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Data Snack: Benchmarking sustainability efforts by banks across economies

  • Banks across many of the world's major economies have a renewed focus on sustainability in 2022, making it a key component of a bank's strategy.
  • Banks are moving towards sustainability in a variety of ways, including digitizing their processes, offering sustainable products, assessing portfolios and educating customers.

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Data Snack: Benchmarking sustainability efforts by banks across economies

Sustainability is more important today for organizations across industries than it has ever been. To speak of banking in particular, sustainability was found to be among the top three concerns across boardrooms in the US, UK, and Australia.

Mobiquity's recent study on sustainable banking found that even compared to last year, there is a greater awareness of the need for sustainability measures across the industry. Furthermore, board representations have also evolved to be more sustainability-focused.

The report surveyed over 600 C-suite banking executives across the US, UK, Netherlands, and Australia, and it provides an interesting peek into where global banking stands in relation to sustainability. In this data snack, let’s quickly overview what they found.

At board level, reporting on sustainability has increased across all regions. This reporting often begins with a sustainability vision statement, where a company outlines what it wishes to achieve with its sustainability efforts. From then on, a shortlist of issues to address is created, goals are set, a strategy is developed, and KPIs are put in place. The report found that:

  • In the US, 99% of boards report on sustainability in 2022, as opposed to 98% in 2021.
  • In the UK, 81% of boards report on sustainability in 2022, as opposed to 71% in 2021.
  • In the Netherlands, 78% of boards report on sustainability in 2022, as opposed to 69% in 2021.
  • In Australia, 99% of boards report on sustainability in 2022, with data for 2021 unavailable.

Across economies where the data is available, that shows an average increase of about 7% in sustainability reporting between 2021 and 2022, while the vast majority were already doing it last year.

In terms of how important sustainability is to a bank’s strategy, almost all those surveyed across the four economies said it was very significant: 97% in the US, 100% in the UK, 97% in the Netherlands and 95% in Australia.

The representation of sustainability-oriented board members across banks has also increased.

  • In the US, 97% of boards have sustainability representatives in 2022, as opposed to 92% in 2021.
  • In the UK, 83% of boards have sustainability representatives in 2022, as opposed to 58% in 2021.
  • In the Netherlands, 83% of boards have sustainability representatives in 2022, as opposed to 64% in 2021.
  • In Australia, 94% of boards have sustainability representatives in 2022, with data for 2021 unavailable.

With that in mind, the next question would be how many of these banks are actually taking steps, devising and implementing strategies to create more sustainable outcomes. In this regard, while the US and the UK showed more banks taking action in 2022 than in 2021 – by 30% and 2% respectively – the Netherlands actually dropped. While 64% of Dutch banks reported taking steps towards sustainability in 2021, just 55% did so in 2022.

When reviewing the sustainability imperatives that banks have been taking across economies, we see that different countries tackle the problem in different ways. 

Efforts in the US and Australia are similar – they focus on implementing digital services such that they drive sustainability. In the UK, the emphasis is more on reporting standards and transparency. In the Netherlands, addressing sustainability is more supply chain-oriented, in addition to assessing client portfolios for shortfalls and improvements, and motivating customers to be more sustainability-focused.

To be specific, in terms of the top strategic imperatives as part of a bank’s sustainability agenda, the study showed that:

  • In the US:
    • 44% were focused on digitizing processes to reduce the bank’s carbon footprint
    • 39% were focused on driving sustainability as part of an ESG strategy
    • 37% were focused on offering sustainable products
  • In the UK:
    • 38% were focused on aligning to global reporting standards on sustainability, transparency and corporate social responsibility
    • 34% were focused on empowering customers to embrace sustainability
    • 32% were focused on embracing emerging technologies
  • In the Netherlands:
    • 31% were focused on offering customers sustainable products (i.e., offering digital products and services)
    • 31% were focused on articulating sustainability practices to customers
    • 20% were focused on mitigating climate risks through assessing current and future client portfolios
  • In Australia:
    • 31% were focused on mitigating climate risks by assessing portfolios
    • 30% were focused on embracing emerging technologies to make digital services available remotely
    • 29% were focused on driving sustainability as part of an ESG strategy

Briefly, the broad approaches that banks are taking to meet sustainability targets can be summed up in the following: promoting remote work for employees, decreasing the use of paper and digitizing their processes, investing in carbon credits, and shutting down branches.

There are obviously many challenges that financial institutions face when trying to transition into completely sustainable models, like: budget implications, long-time execution maps, inconsistent regulations across economies, and cultural legacies.

There is still a long way to go in terms of achieving satisfactory sustainability across banking operations globally. The sustainability benchmark report is among the studies that help us gauge where we stand today, and as time goes by, how our efforts have evolved.

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