UK Banks Sidelining Sustainability

Sustainability is not a boardroom priority for most UK banks, according to new research published today.

The research, commissioned by Mobiquity and conducted by Censuswide reveals that less than a third (31%) of corporate and retail banks in the UK believe that sustainability is a top concern for their business.

Three in four (78%) UK executives at traditional and “challenger” banks said that sustainability was an important part of their company’s business strategy.

However, only six in ten (58%) of UK bank executives surveyed said that their banks were implementing sustainability initiatives. The main barriers cited by banking executives to adopting sustainable behaviours were the COVID-19 pandemic (31%) and industry demands (31%), followed by over a quarter expressing long term commitment to execution (26%) as a key barrier.

Sustainability was low on the list of boardroom priorities (in fifth place out of seven), behind customer retention and COVID-19, changing customer expectations, digital transformation, and increased competition, the research also found. Meanwhile, only six in 10 (58%) banks said that they had made someone responsible for sustainability on their board.

For those banks championing sustainability the most common form of initiative is carbon credits – a scheme allowing a company to buy a permit to produce a certain amount of pollution and offset the pollution by paying for environmentally beneficial activities such as planting trees − was the most common type of action on sustainability among banks surveyed. Forty-seven per cent of UK traditional banks and 42% of challenger banks said they were using carbon credit schemes.

The research suggests that there is a disconnect between bank public commitments to sustainability − including signing up to the UN Principle despite committing to UN Principles for Responsible Banking and promising to achieve “net zero” carbon emissions by 2050 or sooner – and their willingness to take action about sustainability.

The research may also reignite claims that banks are “greenwashing” – giving the impression that their businesses are more environmentally friendly than they are, while still financing fossil fuels such as coal, oil, and gas.

Commenting on the report, Dr Ben Caldecott, Director, Oxford Sustainable Finance Programme, University of Oxford and COP26 Strategy Advisor for Finance, UK Cabinet Office said “Sustainable finance creates huge opportunities for the banking sector, and in addition to supporting clients transitions towards sustainability, banks will also need to become much more sustainable themselves, not only for their financed emissions, but for their own activities and operations.

“The banking sector is where the financial system and the real economy meet. It is in the interests of banks to move quickly given the scale of the opportunities and the risks that are already materialising. Banks need to develop comprehensive strategies, together with detailed plans for implementation tied to appropriate resourcing and levels of accountability to ensure implementation. For example, by enabling investments in digital capabilities, such as platforms that enable new forms of client engagement with sustainability and impact investing.

“Critically, it is also in their own commercial interests to do so and they should not wait for regulation or the enforcement of recently updated regulations.”

Matthew Williamson, VP of Global Financial Services, Mobiquity said “Our report shows that most UK banks are not doing enough to be sustainable. Not only will this have a large impact on the environment, but in the future, they will find that attracting customers and retaining talent will become difficult.

“Customers may decide to vote with their feet and investors may pressure banks to improve their performance on sustainability as it becomes a key business metric.

“Overall, the role of the bank in society is changing from a wealth repository to a digital lifestyle enabler. There is a golden opportunity, therefore, to build on existing awareness around digital and its role in creating sustainable banking outcomes, by embracing digital innovation that lays the foundation for achieving an eco-conscience across banking and financial services.”