Message from the Chief Financial Officer
It is my pleasure to pen introductory remarks for this first edition of the European Stability Mechanism summary report on environmental, social, and governance (ESG) activities. Given the growing interest from investors, policy makers, and the general public in ESG matters, the ESM has taken the opportunity to compile this single destination report that takes stock of and presents ESG initiatives undertaken by the institution.
As many of our investors know, I have long been committed to the fulfilment of a more sustainable planet, something also at the core of the ESM’s mandate to safeguard euro area financial stability – because without a sustainable economy our citizens’ prosperity and financial stability are at stake.
Even without the Covid-19 pandemic or the current challenges to our traditional sources of energy, ESG is a driving force for a better future.
The ESM is doing its part and is steadfast in its commitment to ESG initiatives, proving active on many fronts. The ESM demonstrated this commitment in 2014, just two years after it was created, when it began investing part of its about €80 billion paid-in capital in green bonds.
Ever since, the ESM has been constantly developing and improving its ESG practices.
Since 2019, the ESM has published an annual carbon footprint report that measures the positive impact its ESG actions have on its internal operations.
In February 2020, the ESM signed the United Nations-backed Principles for Responsible Investment, thereby committing to integrating ESG considerations into its investment practices. Against this background, the ESM assesses the alignment of issuers with ESG criteria.
Most recently, the ESM appointed an ESG scorer for its investment portfolios. The ESM published the results of our ESG scoring in the Annual Report 2022 and, according to Moody’s methodology, was ranked very highly.
Other investors around the world also know the merit of ESG considerations. At the time of writing, the sustainable bond market has mushroomed in the past decade to €3 trillion. More than half of that was issued by borrowers in Europe, the Middle East, and Africa. The euro remains the dominant currency of choice for ESG bonds.
I hope that through this publication you will learn more about what the ESM is doing for Europe and the sustainability of our planet