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Can financial services collaborate to drive sustainability?

Can financial services collaborate to drive sustainability?

Company Information,
30 October 2023 | 4 min read

At Sibos 2023, industry experts spoke about the need for cooperation across borders and businesses to help drive sustainability at the pace it needs.

After a summer of droughts, wildfires and extreme heat waves worldwide, the urgency to respond to climate change is growing. Banks and financial institutions recognise that they have an important role to play in meeting sustainability objectives, and many have been making fundamental adjustments to adapt their business models. But the question often asked, as in so much of the sustainability debate, is are they moving fast enough?

As Rosemary Stone, Chief Business Development Officer and ESG Executive Sponsor at Swift, pointed out in one of Sibos 2023’s big issue debates, the cost of the drive towards sustainability is eye-watering. She said that post-pandemic, there was now a $4.2 trillion funding gap needed for emerging countries to achieve the sustainable development goals. Overall, BlackRock estimates that $4.5 trillion will have to be invested every year between 2021 and 2050 to limit global temperature increases to 1.5 degrees over that timeframe.

“Improving sustainability is a complex task with different challenges across different global regions. But what we do know is that in all regions, significant shifts need to be made in the way that our businesses are run and large investments from all sectors of a society are going to be essential,” she added.

Vivek Ramachandran, HSBC's head of Global Trade and Receivables Finance, said that it’s not just geographically that challenges vary, but in the different rates of adoption between corporates and organisations as well.

“[It’s] our first fundamental challenge to acknowledge the completely different stages of adoption. A recent survey we conducted said it's only four out of 10 corporates who have sustainability targets embedded in their interactions with suppliers,” he said.

“We as an organisation [and] as an industry need to make sure that we work with the clients and realise they have commercial challenges that are day-to-day… and sustainability needs to be built into that, as opposed to being something overlaid on top of everything else that they need to deal with.”

The value of sustainability

When asked about whether the shift to sustainability adds value to an organisation, Lavinia Bauerochse, Global Head of ESG at Deutsche Bank, pointed out that ESG is more than just sustainability. She does see an incremental value for sustainability, but points out that businesses are future-proofing themselves by adopting ESG measures, and it’s also becoming a factor in the competition for talent.

“One of the first key questions [from applicants] is, how do I have impact in my role if I join your organisation?” she said.

Often, what’s difficult for organisations is the how of building in ESG, not the why. Standards and accreditations are still in flux and what works in one geographic region or area of business may not work in another. The right kind of data is a key component of this.

Susan Yang, General Manager of International Payments and Network Management at the Commonwealth Bank of Australia (CBA), said that banks can help. She gave the example of a function that CBA built into its banking app during the pandemic to help citizens figure out which benefits they were eligible for.

“We have the customers, we have the data, we have the technology to analyse the criteria,” she said.

How costs will be managed is another issue for organisations. Gopal Bhagat, Deputy CEO of the Indian Banking Association, said that the pandemic had created an opportunity for the public to recognise how costs may have to change in response to external forces.

“Perhaps there is a need to rework the cost given for any product or service because of the cost of their impact on the environment. So, whether it is type one, type two or type three emissions, how the product is affecting those emissions,” he suggested.

Throughout the roundtable, the need for collaboration and shared knowledge was returned to time and again.

“There’s a need for collaboration on a global basis to really make interoperable elements work, but importantly to best serve our clients,” said Ben Matthews, partner at Baringa.

“At the end of the day, there are clients at the end of this, customers that we really need to both protect but also support across what is a very complex and often very emotive subject.”

If you have a Sibos digital pass, you can watch the full debate here.

The views expressed on these pages are those of the authors and/or the institution they represent, and not necessarly those of Swift.