As sustainable finance gains traction, banks are taking a cautious approach to sustainable lending. However, with increasing pressure from shareholders, regulators, and the growing demand for sustainable solutions, banks that do not proactively engage in sustainable lending may find themselves falling behind. Subsidiary finance and public incentives are expected to drive significant demand for sustainable lending in the future, while industry-specific regulations like the EU’s Corporate Sustainability Reporting Directive are placing stricter requirements on banking customers. Non-compliant banks may face higher credit risks, unfavorable lending terms, and weaker profitability, as ESG risks become concentrated in their loan portfolios.
On the other hand, banks that embrace a bold sustainable finance agenda will develop the necessary knowledge and skills to thrive in the future sustainable lending market. By incorporating ESG considerations into their lending decisions and leveraging their investments in automation and credit processing, these banks can outperform their competitors. They can also build ESG data platforms and reskill their lending practice teams to transform their lending value chains. This path of reinvention in sustainable lending not only allows banks to stay ahead of regulatory requirements but also enables them to capture significant growth opportunities in the emerging sustainable finance market and enhance public trust in their ESG behavior and credentials.
- Research Report via Accenture by Christof Innig, Nina Jais, Goffredo Amodio