Ulrich Bergmann, last year CHG-MERIDIAN succeeded in raising further sustainable capital in a second round of funding. What is your strategy in this regard as CFO?
Sustainability is a central pillar of our corporate strategy. Sustainable finance, i.e. finance that is geared to a company’s sustainability performance, is for us – as pioneers of the circular economy – simply a logical combination of our core areas of expertise. In practice, these two points come together in our EcoVadis rating. Our sustainable business model and the external assessment of our sustainability performance have secured us a robust rating, and we benefit from this in the capital markets through lower interest rates.
Ever since we launched our green finance activities in 2021, our objective has been clear. Long term, we want every second euro of our growth-related funding to be raised through sustainability-oriented solutions. The successful placement of two further ESG-linked financing instruments with our partners from Helaba Landesbank Hessen-Thüringen and Landesbank Baden-Württemberg in summer 2022 was an important step on this path. Indeed, if we look at our corporate finance volume in 2022, the majority of the capital provided was linked to ESG in some way.
CHG-MERIDIAN’s sustainable funding volume doubled last year compared to 2021. Will we see a repeat of this in 2023? And, if so, can we expect to see new ideas alongside the existing formats such as ESG-linked loans and promissory notes?
Right now, we can’t make any reliable prediction about this year’s green funding volume. But we do know that it is increasing in line with our growth targets. Essentially, this means that if our business grows as planned, the volume of our green loans and promissory notes will automatically grow as well. Our priority here is clear. We want to obtain as much of our financing as possible through sustainability-linked borrowing.
But, of course, the evolution of new financing instruments is not just in our hands. The successful placement of these funding formats is always the result of a close and trusting relationship with our 100-plus international banking partners – all of us united by the vision of a sustainable finance system. You can therefore expect these questions to be high on the agenda at the upcoming International Funding Partners Conference in Milan at the end of April.
How do you see things developing over the coming years? Will sustainable finance become the norm?
Regulation of the field is tightening, we are already seeing that. The importance of sustainable finance in the context of lending and credit monitoring is shifting further into focus with each new amendment and regulation, for example from the European Banking Authority (EBA). So, in fact the question is not whether sustainable financing will become the norm, but rather when.
We ourselves strongly believe that the market for sustainable finance will continue to grow rapidly over the coming years. My own view is that sustainable components are now at the cutting edge of finance and are simply becoming the go-to format. And that’s good news for us at CHG-MERIDIAN and for our business model too. We have been part of the circular economy for more than 40 years now. This has given us a competitive edge in the past, and I firmly believe that it will do so in the future as well. We just need to keep seeing sustainability as a business opportunity.
