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Sustainable Banking – The Path to Optimized Sustainability Management

With the increased urge to contribute to the European Green Deal, companies have been signing up to become environmentally sustainable.  Although many industries have quickly become active in this area and gained a foothold, the financial sector is still lagging behind. The WWF's sustainability rating shows that only few pioneers in banking are making progress in this matter, leaving plenty of room for improvement – especially in a sector where stakeholder pressure has a major effect on growth.          

More and more customers are demanding a stronger sustainable commitment from their banks and requesting sustainable products, and the competition from sustainably founded banks is constantly increasing.  

On top of that, there is increasing pressure from the government to transparently meet disclosure requirements to fight "greenwashing", which is a method of using fake labels to achieve a green image that fulfills only individual measures of the superficial ESG criteria. 

There are ongoing studies that show the lack of improvement by German banks in meeting the proposed sustainability requirements due to their shortage of efficient tools for collecting and controlling data.  

According to a study by BearingPoint, sustainability has a lot of positive aspects. Banks that deal consistently with this topic show higher returns. Especially during the coronavirus pandemic, banks that have put more effort into sustainability have been less affected and could more easily counter the situation financially. Meanwhile, banks also hold enormous power in their ability to provide funding and must therefore act as role models. By sending a message with the right investments, they can bring awareness to other enterprises and customers about their actions on behalf of the environment.  

Sustainability for banks is more than just a marketing move  

As major economic institutions, investing in sustainable projects and offering sustainable products to customers is the bare minimum banks can achieve. They need to make major internal changes in their regulatory and management processes while still maintaining a certain “business as usual” mentality. Conserving resources, reducing CO2 emissions, and fulfilling the ESG criteria are only a few points that must be incorporated into banks' overall business activities as they work to respect the new regulations regarding the EU taxonomy and the Green Deal.  

Bringing more clarity to green management 

Considering the large amount of data needed to prepare sustainability reports, banks are currently facing a major challenge in maintaining a clear overview of their internal and external information. This process not only requires a huge amount of money for external management, but an enormous amount of time could also be wasted on manual data entry.  

This is where SAP and those of us at Scheer come into play.  

In addition to its wide range of sustainable products, SAP recently introduced SAP Cloud for Sustainable Enterprises, which is designed to evaluate the sustainability parameters of an enterprise. Through only one license, a multitude of aspects of sustainable management are covered and sustainable business is integrated into the core of various enterprise activities. 

Sustainability reporting, climate measures, economic and social aspects – all these points become measurable thanks to this SSE product. After implementing it, you will receive automated reporting that takes the ESG criteria into account. This makes managing your environmental footprint and identifying necessary fields of actions much easier. By highlighting inequality among employees, the software can also be used to ensure ethical business practices at your company as you work to fulfill your social responsibilities. Furthermore, this platform offers the chance to develop new services and business models at the interface between sustainability data and the required regulations. In following these regulations, the transparency required from banks can easily be achieved by creating auditable reports in real time. 

Source: SAP SE

Achieving the goal with a strong partner

In order to achieve the set sustainability goals, it is useful for companies to have a strong partner at their side. On the one hand, this partner should have a thorough knowledge of the functionalities of the SAP Cloud for Sustainable Enterprises and, on the other hand, also specialist knowledge in the area of sustainability. It is important to find a partner who not only takes care of the pure implementation of the software but who can also ensure a seamless transition as well as professional SAP training.

If you're interested in more information or have questions about these topics, why not get in touch with us?

Authors: Lily Riehl, Maissa Bachouche, Daniel Kat