Big transitions are actually millions of small ones

This is the speech I gave at the 2021 Banking Conference in Madrid, Tuesday 2nd of November. Hope you find it interesting.

Turning point

Welcome to our first face-to-face – or rather, mask to mask – banking conference for two years. It’s wonderful to see you here and to welcome you to Madrid.?

We may have been away, but?the world hasn’t slowed down.

Economies have recovered, perhaps not as fast as expected, but they are growing. People have gone back to work, travel, and tourism is surging. We are getting back to normal: to a more uncertain normality, with higher debt levels, rising inflation, and supply chain disruptions… yet we are back.?

Covid turbo-charged the tech revolution and opened the door to bold social and economic policies. It has propelled us much further along the road to a digital society.

Climate change?

Looking ahead, I am an?optimist.?

For me, one of the pandemic lessons is the extraordinary resilience, ingenuity, and creativity of humankind. It isn’t just the miracles wrought by our scientists, but how people looked after each other, kept our shops stocked, and invented new ways of working which we had not even imagined eighteen months ago.

Banks have shown that they are part of the solution – not part of the problem.?

Santander lent on average a billion euros a day in the first months of the pandemic.?

But I am an optimist, who worries a lot – especially about climate change. Climate change, by definition, is a global challenge. It demands a global response. Science suggests that unless we do more, fast, the change could be irreversible. Now world leaders must show they understand the implications. They will have a unique opportunity in Glasgow, perhaps the last chance to keep the ambition set in Paris in 2015 alive – to be net-zero by 2050.

Mobilizing Finance??

The good news is that global finance is mobilizing to fund the transition to the green economy. As a founding member of the Net Zero Banking Alliance, we are committed to making Santander net-zero by 2050.

We’ve already set our first decarbonization target.?By 2030, we will align our power generation portfolio to Paris Agreement goals, stop providing financial services to customers with more than 10% of revenues coming from thermal coal, and eliminate all exposure to thermal coal mining.

Meanwhile, we are financing the green transition.?We are a global leader in financing renewables.?Since only 2020, the renewable projects we’ve financed created enough energy to power a city three times the size of London -which shows the opportunities that the green transition creates.?

I’m proud of the steps Santander is taking, but I’m very aware that we – like our peers – are still in the foothills. The arduous climb to net-zero has yet to begin.

To help our customers, people and companies around the world go green we need better and comparable data and above all companies need guidance and policies from their governments that set clear transition plans and incentives for every sector.

But that is just the start.

We need planning and long-term frameworks for the low carbon transition – clear consistent regulatory incentives and disincentives. That means voters who understand why this matter and accept the disruption ahead because they understand.

We need governments that can build the social safety nets for the those whose jobs will change or disappear, and the policies to help businesses create the millions of new jobs to replace them.

We also need governments that can ask some tough questions about the way power works in the digital economy so that it works for everyone. We need big companies that are willing to take a lead – to be an example. We need banks and capital markets that can provide the finance to drive this transformation and the growth it will bring. And we need global regulation that allows us to finance the big transition.?

Starting Small: Focusing on our Customers

One of the many things I have learned as a banker over the last thirty years is that most of the things we describe as?big transitions in our societies and economies are actually millions of small ones.

They are?changes in technology or social expectations that play out in individual businesses and homes – in individual lives.?

What makes banking my job, my colleagues, worthwhile is often being part of that. Being?able to have a positive impact on millions?of people and businesses when we get it right.

Covid has been like that.?Behind all the health statistics, all the huge borrowing figures, the trillions spent keeping economies on life support, and developing and rolling out vaccines?are a billion stories.?Stories of loss of course, but also of resilience. So I want to start at that level.

I’d like to talk about the Barrueco brothers,?two Spanish entrepreneurs, who?have succeeded by combining a good idea, a clear vision of how to scale a business opportunity, and an incredible resilience and persistence to overcome all the obstacles that appeared on their path.

Luisa and Francisco Barrueco?took over the family civil works company created in 1995 by their parents, Marisa and Paco. Like most of the SMEs, they were firmly grounded in the real economy, and when in the year 2000?mad cow disease?started, they realized that the removal of cow carcases from farms was both a social need and a good business opportunity.?

They researched the market, and waded through reams of red tape to get the necessary permissions and comply with regulations. They trained their staff, adapted their trucks, and fully entered a new line of business. A paragon of flexibility and resource reallocation, in a short period, they became a successful medium-size company in this space.

Then came the scaling of their business.?They soon learned that there was value in going beyond being the middlemen between farms and the animal waste treatment plants. So, they decided to integrate their activities vertically.?

They needed land to build their plant, permits from the regional health authorities in each of their territories, better-trained teams, and, of course,?money to finance their project.?

It was very difficult. But against all the odds, they never gave up.

One Sunday morning, Paco read on his tablet my LinkendIn post about?“entrepreneurs′ hope”: how if we wanted to advance the well-being of all Spaniards we have?to invest in entrepreneurs and SMEs, and how?Santander was committed to this very simple idea.

Luisa wrote to me and told me their story -you can check it here-. Paco and Luisa represent what I believe! That the people of this country have what is needed to succeed: ideas, persistence, courage, flexibility, and vision.

By early Tuesday, our Smart Fund Team was scheduling a business meeting. Our teams worked together with them and the local Puertollano authorities.

And yes, we financed the project. Today, Paco and Luisa run in Puertollano, one of the most technological and sustainable animal waste treatment plants in Europe. The are planning to create 50 jobs, reinvigorated the local economy, and solved a very real recycling problem … and yes, they make money.

This is what economic sustainable and inclusive growth is all about. About the dreams of the people coming true and the increased well-being of the communities because of those dreams. This is also our commitment. This is what I believe.

And this is why I would urge you all today to keep all the “Pacos and Luisas” in mind. To translate the big changes into the language and experience of a small business or individual households. Because it is only with this perspective that we can see what these problems look like from ground level, and how that understanding should shape our approach to designing solutions.

All these big issues “how much capital should banks’ hold?” remain abstract until you link them to the balance sheet flexibility to make a loan. Covid-19 showed how small and big businesses have resilience, imagination, and are innovative.

We, at Santander, are committed to support Barrueco′s spirit and to all SMEs and entrepreneurs – and to work together to support them.

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