" class="no-js "lang="en-US"> Traditional and challenger banks global sustainability standards
Monday, May 20, 2024

Traditional and challenger banks not aligning with global sustainability standards despite high representation at board level

A research report published today shows although challenger and traditional banks have increased sustainability representation at board level, they are underperforming in aligning with global environmental standards due to a lack of regulation and enforcement.

The research of 150 UK banking executives, commissioned by Mobiquity, a full-service digital transformation enabler, and conducted by Censuswide reveals that challenger banks have increased their sustainable representation at board level from over half (55%) in 2021 to 81%. Meanwhile, traditional banks have increased their sustainable representation from 56% in 2021 to 85%.

Despite a high level of ESG representation at board level, the data shows that 4 in 10 (42%) traditional banks and over a third (36%) of challenger banks are not measuring their environmental impact. In addition, only just over half of traditional (55%) and challenger (54%) banks are employing sustainable initiatives.

The key barrier to sustainability for UK banks is lack of universally recognised regulation and enforcement with almost a third of challenger (32%) banks and over a quarter (29%) traditional banks citing this.

Concerns at board level show that almost half (49%) of challenger banks are most concerned with talent management, whereas traditional banks (49%) are focusing on sustainability.

Commenting on the report, Peter-Jan Van De Venn, VP Global Digital Banking, Mobiquity said:“Despite the inherent advantage that challenger banks have over traditional banks in being more digital, sustainability does not automatically follow. Sustainability necessitates using those digital tools available in order to implement ESG standards and initiatives.”

 “Meanwhile, a high number of sustainability representatives at board level across both challenger and traditional banks are failing to take action due to a lack of universally recognised regulation and enforcement.”

“Changing consumer demand and the need for greater transparency have been key driving forces for businesses to re-evaluate their environmental mandates, and while some businesses have seen this as a huge challenge to overcome, others have tapped into its potential. Customers are already opting to turn to the competition if their bank doesn’t exhibit ESG-friendly behaviour, so it’s in the best interest of financial institutions to ramp up and deliver on their sustainability efforts to gain market share.”

“The key to becoming more sustainable for banks of all types is to ensure that they are implementing a robust ESG measurement standard, while planning and executing sustainable initiatives tied to digital transformation. Only then will banks be able to leverage sustainable digitisation to reap the rewards of increased profitability, operational efficiency and greater customer retention and acquisition.”

Chris Gledhill, Independent Fintech Advisor commented on the research:

“Consumers are increasingly expecting the brands they interact with to reflect their values, the values of their community and the values of society in general. Banking is no different so it is heartening to find that across all regions, both traditional and challenger banks have placed greater importance on sustainability as part of the overall business strategy.

“ESG is an opportunity more than a cost. Yes, there are costs involved for banks in formulating and executing an ESG strategy but the returns are customer retention, talent attraction and lower operating costs.

“Societal trends are helping towards ESG goals. COVID-19 accelerated and expanded remote working options, the march towards a cashless society is reducing the logistics of carting round physical cash and digital savvy consumers are becoming increasingly comfortable banking without paper forms, statements, and letters.

“Lack of standards in ESG are having an impact. Without consistent industry and international standards, it is left to banks themselves to formulate their own ESG goals. Whilst this is beneficial as it allows banks to tailor their ESG programmes to their unique businesses, it could also result in some institutions not ‘pulling their weight’ with regards to their role in protecting the planet. In the absence of laws, it would be good to see industry standards or independent accreditations of ESG programmes.

“Sustainability is a mindset. Banks have become increasingly comfortable viewing ‘digital’ as a mindset, The same is true for sustainability. With every new programme and initiative, sustainability should not be an afterthought but integral to the delivery, operation and overall success.”

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