FINANCIAL STRATEGY
Arash Mojabi, UK Head, Sustainable Solutions Group, ING, began his career in infrastructure finance before transitioning to sustainable solutions as the market gathered momentum. For the past five years, he has led ING ' s sustainable finance activities in the UK, supporting clients with connecting finance and sustainability initiatives for long-term value.“ Traditionally, debt optimisation focused on pricing, tenor and diversification. Sustainable finance adds a strategic question: does the debt structure support where the business is going?” he says. He explains that there are two distinct types of sustainable debt. The first category is use-of-proceeds financing, which includes green loans and green bonds. In these structures, ring-fenced funds are earmarked strictly for eligible environmentally friendly projects, such as energy efficiency, clean transport or renewable energy.
As well as being a corporate finance lifeline, sustainability-linked financing goes beyond just loans and bonds, explains Arash. It can encompass sustainable supply chain finance and green deposits allowing banks to meet the demand of corporate clients seeking to implement ESG projects without capital. Filtering through these products is a task which for any CFO, Arash notes, should begin with a question of strategy, not financing.“ The key question for a CFO is not ' Which sustainable finance product should we use?' but ' What business objective are we trying to achieve?' Whether that ' s funding growth, improving resilience, reducing transition risk, broadening the investor base or strengthening access to capital, the financing structure should support a strategic outcome” he says.
Whether the goal is funding digital expansion, improving operational resilience or strengthening capital access, debt choice must support the outcome.
SUSTAINABILITY DEBT AS TWO DIFFERENT CATEGORIES
In addition to the ring-fenced projects used for renewable energy, or energy efficiency, Arash explains that the other use for it is sustainability-linked loans, an ING specialty. The bank was the first to introduce a sustainability linkedloan back in 2017, made to Philips. It currently holds the record for the largest-ever sustainability-linked loan after a joint venture with Santander in 2021, to the tune of US $ 10.1bn. The revolving credit facility was provided to Anheuser-Busch InBev, and was reported to be a first for a publicly listed company in the food and beverage industry. financechief. com 83