ESG and Transportation Sector in Bulgaria Forum brought together carriers from all sectors, experts from UBB and UBB Interlease as well as senior officials from government administration. The participants in the second expert discussion under 24 Hours and UBB for Sustainable Future Project discussed the challenges posed and the opportunities opened by the ESG transition for the business as well as the financing options regarding green projects in Bulgaria. 

Mr. Dobromir Dobrev, UBB Executive Director Corporate Banking and Markets opened the forum and highlighted the Bank’s targets related to the transportation sector.  "We strive to be a leader in terms of market share in green projects financing as well as in the transition to sustainable models.  Over the recent 12 months, UBB Interlease, the leasing company part of KBC Group in Bulgaria, has invested more than EUR 60 million in the transportation sector. Carbon neutrality by 2030 for 2% of the portfolio covering heavy freight vehicles is our target. Or, in other words, financing deals and assets generating less or even zero carbon footprint is our core strategy."

Mr. Dobromir Dobrev explained that, during the new program period, 30% of the EU funds for Bulgaria, or nearly EUR 8 billion, need to be invested in projects supporting the transition to carbon neutral economy.  Invest EU is an instrument meant to finance projects, up to EUR 7.5 million per project, that may also be used by companies in the transportation sector.  Soon enough, another financial instrument will be agreed with the European Investment Fund - RRF, that could also finance projects of transportation companies supporting their sustainable development and transformation.

Mr. Georgi Gvozdeykov, Minister of Transport, commented: "Around 350 000 used vehicles are imported in the country per a year time period.  Therefore, we are in a search of mechanism stimulating society in its transition to electric vehicles. The minister indicated that the introduction of BGN 500 fee per imported used vehicle could be a possible measure against the aging vehicle fleet. The above fee could be transferred to a fund granting bonuses with the purchase of an electric vehicle."

What are the challenges before the transportation sector, what are the best practices embraced in this regard and what are the most urgent problems to be solved discussed the participants in the panel moderated by Associate Professor Marina Stefanova, Deputy Dean of the Faculty of Economics, Sofia University, and one of the leading experts in Bulgaria on the subject.  

Mr. Georgi Zagorov, Manager of Turbotrucks Bulgaria, commented that reaching zero emissions takes time.  For him, green technologies imply the use of cost-effective motors and second-generation biofuels produced from waste. The company now has a complete separation of paper and plastics, metal waste, oil, antifreeze, filters, car batteries. According to Mr. Zagorov, "the business is suffering a serious pressure coming from the European requirements in the context of the Green Deal. Vehicles must have a progressively smaller carbon footprint, be secure, more efficient and safer. Greenhouse gas emissions in 2030 must be 55% lower than in 1990."

The financial director of Discordia, Mr. Tsvetomir Uzunov, shared: "The earlier we start working on building a good charging infrastructure for electric vehicles, the cheaper the price.  The sector needs to carefully monitor all tightening regulations in the different areas and their effect. All company trucks comply with Euro 6 standard while their average age is below 18 months." During the former year Discordia reduced fuel costs by 4%.  Vehicles generate daily 50 kg less emissions.  On the other hand, the partnership with one of the leaders in gas supplies will optimize the so-called empty miles when no cargo is transported. 

Mr. Nikolay Rashkov, Director Business Development in Eurospeed also paid attention to the financing of green projects:  "Banks are starting to make their assessment also considering the ESG rating. If such rating is non-existent, the price of financing gets higher or clients even fail to obtain such. I myself am an optimist because there are banks and lease companies helping reduce the emissions". He shared data that there are over 13 000 transportation companies in Bulgaria, 85% out of which are having up to 5 trucks meaning basically family companies. Eurospeed has set the target to reduce the emissions by 15% in 2024 by buying new vehicles. Part of these vehicles are having longer wheelbase and trailers with improved aerodynamics to reduce fuel consumption. According to Mr. Rashkov, if shippers improve their supply chains, another 15% emissions savings could be achieved.

UBB Interlease has developed and is implementing a strategy to achieve zero emissions by 2050 for the vehicles it finances.  According to Mr. Ivaylo Deliyski, Sales Director at UBB Interlease, the financing companies could contribute to the reduction of emissions by providing money for greener vehicles while offering better conditions. He perceives European co-financing as an opportunity for the financial institutions to offer sufficiently attractive products to help companies in their green transition. "We are aware that we are an important stakeholder and our role is to catalyze these processes and help our partners, assured Deliyski.  We train our staff to understand how important is this role and to communicate this message in their discussions with clients", assured Deliyski.

The forum with a focus on transportation sector is the second from the series of expert events for different industries dedicated to responsible and sustainable development. The project uniting the efforts of 24 Chasa and UBB seeks to prepare the representatives of business for the forthcoming transformation to sustainable future as well as to popularize successful practices embraced by Bulgarian companies for smart management and deployment of new technologies.