Green financing survives covid threat but challenges lie ahead

Despite fears that Covid would commandeer the agenda for finance, pushing out ESG criteria and financing, from a finance perspective it has actually brought them into clearer focus.

Mischcon de Reya partner, real estate debt advisory, Omega Poole, said that we will continue to see the increasing incidence of green and sustainability-linked loans.

“We’ve seen a four-fold increase of such loans that have been published in the market since 2017, I think we’re going to see more of that,” she told Richard Betts of Real Asset Insight.

But she added that it is not just the fact that there are new products, there is a change in the way that ESG has become a factor that all lenders are starting to look out for in all new loans.

One result is that assets can fail the “ESG test” and struggle to get financing. “We’ve already seen that outside of real estate.”

“And I suppose one final concern for lenders is making sure that the covenants that they’re crafting, the so-called green covenants, are genuine substantive and measurable.”

Obviously, they want to avoid a risk of green washing, she added.

Click on the video above to watch the full interview or listen to the podcast below.