Not only are banks the main source of finance for businesses internationally, they also fuel the global economy through capital investments. There is therefore no doubt that in the future our society, our economy and our sustainability will largely depend on the investments the banks put their money into. Banking institutions must evolve also taking into account the concerns of their customers, and more particularly Generation Z, which is more aware of social issues than previous generations. Therefore, nearly 90% of them would be willing to pay 10% more for a product or service if it were more sustainable.
Faced with this new reality, environmental and sustainable investment strategies are slowly but surely gaining importance. By developing a strong social conscience, banks are thus able to increase their attractiveness towards customers, investors and talents, while making, to their measure, a gesture for the common good. However, have banks now really identified and taken these new challenges seriously? And for who does it, is it greenwashing or a true affirmation?
Ecological whitening or green intentions?
Almost all major banks now state on their website that they have implemented a climate or sustainability strategy or commitment. But the reality is quite different, since when questioned, the vast majority (70%) consider ESGs (environmental, social and good governance criteria) as the means to improve their reputation and credibility in the market, while half perceive it as a point of sale and 44% use it to attract young customers.
However, hidden business intentions don’t necessarily mean the absence of significant progress. Many banks are already starting to prioritize sustainable investments, and around € 302 billion was invested in “sustainable” assets in 2020. ABN AMRO is one such bank that is already implementing positive changes, as Tjeerd Krumpelman, Group Sustainability Manager explains: “In 2017, we turned the fortunes of our clients around, informing them that sustainable investments should be the norm. As soon as a private individual or company comes to us as a customer, the standard offer offered to them is systematically sustainable. Customers appreciate and understand it. “
In line with the actions undertaken in 2017 by ABN AMRO, the sector tends to align itself with this new trend, as from 2 August 2022 banks have to offer their customers a questionnaire on their preferences in terms of sustainable investments. This new European legislation is a small revolution aimed at harmonizing and initiating the transformation of the banking sector.
Good speeches but few concrete gestures
The European Central Bank presented its ambitious roadmap in the summer of 2021, defining new policies, risk assessments and regulatory requirements for banks. Unfortunately, it looks like these ads have fallen on deaf ears. Then, in March of this year, the ECB threatened to disclose and expose banks that had not yet implemented its climate risk requirements, claiming they were not up to par.