Sustainable Finance: Vital Momentum for Climate Protection

How can we finance the climate and energy revolution? How can we promote social responsibility? And how can we succeed in steering the flow of private-sector capital toward a sustainable future? The answer is: through sustainable finance, a key lever for healthy economic development aligned with social, ecological and governance goals. Examples from wienerberger show what can be done.

The trend toward sustainable investments is reinforced by new legal requirements, strong demand from investors and increased public awareness. According to Bloomberg, by 2025 ESG assets could exceed 53 trillion US dollars, one third of all global assets under management. Private-sector capital is needed to achieve sustainability goals ranging from the targets in the Paris Climate Accords to the United Nations’ Sustainable Development Goals (SDGs). Sustainable finance is thus becoming a key lever alongside public funding.

This development is being spurred by the EU Commission’s European Green Deal and the Taxonomy Regulation, which classifies sustainable financial products. In addition, the Corporate Sustainability Reporting Directive (CSRD) has broadened the scope of the rules for corporate sustainability reporting. Additional standards, criteria and labels are under development. The EU is thus driving the transition to a competitive, resource-efficient and climate-neutral economy. The aim is to boost sustainable technologies, projects and businesses.

Sustainability is a pillar of wienerberger’s corporate strategy. Shareholders invest in a company that stands out for its values and clear commitment to the environment, social responsibility and good corporate governance. For more than 200 years, wienerberger’s mission has been to improve people’s quality of life with smart building material and infrastructure solutions. The focus on decarbonization, the circular economy and biodiversity set out in the Sustainability Program is a reflection of the company’s support for the European Green Deal for a climate-neutral future.

wienerberger has been listed on the Vienna Stock Exchange since 1869, making the company one of the oldest continuously listed companies in Austria. To live up to its responsibility to people and the environment, wienerberger pursues ambitious ESG targets across all business areas and along the entire value chain. As a member of the UN Global Compact the group is driving the implementation of SDGs in business. wienerberger fulfils the highest international standards of governance and since 2012 has published non-financial key performance indicators in accordance with the requirements of the Global Reporting Initiative.

Growing numbers of investors are choosing sustainable investments. This can promote green growth, create jobs in forward-looking industries and drive change in economic values. In return, companies benefit from financing for sustainable projects.

For investors, the yield from sustainable financial products is at least as good as that from conventional investments. Moreover, in the long term, the former are more resilient. A study by the NYU Stern Center for Sustainable Business indicates that companies whose strategy is focused on ESG issues have a high quality of management and better yields. 

wienerberger too has broadened its sustainability focus to include corporate finance. When it refinanced a corporate bond in December 2019 the company for the first time ever took out a bank loan with a sustainability component based on the ESG rating of the sustainability rating agency EcoVadis. Improvements in the wienerberger Group’s sustainability performance, result in lower financing costs. The 170 million euros loan has an eight-year term and was implemented with five long-standing partner banks with refinancing by Oesterreichische Kontrollbank.

Since then the company has favored sustainable forms of bank financing. Thus in 2021, it took out a further nine-year syndicated loan for 250 million euros with sustainability components linked to the Group’s ESG rating by EcoVadis.

In future, wienerberger plans to incorporate its sustainability strategy even more directly into financing instruments when covering capital requirements. One way of doing this will be to use green capital market instruments such as green bonds. The proceeds of these bonds are used for ambitious green projects, such as the inhouse generation of renewable energy. wienerberger also seeks sustainability-linked financing, where the interest rate is directly linked to externally validated (verified) sustainability performance (such as compliance with a decarbonization pathway).

Some sustainable financial instruments such as ESG-linked loans are tied to ESG ratings. These external ratings rank companies based on their sustainability performance. This is not only useful when evaluating investments. It enables the company’s themselves to regularly evaluate their ESG measures and identify strengths and potential for improvement. Companies that do not act sustainably risk no longer being able to finance their projects or only being able to do so on poor terms.

External ratings and recognitions confirm wienerberger’s sustainability strategy and pioneering role in the building materials industry. In 2022 wienerberger received the highest rating AAA for the fifth time in a row from MSCI, the biggest provider of sustainability analyses. The ESG Corporate Rating of Institutional Shareholder Services (ISS ESG) again classified the company as a Prime Investment. In the same year, wienerberger for the first time submitted climate data to the Carbon Disclosure Project (CDP) and was awarded a “B”- the second-best rating that can be obtained.

Another example is the company’s EcoVadis ESG rating that has been updated each year since 2019. In 2022 the sustainability agency awarded wienerberger a gold medal – the company is among the top 4 percent in the building materials industry. Although wienerberger had continued to improve in all areas, the company’s sustainable procurement stands out in particular. In this area, it performed better than 99 percent of the industry.

Sustainable financing is enjoying growing popularity. Standardization and ratings are helping to make investment conditions even more transparent. wienerberger too is increasingly relying on sustainable financial products, proving that economic growth, innovation and ambitious ESG targets complement one another. Investments in sustainability are investments in the future.