What is sustainable financing?

The European Commission defines sustainable financing as "the process of taking environmental, social and governance (ESG) considerations into account in investment decisions in the financial sector, leading to long-term investment in sustainable economic activities and projects". The definition is a normative one, centred on aligning capital with European climate policies.

(https://finance.ec.europa.eu/sustainable-finance/overview-sustainable-finance_en)

The World Bank adopts a similar vision, focussing on the allocation of capital to support sustainable development and combat climate change. The Bank links sustainable financing to global goals of poverty reduction and climate change adaptation. (https://www.worldbank.org/en/topic/financialsector/brief/sustainable-finance)

The International Monetary Fund (IMF) emphasises that sustainable financing involves integrating ESG factors into economic decisions, investment and development strategies. The Fund treats the concept in terms of macroeconomic stability (https://www.imf.org/en/Publications/GFSR/Issues/2019/10/01/global-financial-stability-report-october-2019#Chapter6)

The European Investment Bank (EIB) believes that sustainable financing means channelling financial resources to projects that support climate and social objectives, ensuring equitable and long-term growth. The Bank emphasises the importance of channelling resources to concrete projects with a focus on social and climate impact, reflecting its mission to finance the green transition in Europe. (https://www.eib.org/en/stories/what-is-sustainable-finance)

Why is it important for businesses?

For a company seeking long-term stability and access to competitive financing, knowledge of the principles of sustainable financing becomes essential. It is no longer just about doing "the right thing", but about understanding how market demands are changing and responding strategically.

Firstly, many financial institutions and investors require companies to be clear about how they are managing their environmental, social and governance impacts - which is reflected in the ESG (Environmental, Social, Governance) criteria. A company that integrates these principles into its business can obtain more favourable lending terms, access to green transition funds or long-term partnerships with sustainability stakeholders.

Second, the European legislative framework obliges companies to comply with new standards of transparency and accountability. The Corporate Sustainability Reporting Directive (CSRD - Corporate Sustainability Reporting DirectiveDirective (EU) 2022/2464) requires companies to report in detail how they affect the environment, employees and the community. The EU Taxonomy Regulation (Regulation (EU) 2020/852) defines what constitutes a "sustainable" economic activity and makes EU funding conditional on compliance with these criteria.

Investors and financial intermediaries are regulated by the Financial Sector Sustainability Disclosure Regulation (SFDR - Sustainable Finance Disclosure RegulationRegulation (EU) 2019/2088), which obliges them to show how "green" the products they offer are. And this is directly reflected in the funding conditions for companies.

Ultimately, getting serious about sustainability also means minimising risks - from climate change and future regulation, to reputational risks or loss of customers. In European value chains, more and more companies are asking their partners for proof of ESG compliance. Lack of such evidence can mean exclusion from projects or crucial development funding.

So it's not just about obligations - it's about opportunity. Sustainability, looked at strategically, opens doors to investors, to European funding and to a stronger future for any business that wants to play the long game.

Sources of sustainable finance available for businesses

European Commission funding programmes

InvestEU - supports sustainable investment in infrastructure and innovation (https://commission.europa.eu/investeu-programme_en)

Just Transition Fund - supports regions in the climate transition (https://commission.europa.eu/strategy-and-policy/priorities-2019-2024/european-green-deal/finance-and-green-deal/just-transition-mechanism/just-transition-fund_en)

LIFE programme - grants for environment, climate and biodiversity (https://cinea.ec.europa.eu/programmes/life_en)

Horizon Europe - sustainability research and innovation (https://research-and-innovation.ec.europa.eu/funding/funding-opportunities/funding-programmes-and-open-calls/horizon-europe_en)

Some banking products from European commercial banks with presence in Romania

BCR (Erste Group)

Green loans for SMEs and energy efficient buildings (https://www.bcr.ro/ro/persoane-juridice/credite/credite-verzi.html)

Funding for renewable energy and electric mobility (https://www.bcr.ro/ro/persoane-juridice/credite/credite-investitii.html)

Sustainable bonds (through Erste Group) (https://www.erstegroup.com/en/sustainability/sustainable-finance)

ESG Consultancy Services (https://www.erstegroup.com/en/sustainability)

ING Bank Romania

Green Loans and Sustainability Linked Loans (https://www.ing.ro/imm/finantare/creditul-verde)

Funding for green projects: energy, agriculture, transport (https://www.ing.ro/companii-mari/finantare/credite-pentru-investitii-verzi)

Customer ESG rating (ING Group ESG score)(https://www.ing.com/Sustainability/Sustainable-business.htm).

Knowing the official definitions and accessing the available instruments means not only complying with the requirements, but also being prepared to access new sources of funding and strategic partnerships.