The concept of Environment, Social and Governance (ESG) is not lost on banks, but perhaps some have yet to grasp its importance in helping consumers engage in a meaningful way with financial organisations.
For many consumers, the relationship they have with their bank is somewhat transactional. But ESG provides an opportunity to level-up the connection, in turn driving up revenue and loyalty, and opening up new income streams e.g., green banking products.
Before we get how banks can improve their ESG efforts, it’s important to make the distinction with corporate social responsibility (CSR).
- CSR is a type of self-regulation which ensures that an organization’s actions have a positive effect on employees, customers, communities and the environment.
- ESG builds on CSR in that it comprises a concrete set of standards and figures which can be utilized by consumers and investors alike, in order to understand an organization’s environmental, social and governance practices.
To put it another way, CSR is the company’s mission statement, whereas ESG is its products and services.
The rise of ESG investments and green banking products in recent years is a reflection of consumers wanting to see some meat on the bones of CSR programs. Some 83% of consumers think companies should be actively shaping ESG best practices, as per PwC research.
87% of bankers believe CSR should be a priority for their bank
Banks have to find a way to close the expectations gap with consumers, but in doing so may face a familiar challenge for all businesses: balancing ESG with growth plans.
Cited by 40% of executives as the biggest barrier preventing their company from progressing on ESG issues, it’s a challenge that can mean senior leadership fail to make ESG a priority.
However, banks have a unique opportunity to further their ESG efforts in a way that increases high-quality digital engagement, boosts sales of green banking products, and builds long-lasting loyalty.
The answer is Meniga’s Carbon Insight tool, which enables customers to track their carbon footprint within their digital banking journey.
By seamlessly integrating carbon footprinting services with their digital provision, banks can enhance their offer to customers – while fulfilling their ESG/CSR commitments.
Meniga Carbon Insight does more than just calculate the footprint of each transaction. It offers customers a rich user experience around understanding and improving their footprints.