“A strong commitment to environmental, social and governance (ESG) issues can result in a considerable competitive advantage for players in the hospitality sector, especially for those that can genuinely report their progress about their ongoing ESG journey,” said Clint Flores, Head ESG Issues at Bank of Valletta during ‘Mission: Forward - Mastering New Opportunities to Succeed Responsibly - the annual conference organised by the Malta Hotels and Restaurants Association. 

High environmental, social and governance standards are increasingly critical to a bank’s reputation and licence to operate. Good banking practices include financing the decarbonisation of economic activities, where banks and businesses that do not measure up to their ESG pledges risk being accused of greenwashing. Also, regulation requires banks to measure and disclose ESG risks in their loan portfolios and other banking activities, as well as the impact of their activities across a broad set of environmental, social and governance considerations.

ESG has now become part of the Bank’s Customer Due Diligence process. As the regulatory landscape continues to evolve and issues related to climate change and social responsibility gain more prominence, banks are screening their current and prospective customer base for the risks posed by ESG factors when assessing customers and their projects. 

All economic activities face climate risk. A bank’s impact on the environment includes its investments in customers’ projects with banks seeking to transition risks by moving to a lower carbon economy and a more sustainable one. It is the responsibility of banks to not only choose green projects – but to make green projects the norm in their operations.