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By Harry Freeman, Consultant, BJSS
A quick scan of recent headlines shows us that the relationship between the financial services industry and sustainability is anything but harmonious at present. Between the of bank headquarters and Extinction Rebellion , it would be easy to gather an image of a zero-sum game in which for one to succeed, the other must fail. dHowever, the reality is much more nuanced. Banks are publicly committing to net zero futures. The chancellor has issued a £15bn green gilt drive and there is a clear impetus across the industry to align incentives towards a greener future.
So, where does the disconnect between financial institutions, their sustainability efforts, and public perception come from?
In this article, we explore the drivers behind the focus on sustainability, how financial services have reacted to date and what more can be done to meet expectations.
What is behind the sudden shift in focus on sustainability?
While Extinction Rebellion is at the sharp end of voicing its dissatisfaction, it is not just a case of a small minority who wants to see action in this space.
Gordon Gekko made “greed is good” famous, but much like the cinematography, the message is starting to look somewhat dated. Investors are increasingly looking for a purpose as well as returns.
With the impacts of Covid-19 beginning to subside, regulators are turning their attention to other key exogenous trends, such as climate change and sustainable finance. With the EU & UK seemingly leading the charge when it comes to ESG (environment, social, governance) regulations and expectations, several recent and upcoming regulatory changes are poised to significantly affect the industry.
According to many leading legal experts, announced 01/07/21 would require pension schemes and financial services to report on governance, strategy, risk management, targets, metrics and disclosures. Firms that don’t yet have a view or handle on this information will need to get one quickly.
How have financial services reacted?
With the aforementioned drivers noted, there is a spectrum of activity ongoing with financial services already. From established firms through to the disruptors, there are several examples worth highlighting:
– Preferential rates and great PR are on offer for firms who can obtain either product. A key issue to date is the number of firms able to access these products. Establishing and agreeing SPT’s (Sustainability Performance Targets) can often prove too complex and expensive for small and medium enterprises.
– has been a funding option on the table for some years now. Speaking to us recently, Peddy Hashemi, EMEA Director at the fintech company, Taulia, explained how they are helping clients to make their supply chain more sustainable using innovative Sustainable SCF.
– Serai’s initial offering earned them the title - “LinkedIn for apparel suppliers”. At first, it targeted the retail industry before helping manufacturers, suppliers, and vendors to connect. However, its next move used its connection with HSBC to combine invoice and payment data alongside certificates of origin to offer proof of sustainability and provenance for suppliers and buyers. The recent move into traceability is helping stakeholders boost their ESG visibility.
, the Nordic-based fintech responsible for My Carbon Action. This partnership not only boosts Bud’s offering to its FS clients, but it means UK Retail Banks can now provide their customers (business and retail) with a clear indication of how their spending impacts their carbon footprint. – Bud, an early leader in the Open Banking space, has signed a deal with
Focusing on the disruptors, we asked Ed Maslaveckas, CEO of BUD, why they have moved into this space;
What more can be done to meet expectations?
As disruptors continue to push expectations higher, consumers will inevitably ask for more from the incumbents. With that in mind, the five key areas financial institutions should consider are as follows;