In today’s rapidly evolving landscape, the banking industry faces a momentous challenge: meeting the ever-growing demands of environmental, social, and governance (ESG) issues. As regulations continue to evolve, the spotlight intensifies on the need for greater transparency and disclosure of ESG-related data. This paradigm shift presents an opportunity for banking leaders to harness the potential of technology driven ESG practices to not only address these demands but also drive financial performance. As per industry reports, the global ESG sustainable finance market is predicted to reach $ 22485 billion by 2031. Banking IT leaders can build new capabilities and solutions without incurring technical debt, positioning their institutions at the forefront of ESG integration.
According to FIS’ 2023 Global Innovation Report, 60 per cent of financial services and fintech firms globally are actively developing new ESG products and services. This demonstrates a growing recognition of the importance of ESG considerations in the industry. The market for ESG data and analytics is set to expand from $2.2 billion in 2020 to $5 billion, as per a recent report by Button Taylor. This growth reflects the increasing significance of data-driven insights for ESG decision-making. To facilitate accessing, validating, and managing internal and externally sourced ESG data, banks are advised to establish centralised ESG data stores. This approach enables efficient management of multiple ESG data variables, including policies, frameworks, and data operations. By centralising ESG data, banks can enhance data management practices and ensure consistency in their ESG reporting and decision-making processes, empowering them to have a comprehensive view of their ESG performance and align it with their overall sustainability goals.