This piece highlights sustainable finance and how environmental and social factors influence investing. It describes a shift in the economic paradigm toward responsible practices, with stable returns for investors. International organizations increasingly adopt and promote a framework of principles and standards that support this approach. Investing now carries a meaningful significance as responsible companies become a core part of the new economy.
More and more investors choose assets not only on financial metrics but also on the environmental impact of the companies they back. The trend is growing steadily and reflects a broader awareness in the market.
BBVA Spain Private Banking gathered diverse experts for a conference to explore this evolving financial reality. The event focused on sustainable investment and future directions: macro and market perspectives for 2023 and the path investment should take in the years ahead.
From an environmental standpoint, decarbonization is central to reducing carbon dioxide emissions, aligning with the goals of the Paris Agreement. This sentiment was echoed by André Themudo, BlackRock Iberia Director of Sales during his presentation on sustainable investments and future portfolios. He noted that more than 160 countries have signed the Paris Agreement and are committed to reducing emissions to achieve net zero by 2050. He also observed that many companies have internal commitments that align with BBVA’s sustainability goals, one of six pillars guiding the firm and mirroring BlackRock’s emphasis on sustainable finance.
As climate change remains humanity’s major challenge, Themudo suggested decarbonization as a solution and emphasized the need for alternative methods that maintain production and services while using clean energy. He explained that governments, a society eager to cut emissions, and technology all play a role in making low-carbon solutions scalable and cost effective. Climate risk is presented as a key factor on par with financial risk, and the integration of sustainability can help investors build more resilient portfolios with stronger long term risk adjusted returns.
As discussed, companies best prepared for the climate transition tend to be rewarded by the market, reinforcing the case for sustainable ideas in corporate planning.
One example highlighted by BlackRock is the BGF Sustainable Energy Fund, notable for its focus on energy transformation and its flexible exposure without strict geographic or sector limits, underscoring its sole aim to benefit from the low carbon transition.
Acknowledging climate change as a major driver, Ximo Raga, Eastern Territorial Private Banking executive, described sustainability as a strong investment opportunity. He noted that future economic growth will depend on substantial investments and that banks have a crucial role in funding this transition. Sustainability remains one of BBVA’s six strategic priorities, with a focus on inclusive growth and a just society. He added that investments should be sustainable and socially responsible while maintaining financial potential for clients.
During the meeting, attendees actively engaged with the speakers through questions about investments. One participant asked whether deposits are more convenient than funds. The manager of Banca Privada Territorial Este explained that deposits still exist, but diversified fixed income mutual funds, aligned with client profiles, can offer similar or higher returns. Tax implications were also discussed: deposits incur direct withholding tax, while funds offer tax deferral opportunities and flexible fund-to-fund transfers without tax consequences, except for a refund scenario. This allows savers to plan for the future and invest in markets best suited to their profile without tax impact.
economic prospects
Roberto Hernandez, a specialist in strategy and private banking investments at BBVA, outlined the expected path for the economy this year. He spoke of a possible slowdown but not a crisis, predicting weaker momentum in the second half due to higher interest rates and persistent inflation. He noted inflationary pressures easing in the first half, albeit more slowly than expected, and that central banks are approaching tighter monetary conditions. He cautioned that the environment remains complex and advised readiness for volatility spikes.
On the type of asset that may perform well, fixed income is described as a leading choice for 2023, given its resilience across various macro scenarios. Hernandez advised diversification across asset classes to stay prepared for likely developments.
A sustainable solution for wallets
Sustainable investing offers a pathway for investors to participate in a transition toward a more sustainable and equitable future. Investing in renewable energy can cut greenhouse gas emissions, while green technology can boost energy efficiency and reduce waste. Supporting socially responsible companies can improve working conditions and reduce inequality. A BBVA regional manager in Alicante recommended approaches that prioritize sustainability when choosing investments, with a focus on renewable energy and companies that value employees and society.
Sustainability has gained substantial traction in recent years. More investors seek profits alongside a positive social and environmental impact. BBVA Private Banking aims to help clients make informed, sustainable investment decisions by offering solutions that generate profit while benefiting the world. Studies indicate that socially responsible companies may outperform over the long term, according to a BBVA speaker.
BBVA Private Banking draws on experts from BBVA and partner organizations to identify relevant sustainability trends for the year. The team provides practical guidance to help investors make decisions that align with responsible investment principles.