Why banks should care about ESG

Why should you care?

Throughout the industry, banks and credit unions are trying to figure out how to embrace ESG and the potential regulations that may come with it. With minimal guidance given thus far to U.S. institutions, it is challenging to figure out exact expectations. Measuring environmental impact can be imprecise, creating further difficulties. What is certain is that financial institution's leaders and their customers see value in supporting ESG:

• 98% of U.S. banking executives said they view sustainability as an important part of their business strategy
• 80% of consumers say they are more likely to buy from a company that supports environmental causes
• A 2022 Gartner report revealed that executing well on ESG can reduce operating costs by up to 60%
• In a 2022 study by KPMG, 59% of CEOs report feeling pressure to increase ESG transparency

For financial institutions that prioritize ESG, there is an added bonus beyond the social impact. In a recent McKinsey article, research showed companies that get ESG right grow faster and boast higher valuations than their competitors—10% to 20% higher. While this shouldn't be the only reason an organization chooses to make ESG a primary focus, it can help motivate institutions to do it faster.

How to calculate your return on investment

Feedback from banking professionals indicates a gap in tools, data, and processes needed to report on the supplier regulatory targets. To help financial institutions gain better insight, Salesforce has invested in what they call the Net Zero Cloud and Automate ESG Reporting. This tool integrates with the various systems that collect data on environmental, social, and governance management. Highlights of this new offering are

• A Diversity, Equity, and Inclusion (DEI) dashboard that can show employee demographics from a company's HR system in the platform
• A multi-org carbon accounting capability that pulls carbon emissions data from an organization's subsidiaries into a single instance of the platform
• A Compliance & Disclosure Hub that offers a streamlined, automated process for creating reports that align to framework-specific ESG standards

These new reporting capabilities give banks and credit unions the resources needed to better manage their ESG initiatives. The Automate ESG Reporting solution will be generally available globally starting February 13th, 2023.