Today Mobiquity, a digital transformation enabler part of Hexaware, has published the findings of its Benchmark for Sustainable Banking Report 2022.

The research conducted by Censuswide surveying 150 UK banking executives found that greenwashing among banks is a systemic problem. Although 100% of UK banking executives say that sustainability is integral to their business strategy, only just over half of UK banks (59%) measure their environmental impact as part of sustainability targets.

The research also demonstrates that banks are offsetting non-sustainable practices with carbon credits. Almost half (49%) of UK banks are investing in carbon credit schemes as a priority initiative, an increase from the 2021 Sustainable Banking Report.

Banking executives have cited key barriers to overcome in securing a sustainable future. The top three listed barriers include the lack of universally recognised regulation and enforcement (31%), cultural legacies that need to be shifted, budget implications and limited knowledge of the market (25%).                                                                                                

While some UK banking executives are failing to implement and track sustainable initiatives, they do recognise the benefits of being sustainable. Over a third of banking executives said that sustainability creates more value for stakeholders (36%), increases operational efficiency (35%) and over a quarter (29%) said that it increased profitability.

The data also shows a huge shift in priorities toward sustainable behaviours compared to the 2021 benchmark report – a 69% increase in those citing sustainability as an integral part of their business strategy – however, there remains a gap between sustainable business planning and the measuring of its success. 

To generate sustainable outcomes, the data shows that 97% of UK banking executives say that ‘sustainable digitisation’ is the key to success. UK banks also believe in creating sustainable supply chains. 9 in 10 (93%) banking executives said that they ensure their suppliers are compliant with current sector-specific sustainability expectations.

Peter-Jan Van De Venn, Strategy Director Fintech, Mobiquity said: “Last year’s report showed that sustainability wasn’t even on the agenda nor was the planning of sustainable initiatives. Our 2022 report shows a continued growing awareness of sustainable banking with more institutions increasing their reporting at the board level as well as integrating it into their business strategy – demonstrating a positive step in the right direction.

“Banks are also citing that sustainable banking increases profitability, operational efficiencies and customer loyalty. Meanwhile, they are holding their supply chain accountable with a large proportion of banks ensuring their customers and suppliers adopt sustainable practices.

“While there has been some good progress on placing sustainable banking at the top of the boardroom agenda, the report shows that there is still an issue with banks saying and not doing. Greenwashing is an ongoing challenge for banks. They will only be able to protect their reputation if they fully optimise the execution of their sustainable initiatives. This can be achieved by harnessing sustainable digitisation combined with a robust ESG measurement framework to track impact.”

Commenting on the report, Dr Ben Caldecott, Director, Oxford Sustainable Finance Programme, University of Oxford and COP26 Strategy Advisor for Finance, UK Cabinet Office said:

“Supervisors and central banks have not been universally impressed by industry efforts to date. And policymakers and wider societal stakeholders have been widely critical of the banking sector’s genuine commitment and authenticity when it comes down to meeting the net zero commitments made in Glasgow.

“Banks should expect greater scrutiny of net zero targets and their implementation, and this will be combined with a tougher and more sophisticated approach from supervisors on climate-related financial risk.

“It is, therefore, a very significant development that the UK Government will make mandatory the publication of firm-level transition plans across the UK economy. This will be a requirement for certain financial sector firms and listed companies by 2023. As standards for transition plans mature, the government and regulators will make it mandatory for firms to publish their transition plans.

“HM Treasury has formally launched a new Transition Plan Taskforce, to develop the gold standard for UK firms’ climate transition plans."