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Leasing: a real option for companies making the sustainable transition

News - 16 May 2019

No entrepreneur today can afford to ignore sustainability. But smaller companies often have a harder time taking steps to make changes. They may lack expertise, for instance, and could benefit from expert advice or a suitable financing plan. Many larger firms, on the other hand, would be interested in a proposal allowing them to finance their sustainability plans on favourable terms. Claudio Moretti, Commercial Banking Manager with ABN AMRO Asset-Based Finance (ABF), says sustainability is now an integral part of the bank’s leasing product range.

Looking for investors? Or a sustainable investment?

Claudio sees plenty of opportunities here. He says, “A few years ago, I teamed up with some of my colleagues and drafted a sustainability plan. We were, and continue to be, convinced that we can make a real difference with our leasing products for companies looking to make the sustainable transition. Our focus is on financing energy-saving production assets and clinching as many sustainable deals as we can. To do that, we need people – people’s energy is key if you want to change things. But conviction will only get you so far – you have to have knowledge, too. That’s why it’s so important that we continue to invest in training for our relationship managers.”

From solar collectors to bioplastic

Many of these leasing projects focus on the environment and clean energy. “We finance lots of solar panels, solar collectors, heat pumps and energy storage systems,” says Claudio, “as well as machinery that produces bioplastic. But that’s not all. Elephant grass is an environmentally friendly component used to make bioplastic. Not to mention thermal furnaces that convert used asphalt into sand, gravel and gypsum – materials which can be put to perfectly good use in other contexts. Most of the heat released is used to produce energy. That way, the company generates power not just for its own use, but also for surrounding industry. Obviously, minimal carbon emissions are one of the benefits of this process. I should stress that we don’t advise our clients on their business operations – our priority is to help them become more sustainable. Our main focus is on the production assets they can harness to achieve their goals.”

ABF is working hard to step up cooperation with representatives from other entities at the bank. “It’s important that relationship managers serving business clients know about our products and services. We’re accompanying them on more and more visits to clients in order to advise them on financing sustainable production assets. Plus we’re now a prominent feature on the bank’s Sustainable Finance Desk ‘menu’. They advise other stakeholders at the bank and have direct contact with clients about sustainable financing issues. Our leasing product offering is the perfect complement to that service. After all, sustainable leasing is still uncharted territory for many firms despite potentially offering them a financial solution for transitioning to a sustainable business model.”

Helping clients become more sustainable

ABF aims to double its sustainable activities in 2019 relative to last year. “Our focus is twofold,” says Claudio. “It involves the financing of energy-saving assets on the one hand and sustainable deals on the other. The latter may include vendor leasing programmes, for instance. A good example is the agreement we recently negotiated with Tesla. Clients who want to drive a Tesla can conclude a leasing agreement through us, as we’re one of the providers of this service for Tesla in the Netherlands. Other vendors include several big energy companies we’re helping to finance the energy transition for their corporate clients. Plus we recently signed an agreement with Mitsubishi to finance their circular lift, the M-Use. As part of this scheme, companies make an initial financial contribution towards the construction of the lift and then pay off the remainder during the agreed term. ABF is providing the financing.”

The energy-saving assets ABF finances range anywhere from a EUR 30,000 solar panel installation to a solar park worth EUR 10 million. Claudio says, “For amounts up to EUR 250,000, all the formalities can be completed in just one working day, and we provide 100 per cent financing without any additional conditions. Up to EUR 1 million, it takes a few days to secure the necessary financing. For amounts over and above EUR 1 million, applications are assessed on a case-by-case basis, which obviously requires more time. Financing refurbished assets is very much on my own personal wish list. Refurbished assets have been given a new lease of life after an overhaul when certain parts are replaced.”

Accelerating the sustainable transition

Claudio is committed to boosting the sustainable transition and the circular economy, but he’s also realistic: “We’re a financial institution, and at the end of the day, it’s also about making money, so we can’t lose sight of our commercial interest. Fortunately, our commercial interest and mission aren’t necessarily mutually exclusive. We’re well on our way to developing our sustainable finance portfolio, but there’s still a huge difference between it and our run-of-the-mill leasing agreements. Last year, the new sustainable contracts we negotiated represented about EUR 150 million. That’s only about 7 per cent of our annual turnover. So there’s still quite a lot of room for improvement here.” For Claudio and his sustainability-minded colleagues, these figures should be more than enough motivation to double the turnover they generate through sustainable activities this year.