Last Updated on Thursday, 11 August, 2022 at 9:49 am by Andre Camilleri
‘Incentivising green private investment is now pivotal‘
The future of the Maltese economy can be transformed by corporate investment in sustainable finance, explains Steve Ellul, a leading chartered financial analyst and government advisor to the Ministry for Energy, Enterprise and Sustainable Development.
Speaking to this newsroom, Ellul discussed the many barriers faced locally in reaching green EU targets and carbon neutrality. “A huge change in mentality is required even at a corporate level for us to make strides in the right direction; business models need to change. Quite simply, those that do not make such changes towards sustainability are running on a short expiry date.”
Ellul explained recent research conducted by the ministry had identified those Maltese companies that have incorporated and invested in sustainable business fare considerably better than those that have not. Such plans may include an effective ESG programme.
“Locally, there is still an element of confusion about ESG (Environment, Social, Governance), and CSR (Corporate Social Responsibility). ESG needs to be deeply ingrained into a company’s culture at the decision-making level and work as the compass of an entity. It is not the responsibility of a marketing team,” explained Ellul.
Environmental, social, and corporate governance is an approach to evaluating the extent to which a corporation works on behalf of social goals that go beyond the role of a corporation to maximise profits on behalf of the corporation’s shareholders.
“We are noticing that younger generations entering the labour market are seeking companies with a strong commitment to ESG values. Today, society has increasing expectations of the role businesses should play in tackling some of the world’s biggest challenges.
As such, corporate sustainability is about creating long-term value by implementing strategies that incorporate environmental, social and governance (ESG) dimensions and economic ones. The environmental pillar can include everything from effective water consumption, electricity use, pollution and waste. The social aspect incorporates everything from a company’s labour practices, investment in people, upskilling, health, and safety. From a governance perspective, topics such as gender pay equality, diversity, tax transparency and executive pay are discussed, forming an integral part of an entity’s sustainability plan.
Tackling this shift is no easy feat, explained Ellul. “We have many obstacles to overcome in convincing shareholders, various stakeholders and C-levels that this is the best way to do business, and not only that- future proof a business. Incentives, for example, need to target the equalisation of costs , for companies to switch to building a new office in a smart and greener way. It may cost more in the initial outlay; however, the running costs long term would be considerably less than a building that is not sustainably designed. All sectors can benefit from such a shift, according to Ellul. However, the construction industry can really transform itself with huge green potential.
“We all feel the construction sector is damaging the environment. Though, if we invested in sustainable and certified green buildings, we could entirely overhaul our landscape and create a greener Malta. Such projects have been a roaring success overseas.”
Such initiatives to pave the way for a greener Malta include the issuing of Green Bonds, which can finance net-carbon buildings by incentivising investors to invest in greener rather than conventional projects through a lower tax on interest paid on such bonds. This can be further supported by fairer taxing eco materials.
“We can meet these EU targets, but we need to make huge changes today, including primarily how and where we invest our money,” concluded Ellul.