Lens
A portfolio lens on exposure view
Financed emissions and social impacts matter as much as in-house operations.
Future of sustainability in banking
Align capital, risk, and customer promises.
Sustainability in banking means integrating climate and social risk into governance, lending, operations, and reporting. This page explains why ESG is important for banks and how to turn intent into action.
What does sustainability in banking include?
Banks embed ESG into governance, risk appetite, product design, and disclosures so lending portfolios and internal operations support a resilient economy.
Teams
Cross-functional teams involved
Risk, finance, frontline bankers, compliance, and sustainability teams collaborate daily.
Plans
Scenario-driven planning approach
Climate scenarios and stress tests ground board discussions and regulator submissions.
ESG banking focus areas
Governance & risk appetite. Set board oversight, escalation paths, and limits for high-risk sectors.
Risk & portfolio management. Integrate ESG data into underwriting, pricing, and capital allocation.
Client engagement & products. Support customers with transition finance, advisory, and sustainability insights.
Reporting & assurance. Deliver transparent disclosures to regulators, investors, and rating agencies.
WHY IT MATTERS
Why ESG elevates banking performance
Regulatory alignment. Supervisors expect banks to evidence climate risk governance and social safeguards.
Capital efficiency. Pricing, provisioning, and capital models improve when ESG risk is visible early.
Customer trust. Clients want guidance on how financing decisions support their sustainability goals.
Talent advantage. Clear ESG commitments help retain bankers and attract new hires.
EXECUTION
How to operationalise sustainability in banking
- Map exposures. List sectors, regions, and client segments, then flag high-impact areas for deeper ESG review.
- Embed scenario analysis. Connect climate and social scenarios to risk appetite statements and decision frameworks.
- Equip frontline teams. Provide playbooks, training, and RunSustainably workflows for bankers and product teams.
- Tie goals to incentives. Link sustainability KPIs to remuneration, credit decisions, and board reporting.
MEASUREMENT
Tracking ESG banking progress
- Financed emissions. Align with PCAF or local requirements to measure portfolio emissions consistently.
- Policy alignment. Monitor how lending, investment, and supplier policies match public commitments.
- Decision logging. Record ESG escalations, approvals, and client commitments in RunSustainably.
- Regulator-ready reporting. Automate production of climate risk reports, ISSB submissions, and stakeholder updates.
Actions for banking teams
Refresh sustainability credit policies. Clarify restricted activities, incentives, and governance flows.
Stand up a climate data room. Centralise collateral, emissions data, and scenario outputs for quick access.
Pilot a banker enablement program. Teach frontline teams how to start ESG conversations and log insights.
GLOSSARY SNAPSHOT
Banking glossary snapshot
Financed emissions. Emissions linked to a bank’s lending and investment portfolio.
Transition finance. Capital that helps clients move from high- to low-carbon models.
Climate scenario analysis. Testing how different climate futures affect credit, market, and operational risk.
FAQS
Future of Sustainability in Banking FAQs
Why is ESG important for banks?
Banks sit at the center of the economy, so regulators, investors, and communities expect them to manage climate and social risk responsibly.
How do ESG benefits show up for banks?
Better risk visibility, stronger client relationships, and improved access to capital markets.
Do smaller banks need complex models?
Start with qualitative assessments and plain-language heatmaps; add advanced models as data improves.
Where should ESG work sit?
Board oversight with shared ownership across risk, finance, frontline teams, and sustainability leads.
Drova RunSustainably unites objectives, approvals, and reporting so industry teams stay aligned.
Ready to keep sustainability work visible?
ESG 101 HUB
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