White Paper

Building a roadmap towards sustainable finance

Discover insights from thought leaders at McKinsey, First Abu Dhabi Bank, TradeSun, and Finastra on the strategies and steps banks can adopt to incorporate ESG considerations into their lending practices.

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The world is increasingly moving toward sustainable finance due to climate change concerns. Banks, investors, and corporates seek alignment, because ESG is not just a trend, but one of the top priorities for society. Indicators like assets under management and investment in sustainable products have grown rapidly. Regulatory taxonomies and standardized reporting formats facilitate efficient operations. With clear aims, standards, and reliable data sources in place, banks are well-positioned to accelerate ESG strategies.

Global coordination for ESG standards and regulations remains a challenge, though progress is being made. The lack of standardized corporate disclosure requirements and the multitude of methods used by ESG ratings providers make it difficult for investors to interpret ratings. However, consolidation efforts, such as the International Platform on Sustainable Finance, aim to create a common ground taxonomy, with 90-95% consistency expected across taxonomies for ESG and Sustainability.

Overtime, the 'S' and the 'G' in ESG have led to regional variances that cannot be overlooked, as most businesses focus on the environmental issue. For banks, it is important to support their clients in rolling out all types of projects and have the right systems in place to be ready for a much more complex set of KPIs.

The ESG business is largely a data problem. Banks can leverage sustainable finance solutions to prepare their systems for upcoming changes, particularly related to new regulations. From a technology stand point, it will help all parties to adopt a flexible platform approach, where banks can plug in new proven apps and enhanced quality data sources that are in line with their business strategies, to fully capitalize on current and future opportunities.

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