Within the banking sector, there has been an increasing amount of activity around the areas of ESG (Environmental, Social and Corporate Governance) and sustainability, as demonstrated at the COP26 event in November 2021.
Banks are increasingly under pressure on a number of fronts: reducing investment in fossil fuels, developing a greener portfolio, reporting and disclosure and creating business models to stress test various climate risk scenarios.
Regulators are moving from a voluntary approach, based around reporting standards such as TCFD (Task Force on Climate-Related Financial Disclosures), into a mandatory environment. Over the next two years, banks will need to explain in detail how their investments impact climate change.
There’s also the tricky area of digital ethics. Avanade defines digital ethics as the systematic application of values to digital technology throughout its lifecycle to make sure it’s respectful of individuals, socially responsible, environmentally conscious, and well-governed. This is much broader than just eliminating bias in algorithms. Even managing risk and compliance – something banks understand well – is only part of the story. Digital ethics is about going a step further to do the right thing, which in turn works to build customer and employee trust.
Banks and sustainability: time to rethink
How to meet the challenges and capture the opportunities
The urgency of digital ethics for banks
Capturing customer and employee trust.