Not only the trees are flourishing. Green credits on the rise.

Green loans and their significance for banks and companies - a review

The European Union has set itself ambitious climate goals with the signing of the Paris Climate Agreement and the Green Deal. Achieving these goals requires constructive interaction between the real economy and the financial sector in order to mobilise sufficient capital for sustainable activities. Banks and credit institutions face major challenges, as they play a key role in the transformation of the economy.

There are a number of financial instruments available to provide the necessary financing for sustainable and climate-friendly activities, such as green loans. A green loan is a form of financing that allows borrowers to use the proceeds exclusively to finance projects that make a significant contribution to an environmental goal. A green loan is thus similar to a green bond in that it raises capital for green projects.

The importance that green loans already have for banks and companies was discussed in a webinar held on 4 April 2022 by ÖGUT on behalf of the Ministry of Climate Protection and in cooperation with the Ecolabel team at VKI.

Josef Behofsics welcomed the participants to the online event on behalf of the Climate Protection Ministry and handed over to Susanne Hasenhüttl from ÖGUT, who led the event. Katharina Muner-Sammer, ÖGUT, started with an introduction to the topic of green loans. Raphael Fink, Verein für Konsumenteninformation, explained in his following remarks the criteria of the Austrian Ecolabel for sustainable financial products (guideline UZ49) in the financing sector. The Austrian Ecolabel for Sustainable Financial Products has been the standard for sustainable financial products in Austria since 2004. In the meantime, more than 200 financial products have already been certified with the Ecolabel. Since 2020, green bonds and sustainable current accounts can also be awarded the Ecolabel; this option does not (yet) exist for green loans. According to Raphael Fink, however, green loans are the next sensible step in the product group expansion.

Reinhard Friesenbichler, Managing Director of rfu, put the bank balance sheet at the beginning of his presentation. He sees the "Green Pool" as the basis for Green Loans and dealt with the question of whether there is a "real" green project shortage or whether the problem lies more in the allocation (in terms of content, time) in the coverage requirement.

Andreas Hauer, Head of Sustainable Finance Corporates, Erste Group Bank, then gave his view. He underlined the important and long-term role of sustainable financing through the increased inclusion of sustainability structures in loan agreements. In 2021, the Green & ESG loan volume in the Western Europe region amounted to USD 222 billion. The last presentation by Thomas Possert, Head of Group Accounting at Energie Steiermark AG, focused on the different requirements of the individual instruments of "green financing" and gave an insight into the company's green loan transaction in cooperation with ERSTE Bank.

At the end of the webinar, Josef Behofsics expressed his sincere thanks to the speakers and the numerous participants of the event.

The individual presentations and the recording of the webinar are available for download on the ÖGUT website:

Written by Susanne Hasenhüttl, ÖGUT