BOV is doing everything it can to integrate sustainability into its product offering, which it believes can be used to leverage the significant investment required to effect the shift to a less resource-intensive economy.
During the presentation of the bank’s presentation of its results for the first quarter of the year, BOV CEO Kenneth Farrugia said that all stakeholders “must appreciate that the transition to green development entails a cost, and we are therefore trying to facilitate investment in this area.”
He was following on from comments made by BOV Chairman Gordon Cordina, where he defined sustainability as a trajectory where there is no need for “dramatic change”, since the required change is implemented in small, thoughtful steps.
Mr Farrugia pointed to new offerings to the market by BOV, like a new loan product that allows businesses to finance green energy investments carrying an effective zero per cent interest rate.
“This is markedly different from traditional loans. Through such products, we want to induce the kind of behaviour that is necessary for our long-term aims, by encouraging customers to implement green solutions.”
The BOV CEO added that the increased regulatory effect of environmental, social and governance (ESG) considerations will mean that these will have to be included when determining the risk-weighted cost of any product, and will therefore have an effect on pricing.
“Therefore, these will also guide our future policies and actions,” he said.
He explained that BOV, as the largest and most systemically important bank in Malta, is “uniquely placed” to look at the overall macro scenario.
Responding to a question on BOV’s position with regard to the funding of high rise development – following APS Bank CEO Marcel Cassar recent comments on the subject – Mr Farrugia said that the financing of relatively large projects is a crucial element in the country’s development.
“This is not only because of job creation and economic growth, but also because large projects serve as an opportunity to forward ESG objectives.”
“It’s all about building a strong basis to make sure that the vision we have of a sustainable economy becomes a reality.”
He has been replaced by Frank Heinänen, with effect from the start of June.
As COO, she will be responsible to build out the company’s capabilities.
He officially begins the new role on 1st July 2023.
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