Sustainability in banks requires listening to workers and customers

  • Financial Services
  • Solutions
  • Cameron MacQuarrie
  • 2023
18 May 2023

Sustainability in banks: woman financial worker with a plant on her left in conversation with a couple of people

The EU Corporate Sustainability Reporting Directive introduced this year means that enterprises must report on the environmental effects of their operations. Globally, 129 banks have joined the United Nations’ Net-Zero Banking Alliance in just over a year—representing 41% of the world’s banking assets.

Given the importance of sustainability in banks to customers, investors, the workforce, and the future of business, the banking sector needs a new approach that puts environmental, social, and governance (ESG) front and centre.

A platform approach to ESG

In the last 15 years, all banks have focused on digitising. As is the case in any sector, keeping pace with new market entrants is a challenge. But this could present an opportunity for banks.

Take retail banking, for example. A 2022 Ipsos survey of UK current account holders found that digital banks topped the league table when it came to overall services, mobile banking and overdrafts. The only poll not dominated by the digital banks was for in-branch services (as these banks do not maintain bricks-and-mortar storefronts).

With the drive to digital in high gear, financial services providers have a unique opportunity to make real progress by delivering personalised, sustainable product options right into the hands of their customers, at the touch of a screen.

A baseline for governance 

In a sector built on the small print, how do we know that these services are truly sustainable?

Unlike the tech and manufacturing industries that have dominated the ESG news cycle, the main cause of emissions in the financial services industry is not day-to-day physical activities.

Instead, it’s emissions related to capital, such as loans, investments, and underwritings. These 'financed emissions' are a bank’s baseline, or footprint, which can be taken as the starting point for measurable change.

If banks mean business on ESG, they need to know exactly how their money is being spent or invested. They should be measuring this against strict metrics so that they can communicate, with full transparency and accountability, that the services and products they have a hand in are sustainable.

Steps towards sustainability

As I shared during a panel discussion at London’s MoneyLIVE Summit in March, this will require more information, greater transparency, and more criteria to validate how every investment affects ESG targets, risks, and controls.

There are a couple of things that banks can do today to make their green ambitions real.

  1. Question every investment. Regardless of how much capital may be involved, lenders should put every loan or investment through the same ESG due diligence checks, asking “How green is this loan?”, “Will this investment really help reduce emissions?” and “Is this the most competitive loan in the market on solar panels?”

  2. Prioritise data. Due to their history and vast ecosystems, banks have access to more data than they probably use. They should integrate these wider data sets from their entire network of subsidiaries, partners, and third parties to use in making better decisions, the kind that their customers and workforce can get behind and invest in.

Find out more about the sustainability considerations for banks in our ebook: Why banks should care more about boilers, EVs, and solar panels.

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