While banks globally have been on the journey of implementing ESG related initiatives for the past few years, the challenges faced and expectations from them have increased significantly. This is on account of the increase in overall awareness of the criticality for banks to support the consolidated push towards a more sustainable future. Further the business opportunity for funding large investments underway can also not be ignored. As a result, well-defined ESG initiatives have been envisioned covering most divisions of the bank. Select technology initiatives while at a nascent stage are progressing well such as building of cloud data platforms and associated data management/intelligence enablement. Regular monitoring followed by integration of ESG risks at an enterprise level however still need additional effort since the outcome would significantly help improve profitability of the asset portfolios that banks manage. The coming few years are hence critical for banks to build out a strong ESG execution ecosystem and the time to act is now.
What is in it for you?
The financial services industry has a huge role to play in enabling this change. Bank’s focus in this space is being driven not only by their internal sustainability agenda but also by way of demands from their customers, regulators, industry groups, colleagues, and investors. Banks are expected to not only bring in the capital but also to motivate their customers to adopt sustainable work practices by leveraging the all-important concept of ESG risk within their risk management frameworks.
While broadly banks have included their commitment to sustainable development goals within their vision & strategy, there remains a gap between aspirations and reality on the ground. The coming few years will be critical for banks to walk the talk where it comes to their defined ESG paths. The technology foundations will be critical for success and the time to focus on those is now.