In the second of this two-part article, Hong My Nguyen (pictured), of the Natixis Green & Sustainable Hub, and Pierre Moretti, global head of new products & innovation equity and head of indices at the bank, talked to SRP about the importance of sustainable investing, the success of the bank’s green bond campaigns in France and Belgium, and the ambition to go beyond environmental.

Sustainable investing

Hong My Nguyen: Sustainability is a must. I would even go further, sustainability has become a key pillar of the New Dimension strategic plan for Natixis as a bank and also for our partners. Our initial strong franchise in renewable energy financing has been extended and developed over the years to a much broader green & sustainable solutions spectrum: from financing solutions to climate-related and ESG investment solutions.

Three years ago, we went a step further. We are very proud to be the first bank to apply what we call the green weighting factor in our balance sheet. It is our in-house capital allocation mechanism providing for an adjustment in the analytical RWA [risk-weighted assets] used when allocating financing. That means that every single finance factor will have a colour, from dark brown to dark green. This initiative is a real milestone, as we are the first investment bank to introduce such a unique and granular set-up.

Green & Sustainable Hub

Hong My Nguyen: On the product and investment solutions side we are very active by launching new green and sustainable products. To support these initiatives we launched in July 2017 a new department, the Natixis Green & Sustainable Hub. The hub’s purpose is to develop CIB’s green and sustainable finance activities in Europe, but also in the Asia Pacific and Americas platforms.

It has two main missions: design and steer product innovation to generate and develop ‘green’ revenues and to enhance syndication and distribution bases and promote a ‘green originate to distribute’ business model.

Institutional and retail investors

Hong My Nguyen: So far, green financing, for example financing renewable energy projects, has been limited to institutional investors. But now with the new tools we have launched, which are innovative and very powerful, retail investors have access to ‘green financing’ too.

What we have seen with the recent campaigns in France and Belgium – where structured notes include a green funding component – that this type of offer is very successful and retail investors are eager to have access to concrete and impactful investment products. They want to have a fully consistent product of tangible green financing wrappers and through a green climate index.

Pierre Moretti (below): The capacity we bring to the market supports growing demand from retail investors. The green bonds on which we have been working and which are now available to retail investors, but also from a strong conviction to drive retail investors towards sustainable solutions.

Hong My Nguyen: The impact reporting of the green bond is key in our commitment to transparency. We publish annual reports that include details on allocation and impact of the programme. We provide the split by geography, by technology, as well as the quantity of green electricity produced and amount of CO2 avoided each year.

Green underlyings

Hong My Nguyen: Our ambition is to promote our existing range of climate indices as we do believe that energy transition indices are the right answer to the market expectations as well as climate issues we are facing.

Looking forward, the Green & Sustainable Hub is collaborating with our financial engineering team to develop other offers. We have the capacity to address the specific needs of each partner with tailor made solutions, which fully fit in with what the market needs today. My conviction is that we will go beyond climate, and beyond environmental. The United Nations has provided us with a set of tools, the Sustainable Development Goals, which are very powerful to help develop new products with more relevant and measurable impact assessment.

So there is client demand, there is action from financial institutions, but we should not forget the active presence of the regulators, who are allowing the fast development of the sustainability products for retail investors in particular.

Click the link to view the Natixis green bonds linked to the Euronext Climate Orientation Priority 50 EW Decrement Index distributed via Crelan, Nagelmackers and Groupama.