Climate talks #2: How we strive to become the flagship in the Hungarian ESG-market?

Climate change is one of the most pressing issues of our time. Therefore, banks also have a role to play in combating climate change by taking real actions.??

In a series of talks, Nikoletta Kovacs , the Leader of Retail Banking Sustainability from our Sustainable Finance Department, shows what group-wide actions Raiffeisen Bank International AG takes to meet its commitments and to turn its climate and environmental business strategy into reality.?

In the second episode Ferenc Kementzey , Deputy CEO Head of Corporate, Markets and Investment Banking at Raiffeisen Bank Hungary shares his experience.

In 2022, Raiffeisen Bank received the Green Bank Award from the Hungarian National Bank. In your opinion, what makes your performance outstanding among other Hungarian financial institutions?

We feel deeply honored to receive the Green Bank Award, endorsing our efforts in the transition towards a low-carbon economy. We also received the 2022 Green Asset Management Fund award from the National Bank. ???

Sustainability is often considered a ’nice to have’. The transformation of business conduct is currently rather voluntary, but I think that this will change fast and become mandatory for most industry sectors. Therefore, our approach is to embed it in our strategy. As part of the RBI Group, our business priorities are making RBI’s balance sheet more Paris Agreement-fit, support RBI’s customers in their climate and environmental transition and drive the sustainable finance transformation based on up-to-date ESG expertise and governance. Furthermore, we are underwriters of the 2021 UN Principles of Responsible Banking and align the RBI Group’s operations with UN SDGs and targets under the Paris Agreement (which were approved by the Science Based Targets initiative in September 2022). We aim for the highest level of transparency by participating in the group’s Sustainability Report and by providing non-financial information within our annual reporting on a voluntary basis. Our Budapest office has state-of-the-art energy efficiency, and we have electric vehicles in our fleet.

We aim to be the flagship in the Hungarian ESG-market promoting the feasibility of making the “ppp”-triangle work: people, planet, and profit. We pursue to lead the transition of small, medium-sized, and large companies, and help our clients reduce their negative impacts and foster the positive ones. In order to do that, we are in close collaboration with the Sustainable Finance Team at Vienna head office.?

What does being committed to leading the transition of the Hungarian companies mean in practice?

There are four ESG Fund of Funds managed by Raiffeisen Asset Management exclusively investing in securities whose issuers are classified as sustainable. We were the first bank to publish a green bond framework and to offer green bonds for corporates in Hungary. We have a proven track record in Corporate Green Bond Advisory and we continually extend our green product and service portfolio. We offer ESG related advisory to our clients to assist in data collection and the selection of an ESG rating provider. We are building inhouse ESG knowledge with dedicated ESG experts and training and we set up an ESG project team working on designing data flow: the way we collect, request, analyze and store ESG data. We incentivize green and social projects as well as projects that enable transition. Our focus is currently on renewable energy projects, green buildings, and refurbishment of buildings, and we also see great opportunities in enhancing net zero emission travelling. Our risk assessment framework supports us in mitigating ESG-related risks. In addition to all this, we have sectoral credit policies for renewable energy projects. Our in-house Sustainability Council and Sustainability Bond Committee sitting quarterly ensure that the bank’s board is aware and updated on all ongoing ESG-related issues.??

What challenges for companies do you see on the horizon?

Firstly, companies of any size must be aware of their environmental and social impact. They should set KPIs, start measuring their emissions, waste generation, water and electricity use, noise pollution, etc. Once they understand the impact of their operation, they should come up with a strategy and measurable targets, how to leverage their potential to reduce their impact. Second, they should communicate impacts and commitments towards internal and external stakeholders via a sustainability report. They should start to build an inhouse ESG competence or team up with consultants to help with their journey. Then, depending on the size of the company, familiarizing with GHG Protocol, SBTi, GRI and the regulatory landscape is essential. You see, there is quite a lot to be done. Sustainability is not a selling point by itself anymore, but an essential criterion all along the value chain. And Raiffeisen is dedicated to support its clients to better understand all the necessary steps to pursue – and reach – the new goals.?

The seeds of change must be carefully nurtured within an organization in order to achieve the defined goals. How do you build knowledge, raise awareness, and get your colleagues’ commitment?

We always make sure that the new ESG processes are properly communicated and that our colleagues are informed and trained to adapt to the changes. We happily iterate these changes, as we believe that the feedback that comes from our colleagues is the most valuable input for further improving our ESG processes and build engagement. This way we can offer the best products and services to our clients. Furthermore, there are several online courses that we offer to our colleagues so they can learn more about sustainability in their own pace.?

One last question. You are in a position to lead by example. What do you do for a greener future and a more sustainable way of life?

Well, I use the public transport a lot in Budapest, I have electric bicycles and an electric boat. I like to be in the nature and to eat healthy food with a smaller ecological footprint. And raise my children towards environmental awareness.