ESG Transformation in the Financial System – 7th ECB Simulation Conference

Training Day is the first day of each ECB Simulation Conference for university students, where distinguished representatives of institutions, the market and academia share their knowledge and experiences with the conference participants.

The Training Day of the 7th ECB Simulation Conference was held at the Amphitheater of the Karatza Megaron of the National Bank of Greece on the 15th of December 2023 (the remaining days, 16-18 of December, were held at the Troias Building of the Athens University of Economics and Business). The examined topics of the Conference were:

  • Interaction of Monetary and Fiscal Policy.
  • Inflation: causes and tools for tackling it.
  • Monetary Policy: Its response and efficiency in a Perma-Crisis environment.
  • ESG transformation in the financial sector and its challenges.
  • Challenges of adopting a Digital Euro solution.

Here we present the remarks of the speakers who participated in the third and last panel that focused on the ESG transformation of the financial system and its challenges. In this discussion panel, we were honored to have Ms. Phoebe Koundouri, Professor of the Athens University of Economics and Business & Technical University of Denmark, President of the EAERE, Chair of the SDSN Global Climate Hub & Co-chair of the SDSN Europe, Mr. Dimitris Kazazoglou-Skouras, Group ESG Coordinator of the Alpha Services & Holdings S.A and the Ms. Kiara Konti, Partner, Climate Change and Sustainability Services Leader – Central, Eastern and Southeastern Europe & Central Asia (CESA) of the ΕΥ Greece.

The last panel of the Training Day of the 7th ECB Simulation Conference was opened by Ms. Phoebe Koundouri, Professor at Athens University of Economics and Business & Technical University of Denmark, President at EAERE, Chair at SDSN Global Climate Hub & Co-chair at SDSN Europe.
Ms. Koundouri commenced her speech by pointing out that the concept of Sustainability is not new. However, she pointed out that all policy regulations and laws, related to ESG and sustainability, have been introduced since 2015 and the Agenda 2030. At the same time, she mentioned that the sustainability issue is well-defined through the 17 Sustainable Development Goals (SDGs) that have been developed by the United Nations (UN) and formed the Agenda 2030.
Ms. Koundouri, then focused on Europe and the legislative actions promoting green transition and sustainable development, such as the European Climate Law, the EU Taxonomy, and the Corporate Sustainability Reporting Directive (CSRD). She highlighted that the future of Europe is digital and green and the crisis that we are experiencing is humanitarian and environmental. For the successful green transition and transformation, collecting the necessary data is vital because, as she said, “if we cannot measure it, we cannot manage it”. Nonetheless, she underlined that the sustainable pathways which are a mix of best practices and tools have not yet been fully developed.
Regarding companies and businesses, she stated that green transition should comply with the regulatory framework and be profitable for them. In closing her speech, she highlighted that 85% of the occupations of 2030 do not exist today. For successful sustainable transformation, innovation, acceleration, and constant reskilling and upskilling are needed.

The panel on the transformation of the financial system and ESG challenges continued with the remarks of Mr. Dimitrios Kazazoglou-Skouras, Group ESG Coordinator at Alpha Services and Holdings S.A.
Mr. Kazazoglou, stressed that financial institutions have a strong desire and an urgent need to adopt more sustainable practices because doing so will have a positive long-term impact on their profitability. He then pointed out that the main objective of the banks is to manage the climate risk of their clients and guide them towards more sustainable solutions while providing the necessary financial tools, as the clients are not always aware of these risks nor do have the necessary tools to address them. Therefore, in the near future, financial institutions will provide funding, incentives, and guidance for the development of sustainable investments, while potentially “penalizing” clients, who when investing, fail to take sustainable considerations, as they face higher risks.
Furthermore, Mr. Kazazoglou stressed that effective corporate governance (pillar “G”) plays a key role in the proper integration of environmental and social aspects. He then concluded by stating that the targets set by legislation to mitigate climate change are difficult to achieve based on projections but argued that “the more ambitious targets we set, the closer we get to achieving them“.

The Training Day of the 7th ECB Simulation Conference concluded with a presentation by Ms. Kiara Konti, Partner, Climate Change and Sustainability Services Leader at EY in Greece and EY Central, Eastern and Southeastern Europe & Central Asia (CESA).
Ms. Konti highlighted a significant gap in understanding the impact of ESG on business models, emphasizing that each industry is affected uniquely and possesses its distinct characteristics. She also stressed the need for a paradigm shift in the way profitability is evaluated, moving from a medium to long-term perspective and incorporating non-financial information when assessing business performance.
Moving forward, Ms. Konti underscored the importance of understanding the distinction between sustainable development and ESG, as they follow different approaches. Moreover, she mentioned that the challenges of the green transition exhibit three main characteristics: a) they are multidimensional, b) they operate systemically, i.e., one affects the other, and c) they are dynamic, evolving over time.
In concluding her remarks, Ms. Konti drew attention to the importance of connecting information, techniques, and knowledge from various departments, businesses, and sectors to address emerging challenges effectively.

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