With a vaccination looming in the horizon, many businesses and investors have shifted their focus from profits to people. Issues related to human equality, access to health services and societal welfare all topped the agenda in 2020. It quickly became evident that the environment and social issues have a deep and direct influence on economic stability.
As we enter the ‘new reality’ following the ongoing effects of COVID-19 to the global economy, ESG takes a leap forward becoming central to a new economic sustainability equation.
Meanwhile the carbon heavy industries plummeted (either shut down or reduced their operations.) Air quality improved dramatically as cars remained parked in the driveways.
All of the above and more have all raised the voice and pressure on the need for greater adoption of environmental, social and governance (ESG). As we enter the ‘new reality’ following the ongoing effects of COVID-19 to the global economy, ESG takes a leap forward becoming central to a new economic sustainability equation.
Whilst it is recognized that banks could face increased pressure to ensure they are able to earn a return on their investment whilst managing material risks impacted due to ESG factors, customers and the public are also increasing the heat as they choose their bank based on their ESG credentials.
Many of the competitive banks are already testing and developing new products, services and models to enhance sustainable banking whilst wealth managers move towards ESG-informed investing to keep on top of public and regulatory expectations.
The introduction of carbon neutral banking, green home-improvement loans, and sustainable exchange-traded funds (ETFs) are examples of how firms are already adapting their strategies to meet ESG expectations. Capital markets move towards ‘green underwriting’ as customers of both commercial and retail banks have the option of a variety of ESG-linked funds, bonds and assets.
To move forward and remain ahead of public and regulatory expectations, the bottom line is that despite the challenges, banks must embrace ESG and make it a part of their strategy.
There are three key actions where we can help develop your ESG strategy: