up across sectors

Delphine Queniart, Global Head of Sustainable Finance & Solutions for Global Markets, on innovation: 
“Having sector expertise and a holistic strategy across sustainable finance is vital to our approach, as it is necessary to scale up transition finance across multiple high emission sectors – from steel and transport, to construction and real estate”


4. Investors look beyond pricing to value ESG

Anjuli Pandit, Primary Markets Sustainability Manager, on investors’ perspective:
“Although there were various market dynamics which contributed to the cheaper [“greenium”] pricing, we heard directly from many key ESG investors that they believe there is a value to be placed on ESG data, on ESG frameworks, and on investing directly in the ESG ambitions of an issuer.”


5. Convergence is key for market integrity

Cécile Moitry, Co-head of Sustainable Finance Markets, on KPI-linked products:
” What we anticipate for the year 2021 is a convergence of the SLL with the SLB. Greater transparency and analysis of the two instruments are now being undertaken. Ultimately it will result in a common and integrated approach adapted to the sustainability strategy of our clients and will bring increased integrity to the market”


6. The ESG bond market is at a crossroads

Agnès Gourc, Co-head of Sustainable Finance Markets, on outlooks for sustainable finance: 
“We are at an interesting crossroad for the ESG bond market, led by regulation on the one hand, investor demand on the other hand, and finally product innovation. The result of these three factors is a greater product and sector diversification.”




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