BUT IT STARTS WITH GROWING AWARENESS
As Environmental, Social and Governance (ESG) factors become more critical in the lending process, businesses of all sizes and types are looking for ways to meet these criteria.
However, the reality is that ESG is not a one-size-fits-all concept. Different businesses will have different environmental impacts, and there is no single approach to addressing these impacts that works for everyone. Zagga’s approach recognizes that environmental impact is not solely a function of a company’s size, and that a “one size fits all” approach to ESG compliance is unlikely to achieve the desired outcomes.
One way in which Zagga is making a difference is through growing awareness of ESG in the lending process, looking specifically at things like greenhouse gas (GHG) emissions and pollution with the counterparties with whom we work. As a boutique lender, Zagga has a unique advantage in being able to be more selective with the property developers we fund. By placing greater emphasis on the environmental impact of a developer’s building works, we can ensure that our lending practices align with our commitment to sustainability.
This approach not only benefits the environment but can also enhance the financial performance of our lending portfolio, as research suggests that sustainable buildings can offer significant financial benefits such as lower operating costs and higher tenant demand.
By focusing on GHG emissions and pollution reduction measures in our lending practices, we are also encouraging our counterparties to adopt more sustainable building practices. This approach can create a ripple effect particularly as more lenders take on similar approaches. Developers will be incentivized to reduce their environmental impact, which can, in turn, help to create a more sustainable and resilient built environment. This is especially important in the property development industry, which has a significant environmental impact due to the carbon emissions and pollution associated with construction works.
Another area of focus for Zagga is pollution. Pollution is a significant environmental problem that affects all businesses, regardless of their size or industry. By simply growing awareness internally of our own corporate footprint, we can start to identify and address our own pollution impacts. Small steps such as swapping:
- disposable coffee cups for re-useable cups
- single-use plastic for sustainable options
- recycling waste
- switching to renewable energy sources
Zagga is helping to reduce our own environmental footprint.
What can be done and what needs to be done, are specific to each business, the sector it is in and the size of the organisation. It is worthwhile going through the process of identifying the ESG considerations that are relevant, material and can make a positive impact on the business and stakeholders.
Every positive action counts.
By showing that it is possible to make a positive environmental impact while providing lending services, Zagga is demonstrating that ESG compliance is not only achievable but can also be profitable. This can help to shift the lending industry towards a more sustainable future, where ESG considerations are integrated into lending decisions and businesses are incentivized to reduce their environmental impact.
ESG is not – and cannot be – a one-size-fits-all concept. All businesses can take a tailored approach to addressing their environmental impacts. By starting small and doing what we can, where we can, specific to our own business and sector, Zagga can help to create positive environmental outcomes and hopefully, be able to drive broader change in the lending industry towards a more sustainable future.
In terms of finance, ESG awareness refers to the increasing recognition and consideration of Environmental, Social, and Governance (ESG) factors in investment and financial decision-making. ESG awareness has gained significant momentum in the world of finance and investment as individuals, companies, and institutions increasingly acknowledge the importance of sustainability and responsible business practices.
ESG awareness recognizes that companies with poor ESG performance may face increased risks related to legal, regulatory, reputational, and financial issues. Investors aim to identify and manage these risks to protect their portfolios.