Future of Banking: 5 digitalised ways to accelerate the sustainability journey in the new normal

Future of Banking with Ebenezer ASUMANG: Digitalized Christmas and an AfCFTA New Year
Ebenezer ASUMANG & Oliver PANIER

“The sustainability revolution will, hopefully, be the third major social and economic turning point in human history, following the Neolithic Revolution moving from hunter-gathering to farming and the Industrial Revolution.” Charles Philip Arthur George, Prince of Wales

Green Technology and Sustainability Market Share (www.openpr.com)

Banks are becoming a major force in achieving the UN Sustainable Development Goals (SDGs). We have also seen changes in the C-Suite. Most companies have created new executive level positions, such as sustainability directors or officers, and are responding to calls from increasingly engaged board of directors. With pressure to act from all sides, the banking industry has reached an ecological tipping point.

In daily conversations with clients, some research (Accenture, 2021) has shown massive changes in banks’ attitudes towards ESG. Bank leaders are placing great emphasis on the “E”, the environmental and climate risk component. Some of the world’s largest financial services institutions, such as HSBC (Oct.9, 2020) and Santander (Madrid, Feb.2021), have committed to going net zero by 2050. They will not only measure emissions from their own operations and supply chains, but, more importantly, from its financed issues. 

Ecological tipping point for Banks

The conversation about sustainability is not new (the Paris Agreement was signed in 2016), so why the sudden urgency? In a word: pressure. Banks feel it everywhere. They are scrutinized by the public, regulators, employees, customers, and investors, and each group is motivated by slightly different interests. The public expects the financial services industry to be the catalyst for achieving the United Nations SDGs.

They ask for transparency and accountability beyond mere economic indicators. Achieving the objectives of the Paris Agreement requires a new contract between the banking industry and society. Some connoisseurs estimate that the necessary changes will require between $ 5 trillion and $ 7 trillion in mutual funds. And that’s just the first wave of public consultations.

Regulators and central banks now understand that climate change poses a profound, immediate, and existential threat to the global economy. It follows that it is a systemic risk for the financial services industry.

Banks can no longer ignore or deny the science of climate change and its catastrophic financial and systemic costs. As a result, these bodies are increasing pressure on banks to immediately comply with the principle of sustainability.

The previous tone has shifted from advice and recommendations to mandatory disclosures and actions related to capital requirements, stress tests, risk models, disclosures, and KPIs (e.g., green asset index). Banks are increasingly incorporating these requirements into their own risk management, compliance, and policy frameworks.

Control and pressure from employees and customers are motivated by a slightly different interest. Research (Accenture 2021) shows that 6 % of talent will not accept a job at a company that does not have strong sustainability and environmental policies, and retail and commercial clients are now choosing banks with strong ESG profiles.

Ultimately, there is pressure from the investment community and activist groups. Institutional investors have already urged some banks to be more ambitious both in the short and medium term to reduce their exposure to fossil fuels and have tabled resolutions at annual general meetings.

With major disruptions ahead, investors are also expecting banks to explore new growth and profit opportunities. For their own business, banks have no choice but to lead by example when it comes to sustainability. They need to examine their supply chain, which is 30-50% of their total cost base. A third-party risk management is expected to become more complex.

Banks have slowed down to join the sustainability efforts of some other industries but the momentum towards sustainable banking is only increasing, and it will continue to grow for the next decade. At this green tipping point, there are five areas in which banks can accelerate their sustainability journey:

  1. Crafting a sustainable banking strategy:

Define your sustainability strategy and develop an action plan to implement it. Do a thorough analysis and map your path to becoming a “responsible bank”. Determine the business model and technology required to seize the opportunity and define your value proposition for your customers.

Examine your company culture for ways to embed positive initiatives that recognize, reward, and promote sustainability across the company. It’s about governance and change management. Integrate sustainability into proper governance and start empowering everyone on the new way forward now.

