CEDER 2024 in review: ESG-related regulations and financing

One of the important topics touched upon by the ESG panel at CEDER 2024 was the relationship between ESG compliance and the investors’ interest and willingness to finance projects. Moderator Maria Florea, Head of Office Advisory at iO Partners, wanted to know whether financing was better for ESG-compliant products.

Oana Cojocaru, Sustanability Director at Globalworth, shared her experience that the questions banks and investors ask on the topic of ESG have become more sophisticated as compared to the previous year, with financiers requesting detailed analyses of all projects. „I don't think it's a question of [whether] the financing is better. I think it's a question of [whether] you will get the financing in the next year, unless you have the good credentials for the building and unless the building is EU aligned.”

Florian Nițu, Managing Partner of Popovici, Nițu, Stoica & Asociații, explained that, at the moment, ESG means a combination of “soft law” and “hard law”. “Soft law consists in guidelines, standards, certifications that are not mandatory by themselves because they are not enforceable by the state (…), but they (…) are promoted by the actors in the market and generate a sense of obligation. (…) The hard law component (…) is the mandatory law, something that effectively has to be applied. In absence of it, there will be sanctions of pecuniary nature, of an administrative nature.” He later added: “ESG is not only a cultural matter, (…) but it's also a matter of effective black letter law that is expanding at a rapid pace. And in terms of investment, if you're looking at the minimum ten-year investment span, you have to factor in as it, as if it is mandatory law.”

To complement this opinion, Ioana Roman, Partner & Head of Real Estate at Filip & Company, pointed out that, even when it comes to investing in older buildings which are not ESG-compliant, but present as opportunities on the market, “every investor should look not only at the opportunity today, but they should look also on the mandatory restrictions that he will have in the future. Because it's clear that the EU is putting a lot of pressure on all the member states.”