In the banking sector, there’s a growing sense of urgency for firms to address sustainability issues. The pandemic resulted in a global economic crisis, which underlined the importance of sustainability and preparing for economic disasters. Indeed, environmental, social and governance (ESG) standards are becoming high on the agenda for many businesses. And as a result of climate change and social unrest, it’s never been more important that today’s banks begin to integrate sustainability into their core business practices, to help achieve goals outlined by the Paris Agreement. Below, we discuss how banking firms can grapple with sustainability challenges and ESG goals.

Embrace corporate purpose

One of the key ways that banks can work towards sustainability goals is by creating a corporate purpose and articulating that message to employees, and candidates. Banking firms must take into consideration how they operate in the social and economic environment and create strategies that ensure their business is valuable in the long term. Leaders need to make a real commitment to sustainability efforts and create a strategy that is well-aligned with the business. It’s no secret that the world needs to move to a low-carbon future. Therefore, there will likely be more pressure on banks from investors who want to ensure they will still be getting a return on their investments. That’s why banks need to take a holistic approach. Board members need to collaborate with key stakeholders and create an ecosystem of sustainability throughout banks. Embracing a core purpose and taking responsibility is one of the steps toward achieving sustainability goals, as well as attracting greater talent.

Sustainable materials

Many companies around the world are making efforts to adopt more eco-friendly materials. It’s critical that banks introduce sustainable products, as they can have a positive impact on the environment. However, Switzerland-based bank UBS has become the first bank to unveil an environmentally-friendly credit card. Known as the UBS Optimus Foundation Credit Card Eco, it’s composed of the plastic substitute PLA, which is made from animal feed corn – and it’s more than 80% biodegradable. The card provides also the usual services, such as contactless payment, but is much healthier for the environment. Then there’s also USB’s virtual card, which is used purely in a mobile banking app, so no plastic card is used. These are examples of how banks can embed ESG strategies in a way that’s practical and visible to customers.

The move to green finance

Ethical investing has become a key area of focus in Switzerland and other parts of the world. To truly reach sustainability goals, banking firms must pursue green finance opportunities. Green finance is any financial activity that helps to ensure a more sustainable outcome, which includes debt, loans and investments that are used to develop green projects. There’s a range of developments underway that can help banks move toward green finance. For example, The Green Fintech Group, based in Zurich has outlined an action plan for Switzerland to improve the green fintech ecosystem. The group was established as part of a larger plan to establish the country as a global leader in green digital finance. Today’s banks need to develop a green finance strategy that focuses on sustainable projects. By engaging in green finance, banks can remain ahead of regulators, build positive relationships with customers – and make a significant contribution to climate goals.

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