Antoni Ballabriga: Sustainable Finance: Embedding Environmental and Social Impact in Decision-Making

Dec 6

Written By sara .

The financial sector has historically prioritised decisions based on risk and return. However, sustainable finance is igniting change by requiring banks to embed environmental and social impact into their decision-making processes. “This means we have to change how banks operate and how the financial sector works. It’s really a transformative approach—it's both exciting and challenging,” points out Antoni Ballabriga, Global Head of Sustainability Intelligence and Advocacy at BBVA. This shift not only redefines traditional financial criteria but also paves the way for a more responsible and forward-thinking industry that prioritises long-term societal benefits alongside economic gains.

Ballabriga’s perspective on sustainability, finance and systemic change has been profoundly shaped by his educational experiences with organisations such as The Aspen Institute, his entrepreneurial journey, and an impressive international career involving collaborations with prestigious institutions including the United Nations Environment Programme Finance Initiative (UNEP FI), the European Banking Federation, the European Commission, and the World Economic Forum, among others. These experiences have reinforced his commitment to driving sustainable practices within the financial sector.

After years of working on BBVA’s transformation to better integrate sustainability into the business strategy, Ballabriga is pleased with the progress achieved. The Sustainability Area consistently operates as an innovation centre, continually developing new tools and methodologies aimed at enhancing capabilities and integrating sustainable practices into its processes.

Sustainable finance plays a vital role in achieving the policy objectives outlined in the European Green Deal, as well as the EU’s international commitments concerning climate and sustainability goals. By channeling private investment into the transition to a climate-neutral, climate-resilient, resource-efficient, and equitable economy, it complements public funding. In this context, the European Union Sustainable Finance Disclosure Regulation (SFDR) requires financial institutions to disclose sustainability information to help investors make informed decisions.

For Ballabriga, while the taxonomies and disclosure requirements that raise supervisory expectations on banks are necessary, “this alone cannot change the game.” He stresses the need for the right ambition from public governments and effective industrial climate policies to provide certainty to companies. The entities that invest in decarbonisation and nature are primarily companies, he explains, adding that governments, households, and SMEs also play a pivotal role in guiding investment decisions by understanding the economic rationale behind those choices.

To ensure these decisions have economic viability, Ballabriga outlines two essential preconditions and one key enabler. The first precondition is the establishment of a supportive policy environment, crucial for promoting the right incentives and streamlining processes to facilitate investments. This framework must provide the predictability that companies need to invest with confidence. The second precondition involves advancing technology to help reduce the green premium associated with sustainable initiatives. Ultimately, while policy and technology are vital components, finance acts as the enabler, supplying the necessary funds and resources to companies, institutions, and households for these vital investments.

Regarding the EU regulation related to sustainability in the financial sector, Ballabriga points out that “we’ve been trying to solve everything, everywhere, all at once” and suggests rethinking our approach to these challenges. Instead of overcomplicating matters, he advocates learning from measures that have already been implemented.

Another important point is the need for international convergence or harmonisation. “In Europe, we want to be the first ones regulating, but for global companies we require a greater degree of harmonisation and alignment across different regulations,” he explains. Without this alignment, EU companies encounter significant operational and competitive burdens, leading to disparities between European companies and their global counterparts.

When discussing the challenges organisations face in embedding sustainability into their business strategies, Ballabriga identifies three key elements: a mindset gap, a knowledge gap, and organisational structure.

From a mindset perspective, he highlights a fundamental challenge in how leadership perceives the impact of social and environmental factors on reshaping the competitive landscape in which companies operate. It is essential to recognise that sustainability and social impact should be viewed “not only as a compliance issue but also as a business opportunity”,he adds.

Examining the knowledge aspect, Ballabriga emphasises that sustainable finance brings new concepts and areas of expertise, which can create a skills gap. Consequently, it is crucial for companies to invest in upskilling their employees, ensuring that sustainability is integrated as a cross-cutting priority rather than being confined to a separate sustainability department.

One of the biggest challenges is rethinking how companies are organised and how sustainability actions are integrated throughout their operations. An example of this is BBVA's internal restructuring to embed sustainability in its business strategy, which includes having the chair and the CEO fully supportive of the sustainability journey. While structure is crucial, Ballabriga emphasises that “the key to success lies in how the various departments take ownership of the sustainability agenda.”

Ballabriga believes that substantial progress has already been made in fostering change within BBVA, yielding tangible results. Looking ahead, he envisions a future where the bank continues to evolve to fully integrate this “third dimension”—sustainable and social impact—into all its operations, addressing climate issues, nature, and inclusive growth from a holistic perspective.

Having led this transformative process at BBVA, he expresses a strong desire for the bank to take a prominent role in contributing to systemic change within the financial sector as a whole. He acknowledges that this ambition cannot be achieved by just a few banks; it requires building partnerships within the financial industry and collaborating to drive meaningful change. As Ballabriga affirms, “this is a long journey that will come to an end when the last one crosses the finish line.”

Antoni recommends

Books:

The Power of Unreasonable People: How Social Entrepreneurs Create Markets That Change the World, by John Elkington and Pamela Hartigan

Net Positive: How Courageous Companies Thrive by Giving More Than They Take, by Paul Polman and Andrew Winston

Speed & Scale: A Global Action Plan for Solving Our Climate Crisis Now, by John Doerr

How can companies be part of the solution?

Adopt a Holistic Approach: Companies should view sustainability as a core component of their business strategy rather than a separate initiative or compliance requirement. By integrating sustainable practices into all aspects of operations, companies can create a culture of sustainability.
Enhance Employee Skills: Invest in training and upskilling employees on sustainability concepts and practices. This helps bridge the skills gap and enables staff to incorporate sustainability into their roles effectively.
Foster Cross-Department Collaboration: Encourage various departments to take ownership of sustainability initiatives, ensuring that sustainability is a shared responsibility across the organisation. This can improve overall effectiveness and innovation.
Develop Strategic Partnerships: Collaborate with other companies, governments, and organisations in the financial sector to share knowledge, resources, and best practices. Building alliances can amplify efforts and drive systemic change.
Engage in Transparent Disclosure: Comply with regulations, such as the EU Sustainable Finance Disclosure Regulation (SFDR) and EU Corporate Sustainability Disclosure Directive (CSRD) to provide clear and accessible sustainability information. This transparency empowers investors and stakeholders to make informed decisions.
Advocate for Supportive Policies: Actively engage with policymakers to advocate for regulatory frameworks that promote sustainable finance and investment. A supportive policy environment is essential for creating stability and encouraging investment in sustainable initiatives.
Focus on Long-Term Impact: Plan and implement initiatives that not only address immediate sustainability challenges but also contribute to long-term environmental, social, and economic goals. Prioritising long-term impacts helps build resilience and sustainability.
Measure and Report Progress: Establish metrics to assess the impact of sustainability efforts. Regularly report on progress to stakeholders to demonstrate accountability and commitment to sustainability goals.
Embrace Innovation: Continuously seek innovative solutions and practices that enhance sustainability, whether through new products, services, or processes. Innovation can drive the transition to a more sustainable business model.