By: Fabian Fonseca, Credit Intelligence Director at Allianz Trade
For many years, sustainability was viewed by many companies merely as a matter of reputation, corporate social responsibility or regulatory compliance. Today, we can say that this view is outdated. Sustainability is increasingly linked to a company’s ability to create value, withstand shocks, and above all, access financing under competitive terms.
The signs are clear: the latest Allianz Trade analysis, based on more than 280,000 companies worldwide, confirms that financial fundamentals remain the main factor in assessing credit risk. Profitability, the level of indebtedness, or the size of a company continue to be decisive in evaluating its ability to meet financial obligations. However, sustainability is no longer a secondary concern: it is now an additional filter that helps distinguish the more resilient companies from the more vulnerable ones.
The most interesting aspect of this analysis is that the impact of sustainability is not uniform. Companies that perform poorly in environmental, social, or governance matters face a significantly higher risk. Conversely, moving from a low level to an intermediate level of sustainable performance can translate into a material improvement in credit quality. The difference between a good company and an excellent company is less relevant. To put it simply: the market increasingly penalizes those who fall behind.
Among the various factors analyzed, environmental performance stands out as the most relevant indicator for anticipating situations of financial fragility, which is not surprising. Extreme weather events, disruptions in supply chains, costs associated with the energy transition, or new regulatory requirements have direct impacts on revenues, operating costs, and a company’s ability to invest.
For a country like Portugal, this trend takes on particular relevance. The Portuguese economy is primarily composed of small and medium-sized enterprises, many of them integrated into international value chains where sustainability criteria are gaining increasing weight. This is not just about meeting environmental targets: it is about maintaining and gaining competitiveness, attracting investment, and ensuring access to financing.
Financial institutions also face a challenge of adaptation. Sustainability should not be viewed as an isolated criterion nor as a substitute for traditional financial analysis. But ignoring environmental or governance risks may mean underestimating real risks that end up reflected in a company’s ability to meet its obligations.
The main lesson is simple: sustainability is no longer a differentiating factor for a small number of companies. It is, indeed, becoming a basic requirement for economic resilience. In a context of increasing geopolitical, climatic, and regulatory volatility, the question is no longer who leads. The question increasingly is to identify who has not yet kept pace with the change and remains exposed to risks that the market has already begun to penalize.
