EBAday 2022: Racing toward net-zero

EBAday 2022 is fast-approaching, and as we edge closer to the conference’s kick off, we’re exploring some highlights across the agenda.

Temenos – Company

Finextra’s head of content, Madhvi Mavadiya, will be moderating the session, leading panellists through complex but vital questions related to reaching net-zero goals.

The session will explore how banks should manage the complex yet critical shift from a shareholder to stakeholder capitalism model. Panellists for the session will include:

  • Kalliopi Chioti, chief environmental, social & governance (ESG) officer, Temenos
  • Silvia Mensdorff-Pouilly, senior vice president, banking and payments, Europe, FIS
  • John Willis, director of research, Planet Tracker

In a recent Finextra blog post, Chioti stated that it is becoming difficult to separate the environmental and commercial ambitions of banks.

“Consumers are not passive bystanders to the climate agenda, and they are increasingly matching their money with their values and voting with their wallets. No more so than millennials, who are more inclined to judge banks by their ESG record and commitment to sustainable banking. This is the generation in line to receive $68 trillion in inherited wealth by 2030.”

Chioti continued: “Banks can’t afford to ignore them. Today, a bank’s green credentials matter just as much as their financial services. Fall short on the former, and the latter may not even matter. Customers are looking for banks that are socially and environmentally responsible and agree with their values.”

Reaching net-zero is one of the highest priorities for financial institutions at present, as they are increasingly being compelled to consider their impact on all those that interact with the organisation – including customers, suppliers, employees, and local communities.

Failure to deliver on these objectives for stakeholders will result in, at least, reputational damage, and at worst, a failed net-zero transition in Europe.

Just this week, the Bank of England warned banks to take immediate action on climate risks or face a 15% hit to annual profits.

Released at the same time the bank published its Climate Biennial Exploratory Scenario, the central bank’s deputy governor Sam Woods stated: “The first key lesson from this exercise is that over time climate risks will become a persistent drag on banks’ and insurers’ profitability – particularly if they don’t manage them effectively. While they vary across firms and scenarios, overall loss rates are equivalent to an average drag on annual profits of around 10-15%.”

“If we are ever to reach net zero, a number of sectors are going to have to adapt their business models on a fundamental level […] As the report sets out, it will be in the collective interests of financial institutions to support counterparties that have credible plans to adapt – and ultimately reduce their exposures to those sectors of the economy that are inconsistent with a net zero policy.”

First published in Finextra:

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Temenos – Company