Financial service and insurance providers are in a unique position to make significant strides towards decarbonization within their own operations, while also supporting decarbonization through their investments. Indeed, the Financial Times’ recent listing of Europe’s Climate Leaders found financial services to be the top performing sector. For many in the sector, the starting point has been to analyse and change what the enterprise can most closely control. This can involve setting targets for reducing paper, energy and water consumption, along with efficiency goals for our buildings and data centres.
Enabling decarbonization across the economy
Harnessing digital finance, big data, artificial intelligence (AI), mobile platforms, blockchain and the Internet of things (IoT) to deliver products and services, offers ongoing opportunities for decarbonization. More can be done to pioneer decarbonization along the value chain, such as through Decarbonization Level Agreements to set measurable targets with suppliers and partners. In addition, companies in the sector can learn the lessons of the pandemic to move their operations further towards a lower-carbon way of operating, embedding some of those changes adopted rapidly in response to Covid-19 to deliver ongoing sustainability benefits.
Yet still, at face value, it may seem that the sector has less to do around decarbonization when compared with sectors such as energy and manufacturing. However, given the nature of the role that financial services and insurance institutions play in most people’s lives, the sector has huge potential to drive progress towards delivering net zero. This is an exciting opportunity to lead change in decarbonization, responding to changing public expectations, regulatory requirements and the needs of investors.
Institutions can become part of a wider decarbonization ecosystem, with mutual value around integrating environmental, social and governance (ESG) criteria into business or investment decisions. Again, digital technologies and data have a role to play, for example with the application of artificial intelligence algorithms to identify more sustainable investment strategies.
At Atos, for example, we have worked with DreamQuark, a French start-up specialising in AI applied to the finance and insurance sectors. Together, we’ve launched the Sustainable Investment Brain, the first digital platform for banks and insurers that is both dedicated to socially responsible finance and compliant with the principles of transparent artificial intelligence as set out in new proposed European regulations.
Leading the transition to net zero
Supported by a growing interest in ESG issues, global sustainable fund inflows were up 88% in the fourth quarter of 2020 to more than $152bn. Their success has since continued to build, supported by the growing demand for meaningful investments during the health crisis. The Sustainable Investment
Brain helps to accelerates this trend by combining AI and deep learning, leveraging financial and extra-financial data, including accurate and standardised ESG data. This can be used to identify potential investors most interested in responsible investment and to recommend the most suitable assets and investment products, taking into account their individual profile and objectives.
The sector can build on the progress made in recent years by embracing new digital tools to become a key enabler and catalyser of a greener society. The combination of digitally-enabled financial services and innovative sustainable finance can help to power economies while supporting the transition to a net zero future.