Sustainable Banking Takes Center Stage: 73% of Banks Embrace ESG Initiatives by 2028
A recent report by Economist Impact for Temenos has shed light on a noteworthy transformation taking place in the global banking sector, as it increasingly embraces Environmental, Social, and Governance (ESG) propositions, as outlined in Fintech Global News. The survey, which involved 300 banking executives from around the world, predicts that within the next five years, an impressive 73% of banks will significantly amplify their commitment to sustainable banking options. This shift is attributed to the dual forces of rising consumer demand and the growing significance of ethical banking practices.
This report underscores the sway of Generation Z, a demographic that leans heavily towards long-term investments that align with ethical and sustainable values. Notably, in the United Kingdom, a remarkable 61% of banking customers express a strong desire for their financial institutions to have a positive impact on social and environmental issues.
The banking sector’s response to this growing demand has been multi-faceted. Approximately 37% of banks are directing their investments into low-carbon technologies and startups focused on decarbonization. Furthermore, 31% are implementing comprehensive sustainability strategies that encompass both their supply chains and internal operations. This commitment to environmental concerns extends to investment strategies, with 74% of banks planning to fund eco-friendly projects in the next five years. Simultaneously, there is a discernible trend of divestment from carbon-intensive industries, as indicated by 64% of the banks surveyed.
The report also highlights a technological shift occurring within the industry, with over half of the banks (51%) predicting a transition away from private data centers in favor of public cloud operations to reduce their carbon footprint.
Kalliopi Chioti, Chief Marketing and ESG Officer at Temenos, underscored the growing influence of consumers on banking operations. Chioti remarked, «Evolving consumer preferences are putting immense pressure on banks to operate according to a clear set of values, and are actively shaping banks’ agendas and strategies. Whether it’s through the use of artificial intelligence to align investment strategies with clients’ values or reducing their carbon footprint through economies of scale on cloud solutions, technology can be a powerful ally for banks on this journey.»