ESG Unconference Workshop Summary: What do we need to do to enable the transition from dirty to green assets?

Split into three topic streams, the participants at the ESG Unconference debated the following areas:

• Next generation usage-based finance products and services seem to offer future potential for the industry to leverage their core capabilities for maximum effect and to drive the circular economy.
• Finance providers need to solve specific challenges associated with funding green assets. These include managing uncertain residual values, and managing and sharing credit risk to enable transitions even for difficult to serve market sectors.
• Sustainability reporting requirements that are driving change – measuring, monitoring and reporting on carbon emissions remains a significant challenge.

The ESG Unconference highlighted that the transition to a ‘new world’ of usage-based models is cautiously welcomed by the asset finance industry, but time and a mindset change are needed to enable the transition to these new environmentally-friendly financing models and circular economy.

Discussions focused on the lack of infrastructure and investment in infrastructure to enable the transition to green assets. While the financing opportunities are in place, the investment in infrastructure is falling behind and affecting investment in green assets.

The impact of regulation on the green agenda was addressed with participants highlighting that regulation is constantly changing and is inconsistent on a global scale. There is a need for consistency in regulation as it can be seen as the driving force in the transition to net zero.

A need for increased collaboration and partnerships between lenders, manufacturers, governments, start-up companies and pay-per-use specialists was noted to spread the increasing risk and cost, and to better understand new business models, new risks, RV uncertainty and new technological challenges.

Despite a number of technology, policy and market-led uncertainties, unconferencce participants were confident that the industry was ready to adapt, with a focus on the ability of software tools to streamline emissions data collection and reporting processes and enable industry-scale transitions.

Summary reports from the three ESG workshops are available to download at:

1. The transition to a ‘new world’ of usage-based models 
2. Green assets: Financing is ready, but infrastructure is falling behind 
3. Scope 3 reporting brings a new set of industry challenges 

The summary and analysis of the Asset Finance Connect ESG senior leadership interview with SGEF’s Odile de Saivre and HSBC’s Sacha Balachandran, in association with Leaseurope and Eurofinas, can be viewed here. 

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