Can banks lead a consumer climate movement?

The COVID-19 global pandemic has turned our world on its head, and while it’s been devastating for society in many ways, some of the lessons to come out of it could contribute to positive social change. During a climate-focused plenary at our yearly Digital Client Exchange event last November, we took a look at financial institutions’ role in reversing global warming and in promoting positive environmental change, and at how corporate social responsibility (CSR) in banking can help tackle the climate crisis.

Dr. Carsten Wengel, G+D Head of Sales & Distribution in the Card & Digital Payment business, states, “I would say the pandemic is a defining moment. It changed awareness – also for the financial services industry – about what is really important. It’s not just about economics, it’s also social and environmental priorities.”

Indeed, the role of banks in our community extends far beyond their central role in the economy. Banks have the power to influence customers and stakeholders, and can use this power to help shape a better world and act against global warming. Swedish fintech startup Doconomy empowers consumers to track their individual carbon footprint, based on their card and online purchases. Mathias Wikström, CEO of Doconomy, believes that the retail banking sector is ideally positioned to effect meaningful change.

For consumers, green fintechs such as Doconomy can help lead to reflection and a change in behavior. By increasing the environmental awareness among consumers and urging them to make climate-protection-related decisions, financial institutions can drive a positive transformation.

A climate-first sustainable strategy: corporate social responsibility

With regard to a sustainability strategy and corporate social responsibility, the banking industry has the opportunity to lead by example. In May 2021, the European Central Bank published a paper titled “Do banks fuel climate change?”¹ with findings pointing to the pivotal and systemic role of the finance sector in introducing changes that lead to a positive climate impact.

“Banks represent a trusted network, and if we can use that trust to mitigate the risks of the climate crisis, I think we have made use of existing functions and features and their role in society,” notes Wikström. Nonetheless, there is a need for increased regulatory measures, he says, and one way that banks can contribute to a positive change is to ensure that a monitoring framework, such as the one put forward by the European Central Bank (ECB) in 2019,² is endorsed and enforced.

Competition and collaboration: investing in sustainable finance

The international race to develop an effective COVID-19 vaccine is a prime example of multilateral competition – and of what is possible when humanity is at risk. Alongside the competition, collaboration was central, and various partnerships emerged to develop vaccines. Wikström believes that competition is the way forward for the finance sector, too. “The best of our efforts will shape our competitors’ services, and stimulate their services to become better,” he explains. “The partnerships that we are in are extremely important. Front-movers are looking to find other front-movers, and that’s why these partnerships become so important over time.”

Published: 20/01/2022