Santander Launches Its First ESG-Structured Product with Environmental and Social Impact

Santander accelerates in sustainable finance. The bank has launched its first ESG-structured financial product with the intention of protecting the capital of corporate clients with a strong cash position and generating a positive environmental and social impact.

Specifically, the bank has designed a structured product for an Aragonese company that, on the one hand, offers a guaranteed minimum return and, on the other, an additional variable remuneration linked to the performance of the Euro Stoxx 50 ESG X index. This is an index that includes European companies with the highest ESG scores and excludes those that do not meet international standards, such as tobacco companies, arms companies, military contracting, or thermal coal companies.

Beyond the sustainable impact of investing in companies with the highest ESG ratings, Santander has committed to reforesting more than 3.75 hectares in the municipality of Albentosa (Teruel), close to the location of the company’s headquarters, to generate an additional positive environmental impact. The land, owned by the town council, will be reforested with around 3,000 trees to create a native forest. Santander will assume all the costs. Additional employment will be generated for this reforestation work so that the project will also have a positive social impact.

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Santander initiative is aimed at increasing the weight of sustainable finance within the bank’s portfolio

Santander has set a target of mobilizing €120 billion between 2019 and 2025, and €220 billion by 2030 in green finance.

Last May, the bank reorganized its Green Finance area to give greater weight to its sustainable finance business. In this way, Santander grouped under the same umbrella the business related to investment banking (issuance of green bonds or equity investments) and sustainable financing offered by commercial banking (green finance products). The bank appointed Lucas Arangüena, who reports directly to the bank’s CEO, as head of this area.

With the appointment of Arangüena, Santander has set itself a twofold objective. The first is to develop the infrastructure that will support the green financing of the entire group. The aim is to incorporate the sustainable finance rating system (SFCS), strengthen the control system to assess and manage the risk of greenwashing, and implement a data strategy to measure and monitor the development of the business.

The second objective is to increase the green finance business, with new products such as the structured product it has just designed. Although it has been developed on an ad hoc basis for a particular company, Santander’s intention is to be able to sell it to more corporate clients as part of its portfolio.

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(Featured image by Mike Mozart CC BY 2.0 via Flickr)

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First published in CincoDias, a third-party contributor translated and adapted the article from the original. In case of discrepancy, the original will prevail.

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