Nicole K. Phinopoulou: Approaching and implementing ESG and sustainability

‘We help businesses with their transition and transformation embracing and applying efficient sustainability practices. We provide legal support and technical expertise in the major aspects of ESG factors, effectively leading organisations and businesses to achieve sustainable growth’

Businesses shouldn’t face sustainability as a necessity but instead as an opportunity for long-term business performance. Incorporating sustainability in business models is not an easy task as it requires inter alias mindset shifting, commitment, perhaps elevated costs, and increased compliance requirements. Nicole Phinopoulou says that incorporating sustainability in your organisation is beneficial, but you need to do it the right way, or else risks will arise.

Building sustainability into the brand helps businesses that want to cultivate company longevity. How ingrained are ESG principles in a company’s operations?
“There is still much work to be done, but it must become a habit. According to a 2019 McKinsey survey, every business is inextricably linked to environmental, social, and governance (ESG) issues.
Analyses show that incorporating ESG into a brand makes sense, implying that a strong ESG proposition can create value. After all, a brand is the perceived relationship between stakeholders and a company, i.e., what the company wants to sell.” ESG reporting provides measurable data for a company’s intangible asset, its brand.
First step is to consider what each of the three elements of ESG represents: environmental, social, and corporate governance. The elements are comprised by several criteria that may be considered, either by socially responsible investors or by companies aiming to adopt a more ESG-friendly operational approach. Let’s take a quick look at the individual components of ESG:
• Environmental criteria are denoted by the letter “E” in ESG.
• ‘S’, or social criteria, refers to your company’s relationships and the reputation it fosters.
• ‘G’, for governance, refers to the internal system of practices, controls, and procedures that your company uses to govern itself.
ESG is an inseparable part of how business is done and operates; its individual components are inextricably linked. More and more businesses are putting sustainability at the forefront of their strategies and looking for ways to comply with and support the 17 United Nations Sustainable Development Goals (UN SDGs) and in parallel with European Union (EU) policies embracing SGDs. Customers and investors expect businesses to behave ethically and to respect, inter alias, the environment, human rights, governance, water management, energy consumption, social inclusion, child trafficking, and gender equality.
The popularity of ESG investing has also skyrocketed. According to reports, global sustainable investment has now surpassed $30 trillion, i.e., a 68 percent increase since 2014 and a tenfold increase since 2004. As a result, the level of business performance and financial targets are constantly being re-assessed. However, having said that, companies and investors should never overlook the challenges and the risks of ‘Greenwashing’ or ESG and shareholding investors’ litigation claims which are also on the raise.”

What sustainability challenges do banking and financial services face?
“Banks are grappling with a slew of complex sustainability issues to meet sustainability criteria, and especially to align with EU commitments, such as the EU Green Deal and the Action Plan on Fostering Sustainable Growth, which will result in new funding through the NextGenerationEU. Investors, regulators, and banks attention is focusing more and more on ESG concerns also complying with enhanced new regulatory frameworks, primarily on climate change. New regulatory frameworks pose additional challenges for banks and the financial system broadly. Now regulated entities have begun to integrate sustainability into their core strategy by incorporating ESG considerations in their risk management processes, product design and purpose statements. They are also publishing corporate governance reports and also incorporate sustainability strategies in their long-term investment strategies.
Furthermore, Covid-19 demonstrated the importance of disaster preparedness and continuity planning.
Investors have noticed a greater emphasis on sustainability. Because of increased government legislation, for example, regarding the use of plastics and other unsustainable business practices, it makes sense for investors to pay attention to the sustainability of their portfolios.
The financial services sector is a critical enabler of the real economy. It promotes economic well-being, which increases the ability of families and governments to improve social outcomes. The financial industry is becoming increasingly important in the implementation of sustainability.
A company’s success is no longer solely determined by its financial performance. According to Black Rock CEO Larry Fink, ‘the public’s expectations of your company have never been higher. Society expects companies, both public and private, to serve a social purpose. To thrive over time, every company must demonstrate not only financial performance, but also how it makes a positive contribution to society’.
The stakes are high (recent legal case involving Shell and Nestle) – penalties, costs, and expenses, as well as restitution policies, are all on the table. Companies are being chastised for unsustainable practices at a higher rate than ever before. This trend is expected to continue, particularly as the purchasing power of Millennials and Generation Z grows. The European Investment Bank (EIB) has correctly observed: ‘Sustainability – The time has come to make a difference in the world. An investment cannot be long-term if it is only concerned with financing’.”

