The need to shift towards greener capital markets

In the second episode of the Ganado Meets Green Finance Podcast, Dr Luke Hili, Associate at Ganado Advocates, speaks with Steve Ellul, CEO of Project Green, to discuss the latest developments and challenges in the field of sustainable finance in Malta.

Shifting Towards Greener Capital Markets

Ellul chalked up his introduction to the sustainability space to his experience as an asset manager. This exposed him to what he identified as a drive particularly by European and US regulators) towards both social and environmental sustainability. Indeed, Ellul soon realised that the largest investment firms (in terms of assets under management) were leading the introduction of ESG criteria in investment decision-making. Against this backdrop, Ellul emphasised the importance of the capital markets as a funnel through which capital can be effectively channelled towards green initiatives. However, he posited that it is also the time for a seismic shift in the use of private capital, which can be diverted towards a greener future. On this note, Ellul drew parallels between the role of central banks in the post-2008 recovery, and the role which they can be made to play in this global economic shift towards sustainable finance.

Project Green: What is it and What Does it Do?

Ellul observed that the ultimate goal for Project Green as an entity is to ensure that it delivers on what he sees as a real need to deliver greener urban spaces in Malta for the local population. Ellul maintained that the quality of life in Malta should be no less than that of any other state in the European Union and, to that end, Project Green is investing no less than €700m for the purpose of redeveloping urban spaces on the island. Ultimately, Ellul held that (once the investment has been completed), no Maltese person would be required to travel for longer than ten minutes in order to have access to a green open space.

ESG in the Maltese Marketplace

Ellul noted that up until at least three years ago, many company directors and C-suite executives in Malta were not familiar with ESG, its meaning, or the underlying concepts. However, quite positively, Ellul did observe that ESG has become relatively mainstream recently, and executives are fast becoming more cognisant of the pressing need to transition to more sustainable ways of doing business. Although this does not mean that all Maltese companies are suddenly ESG-compliant, it does in fact demonstrate a marked improvement. Ellul cited the launch of the ESG Portal as a concrete example of this shift. This initiative, driven by the Sustainable Development Directorate, is a platform for voluntary sustainability disclosures for Maltese companies. Beyond disclosures, the ESG Portal also acts as a platform for guiding and educating local enterprises towards the much-needed green transition. Ellul has also noted an improvement in what he describes as the mindset of companies, who are willing to commit to change beyond simple voluntary disclosures. The fact that matters relating to sustainability are becoming increasingly commonplace in board meeting agendas was cited as a positive example of this shift.

With respect to the question of what is driving this shift, Ellul was reticent to simply ascribe it to compliance with upcoming regulations. He noted that whilst developments in the sector over the past decade were largely the result of regulation, but, more positively, he also pointed out that today less than a handful of Maltese companies would be caught by the scope of ESG regulation at an EU level, meaning that the current shift in mindset cannot be attributed exclusively to simple compliance with hard law. In fact, Ellul stated that 85% of listed Maltese companies are voluntarily providing data to the ESG Portal for publication.

Developments on the ESG Portal

Ellul noted that the Portal was continuously updated, but acknowledged that a general “levelling-up” would be required in order to appease and cater for increased regulatory developments; including the introduction of independent verification methodologies in preparation of the increased reporting obligations brought about by the Corporate Sustainability Reporting Directive (CSRD). Ellul did, however, note that the provision of information to the ESG Portal would continue to be on a voluntary basis; with the focus remaining a carrot over stick approach. Ellul stated that the ultimate goal of all these efforts would be for ESG to be fully embodied in the decision-making process of Maltese businesses, and not be relegated to a simple tick-the-box compliance exercise.

The profit-motive and ESG

Ellul, returning briefly to his past as an asset manager, underlined the importance of the ‘profit-motive’ at the core of each business enterprise. He held that the best possible way for a company to be considered profitable in the long-term (and for risk to be minimised) was to ensure that it is fully committed to sustainable practices from an environmental, social, and governance perspective. Ellul cited as examples large-cap foreign companies who have seen widespread and sustained dilution of their share price as the result of a lack of environmental commitment and/or proper corporate governance. Dr Hili also cited the increase in shareholder activism and ESG litigation as another example of what might occur should a company fail to integrate ESG into its business practices.

Ellul remarked that the idea that sustainable investments are somehow guaranteed a better return than traditional investments should never be sold to investors, as it could not be corroborated by available data. On the other hand, he did express his belief that companies who are strong proponents of ESG do offer better long-term prospects for shareholders, especially in the face of future regulation and political tailwinds from the European Commission and beyond. Other considerations, such as talent acquisition and retention, may also be affected by a company’s failure to embed ESG into its ethos; with an increasing number of employees at interview stage querying prospective employers about their initiatives and commitments in relation to sustainability. In summation, Ellul was keen to note that a company’s ESG commitments would most definitely not be the only thing driving share price movements, but that companies who are ESG compliant carry far less risk than those which are not.

Malta’s Strategic Sustainability Goals and the Economic Transition

Ellul observed that, at present, €25 billion of investor monies lay idle in bank deposits, and could be put to better use in decarbonising the Maltese economy (which, according to Ellul’s calculations, required an investment of approximately €13 billion) whilst creating additional returns for investors. The risk, according to Ellul, lay in shifting investment that has historically been made in the property sector, towards this green transition. The Maltese retail investor holds a disproportionate preference for investments in physical property and, as a result, a change in mindset and culture is imperative. Ellul was keen to point out that investment in the property sector should not dry up completely but should be complemented by investment in research and development, and targeted acquisitions, that could effectively decarbonise the industry to make it more sustainable in the long-term.


Ellul explained that inertia and intransigence constituted the two main challenges which could delay the local economy’s green transition. Companies and investors that have historically profited from conventional, pollutive investments, may be unwilling to make the leap to sustainable investments and risk sacrificing returns, especially in the short-term. To overcome this, Ellul cited regulation as an example of an effective tool which can be deployed, but returned to his earlier point that it would be far more effective for companies to willingly embrace ESG as part of their general ethos. Tax and fiscal incentives which would encourage executives to favour the financing of a ‘green’ project over a traditional one would also be a welcome addition.


This article was first published in the ‘Times of Malta’ on 09/10/2023.

This article was co-authored with Luca Camilleri an Intern at Ganado Advocates.