How financial firms can close the sustainability gap

Our recent study reveals where financial firms are succeeding with sustainability, where they’re falling short and how they can close the gap.

The banking and capital markets sectors are essential to the world’s ability to meet its sustainability needs. In addition to providing incentives for loan customers to make pro-sustainability decisions and using sustainability markers to guide their own investment decisions, financial institutions are also influential in working with their investment portfolio clients to identify and report on their own sustainability data to reduce financed emissions.

In our recent study, however, it appears that many financial services firms are in the earliest stages of implementing—and understanding the impact of—their sustainability initiatives.

The study, conducted in partnership with Oxford Economics, surveyed 3,000 senior business leaders globally, including 295 in the financial services industry. While financial services respondents are committed to achieving net zero and bullish on sustainability, the industry appears to have, so far, pulled back from making the harder decisions—and backing them with budget.

By bringing their sustainability ambitions into reality, financial firms can reduce their exposure to risky investments in high-emitting businesses or customers in disaster-prone geographies, avoid legal liabilities for investing in activities that contribute to environmental damage, cut costs in their own internal operations, burnish their brand for sustainability-minded customers and ensure compliance with emerging disclosure standards and regulations.

In our analysis of the study findings, we’ve come up with three recommendations for financial services firms to close the sustainability gap:

• Prioritize their use of data and technology. For instance, of the respondents using analytics tools to improve their sustainability performance, 70% rate these tools as being effective or highly effective.
  
  
• Rethink their approach to sustainability governance, culture and skills. Sixty-seven percent of respondents agree their organization has a strong culture of sustainability, but success takes action. It will be vital to clarify roles, mobilize teams and establish incentives for success.
  
  
• Tackle financed emissions. The primary focus today for sustainability is on internal operations; however, financed emissions are substantially higher. Financial firms will need to work with clients and partners to identify and reduce environmental impacts.

To see more of our study results and get a deeper look at our recommendations, read the full ebook, "Deep Green: How financial firms can turn sustainability ambitions into action."

For more, visit the Sustainability & Resilience section of our website or contact us.