Sustainable finance, the challenge of building a better future and where translation comes in

by Silvia Giancola

 

The pandemic has introduced us all to the concept of the “new normal” – a different, evolved status quo that reflects our relationship with the planet we inhabit.

The environment has grown in importance in terms of public opinion recently, becoming a priority at long last. It’s far from the being the preserve of scientists and nature lovers, as was previously the case.

We’ve realized that our impact on the planet, our “environmental footprint”, is a significant one – and that the consequences of that can be disastrous. Air, water and soil pollution, climate change, the extinction of animal and plant species or the risk thereof, the loss of biodiversity, eutrophication… the list goes on.

Even the biggest skeptics seem to have received the message that our very survival depends on the wellbeing of the planet.

That’s why the concept of sustainable development has taken on such importance in recent years. According to the WWF’s definition in its Living Planet Report, sustainable development means learning to live within the limits of our sole planet. It’s about developing the ability to live in interdependence without destroying the natural systems that give us our resources – and without overburdening the planet’s ability to absorb the waste generated by our activities.

Even the world of finance has adopted these principles, creating a range of new investment assessment methods and metrics. Perhaps the best-known of these is Sustainable and Responsible Investment (SRI), which complements traditional financial analysis with compliance with Environment, Social and Governance (ESG) criteria.

For us, the most important ESG criteria are innovation, energy efficiency, the relationship between social stakeholders, quality of management and business transparency.

 

Sustainable finance: the main instruments

 

Some of the most common sustainable finance instruments include:

• Green bonds, which are instruments designed to fund projects or activities – both new and existing – with positive impacts on the environment, such as renewable energy, energy efficiency, clean transport, eco-compatible buildings, waste water management and adaptation to climate change;
• Social bonds, relating to projects that can achieve positive social results or tackle social problems. Examples of projects financed or refinanced using these instruments include basic infrastructure (e.g. for the drinking water supply), access to essential services (e.g. sanitary services), financially accessible housing, the creation of jobs through funding and micro-funding for SMEs, food safety and hygiene and broader socio-economic progress and consolidation. These projects are often targeted at specific sections of the population, such as those living under the poverty line, marginalized communities, migrants, the unemployed, women and/or sexual/gender minorities, the disabled and the displaced. These aspects have recently been joined by obligations related to COVID-19, with funds being used to tackle social problems caused by the pandemic, focusing on those groups that have been the most severely affected;
• Sustainability bonds, a third type of bond that involves both environmental and social aspects for the projects they finance. These bonds are issued to wholly or partly finance or refinance social and green initiatives, both new and existing;
• Sustainability-linked bonds, which are bonds whose objective is attainment of a future goal based on the sustainability performance of the issuer, measured as KPIs.

All of these instruments are part of the transition strategy toward a low-carbon economy, inspired by the UN’s 17 Sustainable Development Goals (SDGs) for 2030. For this reason, it’s crucial for companies to show their commitment to sustainability by opting to produce reporting specifically focusing on the area.

Looking ahead to the future of the bond market, increasing numbers of investors are choosing to make their investment portfolios more sustainable, underlining the importance of these new instruments.

 

Translation and sustainable finance

 

Translation services are an essential part of this process of evolution toward a society and economy that exhibit greater awareness of the connections between humans and the planet, work and the environment, wellbeing and health.

It’s crucial that market operators be able to share clear information about the sustainability of their instruments, just as it’s important for investors to understand the nature of different bonds and funds as they look to make targeted choices based on their attitude to sustainability.

Translating sustainable finance and impact investing documentation is a key part of this process.

As a certified Benefit Corporation, Way2Global has always had the goal of raising awareness and creating a society in which everyone can have the best possible quality of life.

Sustainability is a key part of what we do, but so too is finance, which has been our core business for 30 years.

Way2Global gives you access to a network of expert financial translators who have their finger on the pulse of all new developments in the sector.

Get in touch for a quote – we’ll be able to offer you a translation service that meets your needs and those of your investors.

Let’s work together for sustainability, starting with finance!