Focus ESG

Environmental Social Governance as a factor for risk mitigation

Aryza and ESG

At Aryza, we follow a holistic ESG (Environmental, Social and Governance) framework aligned with the UN Sustainable Development Goals. We are committed to having a positive impact on our workplace, the environment, governance and the marketplace.

Marketplace - Aryza is committed to delivering the best results by ensuring that the products and services we provide benefit individuals, SMEs and suppliers.
Workplace - We strive to create a positive working environment for our employees and improve diversity.
Community - We aim to support regional economic growth and make a meaningful and effective social contribution.
Environment - We are committed to identifying and improving the impact of our operations on the environment.
Governance and leadership - We take responsibility for our decisions by applying regulatory and operational best practices to identify and manage all material risks.

How UmweltBank implements ESG

Erik Mundinger, Sustainability Manager at UmweltBank, on the challenges of implementing ESG

Which ESG measures are particularly important for UmweltBank?
Erik Mundinger At UmweltBank, the focus is not on individual ESG measures. Rather, we take a holistic view of sustainability within the company. Sustainability goes far beyond sourcing green electricity or using printer paper sparingly, for example. ESG belongs in the core business - we have been convinced of this since our foundation 25 years ago. At UmweltBank, this applies in particular to lending, but also to our own investments and the securities business. All of these business areas are reviewed on the basis of strict sustainability criteria.How can you imagine this audit?
Erik Mundinger This can be illustrated wonderfully using the example of a construction loan. First of all, we generally check whether the project is in line with our positive and exclusion criteria. Next, we request extensive information on the sustainability of the project with a questionnaire. This data flows into our 'Environmental Rating Construction Financing', which we developed together with the German Sustainable Building Council. We use it to evaluate the ecological and social criteria of the project - from energy efficiency and the integration of renewable energies to accessibility. Achieving one of three creditworthiness classes is a prerequisite for a financing commitment. The following applies: the more sustainable the project, the lower the interest rate.How far have you got with the implementation? What steps still need to be taken?
Erik Mundinger The term sustainability is always changing. That is why we are also constantly developing in this area, whereby we naturally want to be pioneers. Basically, we at UmweltBank - as our company name implies - are very sustainable. Of course, it is an advantage for us that we have anchored sustainability in our corporate strategy since our foundation 25 years ago. This runs through the entire company - from core business to personnel policy to office equipment. In contrast to many other banks, we do not have any legacy burdens on our balance sheet, such as loans for armament companies, coal-fired power plants or animal fattening facilities.Many companies complain that the EU taxonomy makes implementation difficult.
Erik Mundinger First of all, we find it regrettable that natural gas and nuclear power are also considered sustainable under the EU taxonomy. We at UmweltBank see it differently and will continue to consistently exclude these business areas in the future. In addition, we see major challenges, especially in the processes and reporting. Measuring the impact of the data is sometimes very difficult, and a lot is demanded of the companies here. In some cases, however, the data material is simply lacking: it is sometimes very difficult to find out whether a day care centre for which we implement real estate financing meets the goals of the Paris Climate Protection Agreement.People often complain that the implementation of ESG focuses on the "E" - what does Umweltbank do in the "S" and "G" areas?
Erik Mundinger We also have the topic of social taxonomy on our radar. Social criteria for the subsequent use of the property are also included in our environmental rating, which we mentioned earlier. For example, we give a positive rating if properties are offered at reduced rent prices.As far as the "G" for governance is concerned, this is the basis for us anyway, without which the rest cannot function.

ESG activities of the Umweltbank

Women in management positions: 45 %
Supervisory board: 50 / 50 men and women
Board of directors: 1 woman, 2 men
No sales targets --> no incentives for wrong advice
High priority: lifelong learning, family-friendly, work-life balance
Housing neighbourhoods with rents below local level, creation of social housing
Housing projects with community character: building groups, etc.
Corporate governance geared to sustainability
Many more examples and information in the sustainability and annual report

Companies are no longer allowed to put their measures for sustainable business practices on websites or print them on labels for advertising purposes only. They must fulfil fixed criteria and be measured and evaluated against them. The EU's ESG regulations and the Supply Chain Act, which will come into force in Germany in 2023, increase the pressure to act.

Mo Ceka, CEO Wa-Ka Credit Solutions GmbH

ESG quotes

ESG is an absolute hot topic. Financial institutions are now under greater pressure from investors to take care of this. Sustainable products are also an absolute megatrend from the customer side, especially in the younger target groups. The challenge is to make ESG even more measurable.

Kevin Goßling, CEO / Co-Founder Fusionbase

ESG criteria are becoming increasingly important in the corporate sector, also with regard to sustainability and liability issues. ESG questions will be asked more and more frequently in the future and will also increasingly affect smaller companies. In Belgium, 1,000 companies already publish their ESG results, which is already made mandatory by EU directive. From my point of view, the "E" in ESG is the most important new factor. As for the "S" for social: in a tight labour market, companies should, out of self-interest, ensure that their employees are happy.

Ludo Theunissen, Prof. Credit Management

ESG affects the entire credit process. ESG data
collection is a focus for many banks, but success is decided at the end of the chain - from the
customer and bank perspective. Efficient
processes on an end-to-end platform, from loan
application to IFRS 9 risk provisioning and
workout, must be a strategic priority - let's not
repeat the mistakes of the
past.

Sven Ludwig, Partner EY ifb

Banks need a good ESG strategy that focuses not only on costs but also on opportunities. The consistent implementation of regulatory requirements, the introduction of sustainable products and more transparency towards customers and investors are the key success factors.

Christian Piller, Product Director DACH Banking Aryza Europe

Legal requirements are putting increasing pressure on companies to integrate ESG risks into their risk management systems. In doing so, companies encounter a variety of technical and cultural challenges in the implementation. This holistic view of ESG risks strengthens the future viability of every company in the medium term.

Martin Grasse, Product Owner Risk & Impairment

ESG is both a burden and a challenge. The pressure on SMEs in particular to implement ESG in the current already tense situation, but also to implement the Supply Chain Duty of Care Act from 1 January 2023, is great. Banks and SME financiers in particular pay attention to a "green" portfolio. In case of doubt, companies will no longer receive credit approval.

Patrik-Ludwig Hantzsch, Head of Economic Research Creditreform