As a society we are driving towards a decarbonized future, a transition that will transform all parts of our economy. Banks and other financial service providers can play a key role in spearheading this transformation, working across industry sectors to support businesses as they work to reduce their environmental impact and make net zero a reality.
Banks are in a unique position to make significant strides towards decarbonization within their own operations, while also supporting decarbonization through their investments. The establishment last year of the industry-led, UN-convened, Net-Zero Banking Alliance bringing together 53 banks from 27 countries representing almost a quarter of global banking assets (over US$37 trillion), is the most vivid demonstration of this. For many in the sector, the starting point has been to analyze 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 centers.
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, banks 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 banking has less to do around decarbonization when compared with companies operating in the energy and manufacturing sectors for example. However, given the nature of the role that banks play in most people’s lives, they have 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.
Banks 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 specializing 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 accelerate this trend by combining AI and deep learning, leveraging financial and extra-financial data, including accurate and standardized 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 catalyzer of a greener society. The combination of digitally-enabled banking and innovative sustainable finance can help to power economies while supporting the transition to a net zero future.
Developing a data-driven approach to energy management for NatWest
The NatWest Group’s foresight in deploying an innovative embedded service and digital platform has balanced climate action with improvements in efficiency and significant commercial returns:
- £2.4 million in savings and cost avoidance delivered during the first 11 months
- A more efficient billing validation has generated over £1.8 million in cost avoidance
- Energy consumption is lower, keeping the bank on track with its energy reduction targets
- Insightful exception reporting has realized at least £128,000 of energy savings beyond business-as-usual energy savings so far.
NatWest Group (formerly RBS) needed a comprehensive way of managing its energy performance and environmental reporting. Key objectives were to reduce energy consumption and costs while enhancing environmental engagement with internal and external stakeholders.
Involving multiple suppliers, data sources and a reliance on spreadsheets, the company knew that its reporting was slow, with problems around the integrity of data. It wanted a more robust approach, using digital tools and a complete repository of reliable data.
An innovative partnership
Embedded within the NatWest Group’s own team, EcoAct was uniquely placed to understand the day-to-day challenges and work closely with the company to engage with stakeholders and achieve its goals. The team implemented a data and analytics platform that captures, integrates and analyses data from over 5,000 locations in 57 countries, facilitating and driving expense management, reporting and energy management activities.