Italy’s Central Bank adopts sustainable investing

27 May 2019

plantsItaly’s Central Bank is one of the latest to adopt a sustainable approach to business. Sustainability is no longer just what could be considered a trend or an optional path; it is now a necessity for most companies and banks to survive.

As Nasdaq reports, the bank has shared plans of implementing an investment criteria that will reward companies for prioritising climate change, across its portfolio of $8 billion in shareholdings from the end of June. It will then broaden the program to a billion euros in corporate bond holdings.

The bank has expressed its support for climate change, having previously joined the Network for Greening the Financial System, which is a global organisation targeting the impact of climate change on the financial industry.

The Bank of Italy’s goals for its companies includes decreasing greenhouse gas emissions by 23% while lowering water consumption by 17% and energy consumption by 30%. Firms that do not follow U.N. principles on human rights, labour, the environment and anti-corruption are not included.

Italy’s central bank follows the footsteps of many other banks and fund managers before it, which also implemented similar schemes.

One of the most sustainable investors is the European Central Bank (ECB), which according to Benoît Cœuré, member of the ECB’s executive board, owns about a quarter of green public bonds totalling to €48bn and a quarter of green corporate bonds. However as the bank revealed, principles of market neutrality were abided by when purchasing the bonds and therefore, strengthening the green financial market was not the only intention.

Green mutual funds have been boosted in recent years as more awareness on the subject is being made, and now many are able to make decent returns. Sustainability in the world of finance is not expected to lessen in importance any time soon; but actually heighten profusely instead.