FINANCIAL SERVICES
TThere are virtually no areas of the global economy untouched by the quest for sustainability and net-zero emissions . Meeting net-zero emission goals in financial services is one of the most important drives toward a sustainable future .
Global banks fund , invest and partner with the world ’ s leading organisations – it is up to them to take the lead on green financing projects and meet the growing desires of their customers for green products .
“ Consumer demand is surging , not just for ESG-focused offerings , but for products with clear links to well-defined metrics and impact mandates ,” says Shuvo G Roy , VP and Head of Banking Solutions ( EMEA ) at Mphasis .
Statistics do not lie – the call for sustainable products resonates across demographics , from rural retirees to young urban entrepreneurs .
As Shuvo notes : “ Recent research suggests that customers are willing to dedicate a significant portion , up to 40 %, of their savings to green products . This trend is reflected in the rapid rise of green assets under management ( AUM ), now approaching 10 % of global AUM .”
Today , a lot needs to be done for banks to meet the demands of consumers . And , just as banks take action to reduce emissions , new technologies contrive to drive energy consumption upwards .
As the banking sector continues to explore ways AI can be leveraged to best serve its customers , this presents a challenge in that it consumes vast amounts of energy , too .
Francois Terrade , Global Head of Structuring at Demica , says : “ Addressing this issue requires a collective effort from the entire banking sector . For green banking initiatives to be effective , they must be collaborative and progress uniformly to ensure widespread adoption .”
Banks need to focus on several factors to build a greener future , as outlined by Shuvo :
• Redefining investment and lending policies to prioritise global energy transition and funding circular economy projects
• Reading investor expectations to facilitate weaning off environmentally unfriendly assets in their portfolios
• Setting clear and measurable objectives and covenants for borrowers , as well as partnering with data providers to acquire necessary data to evaluate performance against these objectives
• Aligning their supply chains and vendor ecosystems to promote nationally and UN-mandated sustainability objectives
• Increasing the pool of tradable instruments backing green investments , thereby attracting higher participation from both institutional and individual investors .
124 September 2024