ADVANT Nctm, one of Italy's leading independent law firms, offers its clients an interdisciplinary ESG path to support business
“The ESG and sustainable finance regulation is complex and requires a holistic approach. The three components, environmental, social and governance, must be addressed as one”. Riccardo Sallustio, partner of ADVANT Nctm, the Italian law firm that is part of ADVANT, the pan-European organisation with 250 professionals, 72 partners and 5 operating offices in Italy and abroad, has no doubts: being sustainable is the main critical success factor and development driver for companies in the coming years. Sallustio is an expert in green and sustainable finance and lecturer at the Luiss Guido Carli University in the field of sustainable finance and a consultant to listed and unlisted companies and financial institutions: ESG criteria have an impact on the investment decisions not only of the big players but also of a growing number of SMEs, which need to be properly oriented. “These issues are constantly evolving and, moreover, are mainly based on non-binding rules. Rules which, nonetheless, become binding once adopted. The fact that they are laid down in non-binding documents should not be misleading: the introduction of European and national legislation is just around the corner. I recommend considering ESG as a new challenge for enterprises, which concerns everyone, from boards of directors to management functions and production units, and not just as something required by compliance”, he explained. The change has to be above all cultural. “Those who remain stagnant are likely to face, in the medium term, higher credit supply costs and an inability to access some capital markets. There is also the risk of being excluded from markets that are more sensitive to said issues, such as the US or northern Europe ones, and alienating various categories of consumers and other parties in the production chain”. The first essential step is to identify an ad hoc path for each company, choosing the right investments to multiply positive effects. “Board of directors should have a sustainable strategy, medium and long term objectives and start a process to carry out a double materiality assessment involving their stakeholders, evaluating how sustainability issues affect the business activity and how the company itself impacts on people, environment and ecosystems”.
SMEs AND THE PATH TO ESG
Italian listed companies have long been aware that key ESG factors can be associated with long-term corporate value. “They have gained significant experience, communicating to stakeholders and the market, in the non-financial statement in accordance with the GRI standards, the information related to the process to achieve the Sustainable Development Goals of the 2030 Agenda”. In the coming years, reporting will also affect unlisted medium-sized companies. “It can be of great help to investors, but it is essential that all company decisions are in line with the strategy decided by the board of directors. Those dealing with finance and planning need to start by understanding the European Taxonomy, the classification system for sustainable activities that will guide banks and investors in the near future, and respect its principles in the carrying out of the works and projects under the National Recovery and Resilience Plan”. Where do Italian entrepreneurs stand in this global race? “Sustainable development is the biggest opportunity for companies, banks and managers to renew our economy since the Second World War. Our big players in the electricity and hydrocarbons sectors, such as Eni, Enel and Snam, are considered as a pole of excellence for green and sustainable strategy and finance at a global level. For said companies, the energy transition was not a choice, but a necessity. The case of small and medium-sized companies is different, as they are generally still unable to seize the opportunities offered by the transition”.
CARBON NEUTRAL FUTURE
For the European Commission, sustainable finance must support the continent’s decarbonisation process. “It is not only about increasing green finance projects in the clean energy sector but also about helping companies in transition in sectors that by their nature have structural difficulties to decarbonise”. Sustainable topics are also central to ADVANT Nctm, which in recent years has undertaken important initiatives on mobility, the use of renewable energy, limitation of the use of plastic in the office and for social purposes, and assisted various entities on a pro bono basis. “The high level of knowledge on these topics enables us to create added value for clients. We have set up a multidisciplinary ESG group that assists companies, banks and other entities on various issues. For example, we are highly involved in sustainability financing and green financing. We have recently set up a study group on the European Taxonomy and its applicability to banking and insurance”. All data and information contained in this focus has been provided by the client, who guarantees its accuracy and truthfulness, for information purposes only.
