Sustainable finance in action: when financial players transform their business model

Despite very different economic, social, geographical and geopolitical contexts, many financial institutions are adopting similar approaches to offering responsible financing products that are both practical and commercially viable. The importance of internal commitment is a common feature of all these institutions. “During the Covid period, First Rand decided to incorporate shared prosperity into its strategic framework. - For the management team, it was becoming increasingly difficult to say ‘we are prospering’ when our country was not”, explains Bhulesh Singh, Treasurer of South African group First Rand Bank. 

The bank therefore reviewed its priorities in order to contribute more effectively to the well-being of society, and “no longer just generate profit. We’re the custodian of an enormous amount of savings of citizens of the country. And then we also asked ourselves, “what would society want us to do with all these savings?”

In Costa Rica, Banco Promerica’s trajectory is based on a two-pronged approach: a strong commitment from senior management and the mobilisation of local green champions. As Michelle Espinach, Sustainable Bank Manager, Banco Promerica Costa Rica, explains: “We actually started engaging in green financing before there was a word for it. There was no taxonomy in our countries. Development finance institutions (DFIs) like Proparco helped us all the way.” The decision to sign up to the Net Zero Banking Alliance1 was a turning point: “The banks that signed this agreement took risks, because decarbonising a portfolio is a complex task. But a more responsible customer is also a more profitable, and therefore a more solvent one. Everyone’s wins.” Michelle Espinach calls on financial institutions to take a more proactive role: “We have to use the power we have to finance the economy for the common good. But if all banks decided to no longer finance the big polluters and certain polluting vehicles, that would change our country instantly.”

The banks believe that to sell the idea of sustainability, you have to embody it. Alex Mantua, CEO of ProCredit in Georgia, believes that, “If everyone in the institution understands what sustainability is, then you can sell it. Otherwise, you can’t break into the market.” This group, whose assets are mainly invested in small and medium-sized enterprises in the country, has opted to train its 450 employees every year since 2010: “Once is not enough, the process has to be repeated.” 

At the same time, the bank itself first deployed the solutions it wished to market. “In 2015 or 2016, when I asked colleagues to come up with a solar panel project for head office, the payback period was 25 years. We said, it’s not possible. Then the cost came down, and in 2019-2020 we re-evaluated the payback period. Once it had fallen to 9 years, we said now we’re going to do it.” Internal testing made the offer more convincing for customers, even though the IRR still had to be reduced to a maximum of 7 years.

By incorporating subsidies and reduced interest rates, ProCredit calibrated its model and launched an eco-loan for installing solar panels for SMEs, with an automatic approval process based on financial data and available surface area. It has also encouraged electromobility by first replacing its own fleet and then facilitating loans to facilitate access to it.

The Kenya Commercial Bank (KCB) group, a member of the Net Zero Banking Alliance, is demonstrating the same proactive mindset. As Eric Naivasha, Head of Sustainable Finance for the group, explains, KCB has initially identified three priority areas for action: transport, commercial real estate and commercial lending. “90% of our emissions come from lorries. We therefore developed a decarbonisation strategy per segment: two-wheelers, light vehicles, heavy goods vehicles, etc.” KCB’s trajectory forecasts that 60% of new vehicle financing will be for electric vehicles by 2040, with a total halt to loans for combustion engine vehicles after that. More broadly, the group is aiming for a 25% green portfolio within two years, representing USD 5-10 billion in investments. But Eric Naivasha stresses that success depends less on plans than on human expertise. “Until the client-facing person understands that strategy, then it just remains some nice piece of paper in our files. We need to train not only our staff, but also our customers, right down to the small farmer who is unaware that climate change is reducing his harvests.” For him, the transition must become a lever for opportunity and it concerns irrigation and greenhouses as much as the overall deployment of resilient agriculture.

However, for it to fully play this role, sustainable financing must be made accessible (locally), and this is another requirement common to all institutions. Sterling Bank’s actions in Nigeria illustrate this: in 2024, it financed the purchase of a fleet of 120 electric tricycles to support female entrepreneurship and mobility in Kano, a city with a population of 14 million. Abubakar Suleiman, CEO of Sterling Bank explains that, “the aim was to provide women with a means of transport that they not only own but have co-created, that is both economically viable and improves the local economy.” Today, the fleet, which is equipped with interchangeable solar-powered batteries, has clocked up a total of 450,000 kilometres. Abubakar calculates that “In three days, a driver can earn the equivalent of a minimum monthly wage. “All of this represents an investment of only USD 400,000 to USD 500,000. We have already avoided the emission of 26.1 tonnes of CO₂ with only 120 tricycles. Imagine the impact with tens of thousands; on a large scale? – and this won’t require any subsidies.”

And as the banks point out, scaling up requires rethinking objectives, organisations and operational tools. In the face of global challenges and their local contexts, the energy transition is not a mere formality: it is a requirement for staying in business as much as a lever for competitiveness.

But this requires new business strategies, careful risk management and structural transformation of the economies they finance. For Rachael Antwi, Head of Sustainability for Ecobank group, the bank’s record reflects its commitment to climate finance: “It’s not a question of compliance, but of survival – for the bank and for the economies in which we invest.” Ecobank has launched its own initiative, which includes portfolio analysis, a decarbonisation plan with a coal exit policy, and targeting sectors with high green potential. “Our goal is to mobilise USD 5 billion in six or seven years for climate finance.” This strategy is based on a continuous learning approach: internal training, data audits, and the creation of an ad hoc digital tool to analyse and monitor physical and transition risks. Rachael Antwi also highlights the difficulty (and importance) of obtaining reliable data in Africa and the need for an integrated reporting system.

Eric Campos, Crédit Agricole S.A.’s Chief Sustainability and Impact Officer, explains the complexity of sustainable development in a group with assets exceeding €1 trillion. “The challenge is not to green our assets, but to green the economy.” Since 2019, the group’s climate strategy has been supported by a Scientific Advisory Committee and the direct commitment of the Chairman and Chief Executive Officer: “Without support from senior management, don’t even try to implement a climate strategy. It’s absolutely impossible.”The challenge is twofold: maintaining financial performance while taking responsibility for carbon performance. Between 2020 and 2024, the bank increased its investments in renewable energies by 140% and reduced those in fossil fuels by 40%: “It is absolutely imperative that we turn climate constraints into business opportunities.”

Proactive and determined, financial players who are committed to climate finance and its concrete deployment still stress the advantages of being able to rely on development finance institutions (DFIs) such as Proparco. The testimony of Hawshi Shawa, Chairman of the Bank of Palestine Group, is very interesting in this respect: “Thanks to the catalytic effect of AFD and Proparco programmes, we have been able to lend more in a difficult context.” The Sunref I & II projects have financed solar farms ranging between 0.5 and 5 MW, and since 2018, more than USD 50 million in green loans have been granted to SMEs to improve their energy efficiency. “This illustrates the scale effect made possible with the right programmes: a risk reduction component, a subsidy component, and above all technical assistance to train our teams, raise customer awareness, and encourage them to adopt these solutions,” he adds.

Beyond that, regardless of their location, all banks support innovation (through venture capital funds, acceleration hubs, etc.) by increasingly encouraging start-ups committed to sustainable development. The aim is to unleash the entrepreneurial dynamism that is often stymied by traditional banking processes, in order to further accelerate the battle against climate change and give concrete impetus to sustainable development.