Having faced increased levels of volatility in recent years, businesses have had to mitigate unprecedented levels of risk. Alongside this, the financial services industry has had to maintain prosperity whilst minimising negative impact on the planet – and society.
Our MoneyMinds insight explores the biggest trends impacting the financial services landscape in 2024. The third trend looked at the long-term sustainability agenda and the role of the financial services industry in driving this forward.
We’ve all probably become tired of the ESG moniker. It was first slapped across brands, then heralded as a saving grace and the future of business. More recently, it has been dragged through the mud as the industry reckons with greenwashing claims, increasing political backlash, and salient skepticism over whether sustainability should lead the corporate agenda. Even BlackRock’s Larry Fink changed his tone for this year’s annual letter.
That said, climate change is undoubtedly occurring before our eyes – there is little need to share statistics about our warming planet and its ever-more extreme natural events. More than two-thirds (71%) of survey respondents across different generations agree that climate change, biodiversity loss, and other environmental issues are big enough problems that they justify significant changes to people’s lifestyles. But what does this mean for the financial services sector?
Consumers are indeed focused on the impact that financial services can have on the environment. Nearly two fifths (37%) think that ESG is important when making decisions about their financial services provider, and 43% say it is more important now than it was a year ago. The reality is that our choice of banking, pensions, and investment management providers affects where capital is directed – arguably the leading catalyst for development.
From trillion-dollar asset managers to bourgeoning startups, we’ve seen ESG transform into a distinguishable part of many businesses’ communication activity. Talking the talk, however, is much easier than walking the walk. Conveying authentic corporate interests to improve general wellbeing, increase diversity across organisations, and reduce the effects of business on the environment, can be challenging.
Communicating compelling sustainability practices and, more importantly, how corporate actions positively impact the environment and the lives of stakeholders by considering ESG factors requires genuine and heartfelt effort. The occasional internal newsletter on World Earth Day, fanciful press releases, and big website banners that seemingly set corporates aside from their peers can come across as surface-level and even deceitful. Brands which are playing where they have agency, will find that authenticity comes naturally.
The task is therefore threefold: promote honesty, transparency, and dialogue in meaningful ways, without reducing ESG performance and ambition into a yearly slogan; ensure boardrooms have delegated representatives that move the needle from top-down; and finally, collaborate with agencies whose values actually align with what you’re trying to accomplish.
