Sustainability: From scepticism to survival

There was a time when the question that followed claims of sustainable development was, “isn’t it an oxymoron?” Now, though, MCB Head of Mauritian and Regional Corporates, Aldo Sydonie, argues that “the question is no longer whether development can be sustainable but whether development can be anything but sustainable”.

This conversation – about how the perception of sustainability has evolved from scepticism to become one of survival – was at the heart of the latest episode of MCB Talk, “Sustainability: From scepticism to survival”, with guests Vanessa de Speville, MCB Group Head of Sustainability, Reputation and Engagement, and Aldo Sydonie.

If the premise of the podcast discussion was whether banks can be taken seriously when they make claims of sustainability – or whether sustainable development was indeed a contradiction in terms – it quickly became evident that the question itself was redundant. Climate Change had become so evident that whether to take companies' claims of greening their activities seriously had become a moot point.

Vanessa and Aldo both agreed that there was no longer any doubt that climate risks have today become financial risks, giving banks like MCB no other option than triggering “difficult conversations” with their clients, urging them to accelerate their transition towards a more sustainable model.

It’s about staying in business in the medium to long term, adds Vanessa. “And it’s not just about climate; it’s about loss of biodiversity, water scarcity, etc. How does a textile factory operate when there’s no water? All this will have a major impact on our clients’ activities and ultimately on us as well. So, this is a preparation process”, said Vanessa, adding that the ones who will survive will be the ones who will be prepared for what’s to come.

Aldo reveals that his team is already having those discussions with clients and that a number of the country’s largest companies have realised they risk driving their business to the ground if they don’t start future-proofing their model, contrasting the current situation to the one that prevailed not so long ago.

“Ten years ago, sustainability was a topic that was completely remote to our clients. Today, it is at the core of their consideration in any business decision they will make; it’s being discussed in boardrooms, in investment committees, on ESG committees”, says Aldo.

The same is true for MCB’s boardroom, adds Vanessa. “Today, sustainability is being discussed everywhere, whether at the Bank of Mauritius, with our clients, with the press, with everyone. It’s everyone’s business”. In addition to embedding ESG principles in its operations and credit cycle, the bank has a board-level governance structure where sustainability matters are discussed.

Which is not to say that greenwashing has stopped being an issue. In fact, Vanessa calls it “one of the biggest threats facing companies today”, adding, however, that it didn’t mean that companies had to stop communicating on their green commitments. “Communication can be a powerful tool for any organisation trying to accelerate their journey towards a more sustainable development”. It’s helpful, she says, for CEOs to set the ambition and for companies to have clear targets.

For instance, she adds, when MCB finances “the fight against climate change, be it in terms of adaptation, of avoiding beach erosion, trying to accelerate the energy mix agenda for the country, boosting the local economy, local production, these are great stories that can inspire others”.

MCB’s sustainable offering is grounded in the bank’s Sustainable Finance Framework, a dynamic document that defines what MCB considers sustainable. It encompasses green and social topics and serves to give credibility to the bank whether it’s with its clients, investors, the market at large or with DFIs when it needs to raise money.

The framework is set to evolve as the bank’s green ambitions grow and the pressure from Climate Change become stronger, Vanessa adds.  

But clients need to come on board. Both agree that the time has come for banks to go one step further when talking to their clients. “It's for us to understand what the main challenges of our clients are, add to the conversation and move the agenda forward”, stresses Vanessa. Sustainability is measured by the ESG toolkit – Environment, Social, and Governance, and all three criteria need to be considered as businesses shift their focus from business as usual to one that’s sustainable. Aldo feels that equal attention should be given to the Environment and Social aspects.

Vanessa agreed, saying the social aspect needs to become part of the banker's conversation with the client. “For instance, if we’re financing a PV plant, we should ask the client about the neighbouring communities – is it near a village? Are there planters around? Could we turn the project into an agri-PV, for instance? Is it worth checking if the communities can get something out of the project too?”, she added. 

The governance aspect should not be neglected either, Vanessa cautions.

“Governance is such an important aspect of the MIFC because if we are to attract investors, we need to be completely aligned in terms of compliance with international standards”.

Both heads agreed that although there was a disconnect between what scientists expected from Climate Change and what the financial ecosystem was prepared for, the narrative is moving in the right direction, albeit not fast enough. 

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