Banks generating revenue growth from ESG strategies

October 04, 2022

Environmental, social, and governance (ESG) issues are top-of-mind for financial institution executives. A whopping 98% of U.S. banking executives in fact said they view sustainability as an important part of their business strategy, according to a study by Mobiquity.

Saying you support sustainability while not risk-free is not likely to land a banking CEO in the headlines. Actions to support the concept, however, can and have had that effect. Even so, numerous financial institutions, for whatever reasons, want to contribute to “ensuring a balance between economic growth, environmental care and social well-being,” to borrow a description of sustainability from Banco Santander.

But what role can banks and credit unions play in addressing sustainability, especially the politically charged issue of climate change actually, quite a bit. And there could be some good results from doing so.

For example, banks and credit unions can use their support of sustainability to attract and retain both customers and employees. 80% of consumers and 84% of employees are more likely to buy from or work for a company that is seen as actively supporting the environment, a 2021 PwC survey found.

For financial institutions that elect to “go green,” the process isn’t easy since measuring environmental impacts can be vague. Nor can sustainability be addressed by a few paragraphs in an annual report. “Sustainability efforts do not work in a vacuum; they must permeate the entire organization and that can only happen if they’re being driven from the top,” explains Kate Drew, Director of Research at CCG Catalyst.