  1. Compliance with risks and regulations:

ESG regulation is evolving at a rapid pace and control already extends beyond climate change and will continue to address governance and social issues. Some regulatory requirements are already in place, such as climate stress testing and sustainability disclosures.

The next step will be to filter loan books against taxonomies. Banks should try to stay ahead of the regulatory curve. ESG-related risk management is not just about regulatory reporting, it should be seen as a paradigm shift for end-to-end risk management frameworks and guidelines. Leverage your data capabilities with smart tools to collect, validate, and analyze ESG data and ensure you turn data into action.

  1. Sustainable product offerings:

With innovative green products such as bonds, sustainable mortgages, and sustainability-linked loans, banks are already seeking competitive advantages in the green finance market. This will set off a chain reaction across multiple industries to embrace sustainability.

Right now, banks are feeling pressure, but ESG-linked products, both on the credit and investment side, can provide a competitive advantage. Banks will need products and processes to support green initiatives, but these solutions must be efficient in terms of process structure and technical architecture. Get advice from your ecosystem partners to help you make the necessary changes in policies, processes, and technology.

  1. A smart target operating model for sustainable banking:

Some research shows a clear impact of ESG on banks’ target operating models, including customer service and back offices. Sustainable financial decision-making and monitoring, ESG client due diligence, investment advice, and supply chain financing are just a few of the well-known use cases; actually, there are a lot of them. Since ESG frameworks and taxonomies are still too volatile and available data, such as ESG ratings, is not consistent enough or not available to all clients, we expect massive efforts from ESG analyst cohorts.

A smart operating model for sustainability combines strong operational discipline, work orchestration, and governance. It takes full advantage of the intelligent connection of existing customers with digital channels supported by an integrated ecosystem of data providers to help manage the effort. ESG data should become an integral part of customer lifecycle management, building on existing KYC and AML exams and functions.

  1. Green IT:

Gain operational efficiency by moving applications, data and infrastructure to the cloud and double the impact on stakeholder value by reducing CO2 emissions and operating costs. Taken from a sustainability perspective, migration to the clouds can reduce global CO2 emissions by 59 million tons of CO2 per year. Research (Accenture 2021) estimates that this reduction equates to a 5.9% reduction in total IT emissions. That’s the equivalent of taking 22 million cars off the road, a massive reduction that can help meet the collective commitments on climate change.

Building the Bridge

The green transformation is a major challenge in the banking industry, and this require the right calibre of human resource in the right places to turn the transformation dreams into realities. There must be deliberate value-based recruiting to find the right people in transforming internal corporate cultures within the banks. This will eventually result in the outward oriented transformation the world envisages in green banking and ultimate sustainability.

This is a crucial moment. The challenge is real, and the work ahead is complicated. But it is a job that must be done and done well. Banks that now envision and implement their sustainability agendas will have a pioneering advantage in the race to achieve, and even exceed, their sustainability goals.

Time to get down to business.


https://greencoast.org/quotes-about-sustainability/ [Accessed November 4, 2021]

https://www.accenture.com/gb-en [Accessed November 4, 2021]

https://www.un.org/en/climatechange/paris-agreement [Accessed November 6, 2021]


[November 6, 2021]

https://www.hsbc.com/news-and-media/hsbc-news/hsbc-sets-out-net-zero-ambition [Accessed November 7, 2021]

About the Writers

Oliver is Swiss with Ghanaian background and has over 20 years’ experience as an entrepreneur with specialities also in investment & private banking, mentoring, value-based recruiting, and executive search; focusing on banking & sustainability.

He is the founder of People Investor AG, Switzerland and Ghana, and a member of the investment committee of a Christian ethical pension fund. (www.people-investor.com)

Contact him via ([email protected])

Ebenezer is a Development Communication Specialist, Banking, Finance & Investment Professional, MSME & SDG Enthusiast, and a WriterPreneur. He`s Ghana Branch Manager of People Investor AG (www.people-investor.com). Contact him via ([email protected])

He is also Country Director (Ag) of PIRON Global Development GmbH, Ghana (www.piron.global). Contact him via ([email protected])

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