Sustainable finance: taking ESG to the board

Banks are the blood line of any economy, having the ability to steer it by redirecting capital to where it matters, but also withhold it from other sectors. It is therefore imperative that banks participate in the shift towards more sustainable development.

As in other sectors, we have seen views of several banks’ views on environmental, social and governance (ESG) dimensions evolving – from being seen simply as philanthropic or corporate social responsibility activities to now becoming central to operations and the business model.

Financial institutions are being requested to embed ESG in their overall strategies and risk management frameworks as well as increase their non-financial disclosures.

These requests, which were originally being pushed by regulators, are now increasingly becoming market-driven, with clients and investors demanding more information on what is being funded and what societal impact it might be having.

This is resulting in mounting expectations being placed on financial institutions, to make public commitments and take actions on the ESG front. Inevitably this puts pressure on boards to step up their game and actively engage and lead their banks through a...