A multifaceted approach

As a lawyer with a profound knowledge in developments and implementation of EU Regulatory Compliance complexities with focus on applicability of ESG and sustainability strategies programmes, how do you advise your clients on sustainable finance?
“Sustainability necessitates a multifaceted approach. As it was many times mentioned, there is no silver bullet for businesses seeking to become more sustainable. Instead, approaches must be blended across all operations and the supply chain. Sustainability concerns go far beyond environmental law. Nearly every aspect of a business provides an opportunity to make a difference; not only contracting. It’s difficult to think of a legal field that doesn’t deal with some aspect of sustainability.
Our office expert team and I personally are involved in each project’s development, implementation, and integration stages. We have developed expertise and capabilities to provide legal and regulatory advice as well as technical implementation aspects. Our services include:
• Environmental, Social, Governance (ESG) implementation
• Corporate Governance Compliance
• Sustainability Reporting & Sustainability Regulatory Compliance Obligations
• Sustainable Finance
• Corporate Social Responsibility (CSR)
We are not overnight ESG experts, or because it is a new trend, but rather because we constantly strive to expand our knowledge over time in banking finance & financial services including corresponding regulatory compliance and corporate governance. Our team also has useful skillsets from previous roles, such as human rights and gender equality that we can leverage.”

Who is who?
Experienced, motivated and results driven professional, Nicole is a qualified licensed lawyer with over twenty years of experience. She has a solid track record on transactional and problem-solving projects, demonstrating in-depth well-oriented legal business and regulatory compliance technical knowledge on her focused practice in banking finance, capital markets and financial services. She has led high profile projects, both for sponsors and lenders; engaged in teams (in Cyprus and cross-border) on banking lending and asset finance (project finance; structured and sustainable loan financing products; real estate finance; securitisation); capital markets & financial services (development and distribution of securities products (bonds, public listings); asset wealth management services; debt equity) and corporate and commercial (mergers and acquisitions; reorganisations; restructuring distressed assets, NPLs resolution and loan portfolio sales).
Since 2016, Nicole’s, evolutionary legal focus, is on the integration and implementation of the UN, SDGs ESG factors in clients’ projects. She has been involved and actively participated in the Cyprus legislative transposition of the EU Directive on Corporate Social Responsibility (CSR) (non-financial metrics). She is also the founding member and pro-bono legal advisor of the CSR Cyprus Association. She possesses expertise on assessing, developing, and monitoring implementation of projects and on delivering redefined operational and investments business procedures and processes. Projects include consulting and advising stakeholders’ management in legal regulatory compliance commitments, focusing on the European Union’s policies: e.g., Taxonomy Regulation, Sustainable Finance Disclosure Regulation, Corporate Sustainability Reporting Directive, and Green Sustainability Bonds.
Over her practice, she has developed analytical skills and can transform supervisory statutory requirements and expectations into sustainable business actions. She is constantly engaged on advising clients on corporate governance regulatory obligations including offering services to large organisations in strategic cultural transformation projects involving legal and operational sustainability risk assessment. In November 2020, she successfully became alumni of the Cambridge University Institute for Sustainability Leadership. In November 2021, she graduated from the Cambridge University Judge Business School on Circular Economy and Sustainability Strategies (Executive Programme).
Nicole is regularly engaged on delivering workshops and presentations on sustainability and ESG strategies.

P.O. Box 16223, 2087 Nicosia, Cyprus | Tel: +357 22697400, Fax: +357 22697414 | E-mail: [email protected]

Watch the full video on Cyprus Mail’s YouTube Channel: Nicole K. Phinopoulou