Banks
Banks across the globe are putting sustainability at the forefront of their growth mission. Sustainable banking products can help mitigate a bank's exposure to ESG-related risks and improve profitability.
The steady and steep rise in sustainability-related debt is one of the most distinctive features of the sustainable economy. Retail and investment banks globally are embracing sustainability-linked loans and green bonds, and launching consumer loans, car loans, and mortgages with a green tilt. Others are reconsidering their loan footprint with “brown” industries. Financing the green transition and footing new green businesses will continue to take center stage.
Banks also face increasing pressure from regulatory bodies highlighting the need for them to consider ESG risks in general, and climate-related financial risk in particular, in their risk management framework, in particular stress testing. Clients also scrutinize banks’ investment and lending practices to determine whether they align with society’s values.
These dynamics are compelling banks to reframe the investment and lending decision-making process through the ESG lens—and then to determine what metrics should be included. But the current ESG landscape can be overwhelming at first glance. Banks need to adopt clear policies, processes, and KPIs to establish credibility and deliver successfully.
Comprehensive services for banks
Adopting a holistic strategy
Banks need comprehensive and ESG strategies to participate in and benefit from the accelerating growth of sustainable finance. We advise on building and communicating a realistic and systemic sustainability policy that includes all business units, from retail banking, investment banking, asset management to wealth management. Policies should encapsulate clearly stated targets in specific areas with metrics in place to support them.
Compliance
Regulators are demanding banks to devise climate stress tests to assess banks’ climate-risk preparedness and requiring them to disclose ESG factors through international frameworks such as TFCD or SASB. We advise banks on coping with existing and upcoming regulatory requirements and on identifying gaps in compliance and practice.
ESG Metrics
Metrics and targets are at the core of a bank’s sustainability agenda. We advise retail and investment banks on setting their targets, developing their proprietary methodologies, accessing new data sources, adding granularity in tracking, and updating external client and industry data as these become available over time. We also support clients on how to use international benchmarks and risk scoring models to ensure that the bank’s ESG agenda is accurate, timely and verified.
Building Synergies
Establishing syndicates of mission-aligned lenders, with mandate lead arrangers and bookrunners, to expand debt allocations into specific companies, sectors or under specific guidelines.
Global benchmarking
Conducting data-driven and bespoke studies on the global ESG industry, covering trends, standards, regulatory frameworks, practices, benchmarks, players, initiatives, associations, gaps, and opportunities.
Partnerships
Reviewing initiatives such as the UN-convened Net-Zero Banking Alliance or the UN- Principles for Responsible Banking and advising on how clients can establish common science-based guidelines and align their lending and investment portfolios with peers.
