Milbank Global Project, Energy and Infrastructure Finance partner Allan Marks discussed the increasing importance of sustainability, key considerations for companies and investors, and the implications of the COVID-19 pandemic for companies’ long-term sustainability strategies in the October-December 2020 issue of Risk & Compliance Magazine.
“Sustainability has been a critical focus for companies and investors alike, especially of late. For example, sustainable funds or other investment vehicles that market an awareness of environmental, social and corporate governance (ESG) issues have experienced record inflows of capital in 2020,” Mr. Marks observed. “This trend is notable against the backdrop of the global recession and market volatility. The idea that creating value for investors and shareholders need not come at the expense of other stakeholders is no longer novel.” He added, “Indeed, in the longer run, investments in companies and products that are sustainable may be both more resilient and more successful in attracting risk capital.”
“Sustainability means maintaining current living standards without jeopardising the quality of life for future generations. That definition applies to the environment and also to social equity. So, in a sense, the pandemic has been a sort of stress test revealing vulnerabilities and inequities in systems and institutions,” Mr. Marks noted, continuing, “We are seeing, without a doubt, increased pressure on companies to reduce their financial losses, which may at first appear to be at odds in the short term with investments in sustainability. However, I would expect investors and consumers to reward companies that commit to sustainability in the years to come.”
Mr. Marks explains the significance of COVID-19’s impact on companies’ focus on sustainability strategies and reporting, “Sometimes external shocks are a valuable wakeup call, spurring renewed attention to both risks and opportunities. I would advise companies to remember that sustainability is not limited to checking compliance boxes.” He further highlights how companies should reevaluate the deployment of their strategies in the COVID-19 era as part of their recovery and growth, “For so many of us, the pandemic has been an opportunity to reset and reevaluate priorities, and the same should be true for every business as we plan for a post-COVID-19 future. Risk management is becoming more valued, and appropriately so. Managing risk in the face of uncertainty presents challenges for valuations, liquidity and investment. Those challenges can be met with coordinated action, vigilance and creativity. As just a small example, many companies are experimenting with new ways of connecting with employees and customers digitally, given social distancing, which results in less wasted time and energy than was previously spent travelling and commuting. Those new tools will likely survive the pandemic, with resulting cost savings, increased workforce flexibility and environmental benefits.”
Mr. Marks is one of the world's leading project finance lawyers, with deep expertise across many infrastructure sectors, including water, transportation, airports, rail, port terminals, power and renewable energy, oil and gas, social infrastructure, and telecommunications and digital infrastructure. He routinely represents developers, investors, lenders, and underwriters in the development and financing of complex infrastructure projects worldwide, and has participated in numerous project financings, acquisitions, restructurings, securities offerings and private placements for a variety of sophisticated institutional clients. Mr. Marks frequently speaks and publishes on renewable energy, public-private partnerships, cross-border financing issues, infrastructure investments, deregulation and emerging markets.