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U.S. Bancorp

09/24/2021 | News release | Distributed by Public on 09/23/2021 23:13

U.S. Bank expands sustainable financing capabilities as demand surges

Fixed Income and Capital Markets team adds Ade Adedeji and names Marcus Martin head of newly established full-service ESG practice.

When speaking with Marcus Martin and Ade Adedeji, you can feel the enthusiasm that arises when professionals find the right roles at the right time. For two veteran bankers highly skilled at helping both businesses and investors use finance to achieve sustainability progress, they couldn't have joined U.S. Bank at a better time. Throughout 2021, client demand for environmental, social and governance (ESG) financing has surged. At the same time, U.S. Bank has expanded efforts to deliver innovative sustainable financing solutions to clients, including the formal establishment of a full-service ESG practice within Fixed Income and Capital Markets (FICM).

"ESG is not only a key element of our bank's core values, it is a foundational element of our Fixed Income and Capital Markets efforts, having led our first green bond back in 2014 and a multitude of ESG financings since then," said Stephen Philipson, head of FICM. "Creating this new ESG vertical is a natural evolution of these efforts as we - and the markets - focus on increasing the positive impact we collectively have with our customers on our communities and society at large.

"It was the perfect timing," Adedeji said of joining the bank in August as director for ESG FICM. "The bank's demonstrated national leadership in lending with environmental and social impact helped draw me in. But what solidified my decision was the strong commitment from bank leaders to continue to expand the ways we can help clients with sustainable financing."

Adedeji, who joined U.S. Bank from BNP Paribas and has been successful at several firms leading cross-functional teams and helping clients across many different sectors, will be responsible for helping coordinate ESG financing efforts across all business lines at U.S. Bank.

In a recent survey, 71 percent of Chief Financial Officers (CFOs) told us that their business's focus on ESG criteria has increased in the past year. While there are countless impactful ESG activities taking place across organizations - including at U.S. Bank - attention has increasingly turned to how CFOs can address ESG issues through their financing activities. For example, when a company issues a bond or takes out a loan, they can include provisions that provide for lower borrowing costs if certain environmental milestones are met. The opportunities to be creative with financing to incentivize progress are endless.

"The ESG financing space is complex and rapidly changing, so it's critical that we provide our clients with innovative options. We don't deliver the standard 'off the shelf' ESG solutions when it comes to helping CFOs and their teams, but instead differentiate ourselves by providing each client with customized solutions for greatest impact," said Martin, who joined the bank less than a year ago, and after growing FICM's ESG work severalfold, now leads the new ESG FICM vertical.

Martin has a laser-like focus on combatting an issue - sometimes referred to as "greenwashing" for environmental projects - that occurs when ESG financing activities are touted as successful but don't have a real impact on sustainability. For example, a company may set targets so low that even if they are surpassed there isn't meaningful progress. The ESG FICM team spends a lot of time working down to the project level on how exactly funds will be used and setting benchmarks that are robust and impactful.

"We take a very intentional approach to make sure the ESG financing the client is pursuing - be it a bond issuance, loan, or investment - has the framework in place to ensure there is real, achievable impact. Critical to this is transparency, which is why we work so hard on mechanisms for reporting progress. This is not only important for the borrower as they push for impact, but also critical for investors or lenders to ensure their money is being used as they intended," said Martin.

Martin and Adedeji both point to the "S" within ESG as an area where clients are increasingly looking for advice. In July, the team helped a longtime U.S. Bank client issue an innovative racial equity bond, which will provide loans to housing developers of color. Martin expects this structure, which also provides investors an opportunity to directly invest in projects that address critical social challenges, to be replicated by other organizations - including corporations, municipalities and not-for-profits.