The report, titled ‘Can banks create a true ecosystem with embedded finance?’, surveyed 300 banking executives globally and highlights key findings on ESG. Moreover, it shows that 73% of banks are expected to offer more sustainable banking options in the next five years in response to increasing customer demand for banks to be engaged in ESG issues.
As banking becomes more integrated into consumers' lives and businesses' operations, more attention is being directed towards banks' values and climate credentials. For instance, the study shows that 24% of European consumers are likely to switch providers if their bank is not engaged in ESG issues. Likewise, Generation Z is expected to drive this shift with their long-term investing approach and preference for ethical and sustainable banking options. In the UK, 61% of banking customers want their bank to do more to create a positive social and environmental impact.
As a response to these specific preferences, banks started to increase investment in low-carbon technologies and decarbonization startups, with 37% of banks currently doing so, and an additional 31% of banks pursuing sustainability strategies that reduce emissions in both their supply chains and internal operations. Furthermore, the paper shows that 74% of banks are looking to invest in environmentally friendly projects in the next five years, while 64% are considering diverting capital from carbon-intensive industries. Banks are also looking to reduce their carbon footprint by moving operations to the public cloud, with over half agreeing that banks will no longer own any private data.
Large corporations, fintech companies, and banks have a significant role to play in sustainability-related matters. They can make a valuable contribution to the cause by gaining a better understanding of environmental, social, and governance (ESG) issues that are pertinent to their operations. Additionally, they can scrutinise their impact materiality, which involves identifying how their business activities influence the ecosystems in which they function. This includes identifying potential risks and opportunities and measuring and monitoring ESG performance.
Moreover, according to the Paris Climate Protection Agreement, which regulates ESG policies, 195 countries and territories were summoned to change the global economy in a climate-friendly manner, marking an important milestone for international climate policy.
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