FINANCIAL INNOVATIONS TO ACCELERATE SOLUTIONS FOR SMART MOBILITY
- 1 FROM THE MINUTES 2018
- 1.1 THREE FINANCING SOLUTIONS
- 1.2 AN INTANGIBLE ASSET BASED ON CORPORATE RESPONSIBILITY
- 1.3 PROJECT BUILDING UTOPIA
FROM THE MINUTES 2018
Getting approval for a funding project based solely on its financial viability is a thing of the past for many institutions. Today, established funding bodies such as BNP Paribas are issuing positive incentive loans tied to a project’s corporate responsibility instead of solely on its financials.
THREE FINANCING SOLUTIONS
Proceeds are used to finance or refinance social and environmental projects.
Environmental criteria are used to assess a project’s viability for funding.
ESG LINKED LOANS
Links loan pricing to a project’s adherence to environmental, social and governance (ESG) criteria, through third-party companies like Sustainalytics.
ASSESSING RISKS IN THE KNOWLEDGE ECONOMY
When looking at future risks, funding bodies consider:
Tangible assets: Fixed assets such as buildings and machinery
Intangible assets: Non-physical assets such as patents and brand value
According to the World Intellectual Property Organization, a shift to the knowledge economy in recent years has seen intangible assets grow from 20–80% of corporate balance sheets.
AN INTANGIBLE ASSET BASED ON CORPORATE RESPONSIBILITY
Experimental finance takes more than financial risk into consideration, it considers a project or company’s ESG risk, defined by how it manages these variables:
Environmental: How will climate change impact this company or project?
Social: How well will this company or project assume responsibility for social factors such as inclusiveness and local community impact?
Governance: What is the balance of power between this company’s CEO and Board of Directors?
PROJECT BUILDING UTOPIA
Movin’On participants were asked to imagine they were superheroes who had to come up with incentive financing for imaginary galactic cities.
STARPEEDIA’S DPS DRONE TRANSPORTATION SYSTEM
We have created the DPS drone transportation system. The world will be a better place because it will reduce CO2, increase mobility and put less stress on infrastructure. We impressed the galactic council by financing our project with a loan that links its interest rate to usage: the more the product is used, the lower the interest rate.
VELOCITY GREEN BUSES DELIVERY SYSTEM
We have imagined a smart delivery system that adds package delivery to city buses. Commuters can pick up their Amazon deliveries during their bus ride home. The world will be a better place because this project will:
→ Eliminate the need for a lot of trucks and last-mile deliveries
→ Encourage people to use the buses
→ Create a line of revenue for the bus company
We impressed the galactic council by financing our project with a green bond
ESG FINANCING IN ACTION
BNP PARIBAS’ $2 billion positive incentive loan to Danone
Banks led by BNP Paribas have added sustainability criteria to an existing $2-billion loan to the Danone French dairy group. Lenders will charge the company a lower margin on a credit line if it meets specific social and environmental targets.