BBVA, leading the way toward a more sustainable future in Europe and globally

In a world that is becoming increasingly aware of the importance of sustainability and environmental responsibility, financial institutions play a crucial role in the transition toward a greener and more inclusive future. In this interview, Frank Hoefnagels, Head of BBVA CIB Europe, discusses in depth BBVA CIB's sustainability strategy in the region and explains how the bank is accompanying its clients in the transition toward a more sustainable future, which involves the entire value chain. From emission reduction goals in key sectors to the application of disruptive technologies, Hoefnagels shares valuable insights on how BBVA CIB is driving the decarbonization of the corporate world, while fostering a positive change in the industry.

• Sustainability is increasingly present in the business world. How does BBVA CIB integrate this factor into its business strategy?

At BBVA CIB, we have a holistic view of the business, where sustainability works transversally and plays a relevant role for many wholesale clients. Therefore, this is a key pillar of our strategy. We strive to integrate sustainable practices into all aspects of our business, from investment decision-making processes to providing advice to our clients and helping them on their own decarbonization efforts. We also help them by applying environmentally friendly technologies and methodologies and meeting environmental, social and inclusive growth goals, by setting measurable, traceable and science-based indicators. Our team of fully committed and dedicated experts on ESG-related matters fills a gap in the European investment banking market.

• What is the bank's value proposition in this regard?

We have a differentiating value proposition in the European wholesale banking space, which adds value to our clients and stakeholders. This end-to-end proposal is based on our unique capacity to combine the industrial reality of our clients with the regulatory and business commitments we have acquired as a financial entity, using the approach applied by rating agencies and regulatory bodies, while meeting the requirements set forth by investors. This combination allows us to achieve an in-depth understanding of our clients' needs and to offer end-to-end added-value solutions that not only involve companies, but also their suppliers and other actors who are relevant to the business.

• How does BBVA CIB promote sustainable growth for corporate clients?

Our teams develop products and services with a focus on a sector strategy. For example, we focus on emission-intensive sectors (energy, automotive, logistics and infrastructure, cement), which are the ones that have received the biggest impact from the 2030 decarbonization goals, and for which we develop solutions with a focus on energy efficiency. Each sector plan has a client specific transmission risk indicator that allows for personalized advice to be provided. This plan allows us to establish internal goals on an annual basis for each of these risks and to monitor them in a suitable way to assess the attainment of such goals. In addition, we have designed a specific business model to guide the progress in each sector, ensuring that all teams of the different business and risk areas participate throughout the process. Joint work and collaboration between teams has proven to be indispensable to achieve these goals. This helps ensure that the goals set forth correspond to a growth model that is viable over time, which helps protect the environment and takes into account the impact generated by growth across all levels (environmental, social and economic).

• How has the European financial sector's ESG performance changed over time? How have you adapted your strategy to this scenario?

For the past few years, we have observed how the financial industry is trying to make its contribution to the achievement of the Sustainable Development Goals, under different initiatives, such as the Net-Zero Banking Alliance, a coalition of banking institutions of which we are founding members and which aims to accelerate the decarbonization of the economy. We have developed some initiatives with this in mind, such as the ESG Screened Investments, monthly investment proposals in structured products with a selection process based on sustainability criteria available to clients since January 2023.

In the light of the above, we have also detected a growing interest in certain emerging markets, where we remain the preferred partner for any activity in the region. Our strategic presence in different markets, such as the Mexican and Turkish markets, gives us a unique advantage. We seek to respond to opportunities arising from geopolitical, economic and market-based developments, as well as to those based on relevant trends, such as Nearshoring. We are pioneers on this approach, although we recognize that there are challenges, such as strengthening client relationships and coordinating teams in each geography in a very efficient way to ensure the efficient implementation of tailored products and services for each client. 

• When it comes to applying sustainability to services, what technologies or methods do you use? What makes you different?

Our holistic approach also refers to how the bank helps achieve the decarbonization goals of its clients, using technologies in our own portfolio. This is explained better with an example: in some industries, we can incorporate some companies from our portfolio of venture capital investees that apply their know-how and technology to optimize carbon capture procedures at a specific stage of the production process, promote changes in commodities used or avoid the use of fossil fuels to generate heat and use clean or renewable sources of energy to produce certain materials, among other things. With regard to the methodology, we use the PACTA technique, which allows us to establish portfolio alignment goals and other goals based on the reduction of emissions in specific sectors. This is how we can measure the alignment of portfolios and define more realistic emission reduction goals. We are constantly searching for ground-breaking technologies that add value to decarbonization processes, and which we can escalate to all other geographies. We are a factory of ideas for our clients and for their businesses. We seek to fully understand their changing needs and deliver innovative financial solutions that drive and guarantee their long-term success.