Other parts of this series:
The drive for sustainability will force banks to radically change their relationships with many of their key corporate customers.
They’ll need to gain a deeper understanding of their customers’ businesses and develop greater insight into the workings of their supply chains. Furthermore, they’ll have to shift from being mainly sources of finance to instead becoming partners that provide knowledge, guidance and a variety of resources.
Unless banks build closer ties with their corporate customers, they’re likely to struggle to meet their sustainability targets. They’ll find it difficult, for example, to curb the carbon emissions generated by the companies and projects they finance. And they’ll battle to reach their net-zero targets. Our research shows that more than half of the big banks in Europe have committed themselves to ambitious net-zero goals.
It’s not enough for banks to simply encourage their corporate customers to cut their carbon emissions and improve their sustainability practices. They need to work closely with these companies to understand the challenges they face, win their trust and help them develop solutions. Often, they’ll have to engage with their customers’ supply chains to foster greater support for sustainability within their business ecosystems.
Banks that move quickly to become sustainability partners will enhance their standing among their corporate customers. They’ll increasingly be recognized as trusted guides and companions on the path to sustainability.
Effective sustainability partners
We’ve identified three sectors where banks can become effective sustainability partners. By fostering closer relations with their corporate customers in these sectors institutions can improve their sustainability status and steer the companies they finance to better compliance.
|Agriculture||Around 10 percent of greenhouse emissions in Europe are generated by farmers and other participants in the agriculture sector. Many banks are already working with farmers and agriculture representatives to help them improve their sustainability.|
|Electric Vehicles||The electric vehicle sector is growing at a blistering pace and offers banks plenty of opportunities to participate and encourage greater sustainability. Sales doubled last year to reach 6.6 million vehicles – three times the number sold in 2019. Several banks are working with vehicle suppliers, infrastructure providers and consumers to promote the transition to cleaner transport.|
|Energy||The shift from fossil fuels to renewable sources of energy is critical to the success of the sustainability objectives set by the United Nations and other international agencies. A variety of banks are fostering the development of renewable energy producers and suppliers.|
Key customer concerns
Our work with banks looking to increase their commitment to sustainability has highlighted some of the key concerns of the companies they finance.
- Lack of understanding. Many firms remark that their banks lack sufficient understanding of their businesses and say they’re wary of broad, one-size-fits-all approaches to improving sustainability.
- Deficit of trust. Often companies lament that they are unable to find unbiased partners that can guide them to become more sustainable.
- Scarcity of reliable information. Numerous businesses remark that there is an abundance of information available about sustainability, but reliable data is scarce. Industry representative organizations are seen as the most credible sources of sustainability information.
- Regulatory challenges. Growing regulatory requirements, intended to encourage greater sustainability, are often decried by companies as overly complex, burdensome and sometimes inappropriate.
- Impact on profitability. While most firms recognize the need to improve their sustainability, many are concerned that efforts to achieve such results might hamper their profitability.
- Unclear opportunities. Some companies struggle to identify opportunities that could emerge from the growing demand for sustainability among regulators, governments and consumers.
- Insufficient incentives. Several firms remark that there are insufficient incentives to counter the risks associated with changing their businesses to become more sustainable.
A few banks are already looking to develop solutions to address some of these concerns. They’re aiming to provide, among other things, easier access to funding, more personalized services, greater marketing support, curated information and education portals, and community hubs that link customers within specific industry sectors. Such innovations will build trust and credibility and enable banks to forge stronger relations with their corporate customers. Closer ties with such customers will help these institutions accelerate their journey to sustainability.
If you’d like to discuss your organization’s drive to sustainability, contact me here. To learn more about Accenture’s commitment to sustainability, read this report: Climate Leadership in the Eleventh Hour:
In my next blog post, I’ll examine how banks can encourage their customers to build sustainability into their procurement practices.