Banks should turn to sustainability amid COVID-19 pandemic, says GlobalData

Amidst these COVID-19 times, banks should use the current lockdown to reflect on their strategies by refocusing on sustainability including Environmental, Social, and Governance (ESG), says GlobalData, a leading data and analytics company.

The largest driver of sustainability is the rise of millennial and Gen-Z buying power in financial services, two generational cohorts that will soon comprise 75% of all accounts and purchases. GlobalData’s 2020 Banking and Payments survey has found that 18–34 years olds are 40% more likely on average to say that ‘supporting environmental and ethical causes’ is the most important attribute in a financial services firm.

Katherine Long, Retail Banking Analyst at GlobalData, comments: “To align with their own beliefs, consumers are demanding faster, cheaper, more convenient ways of managing their finances as they want the brands of the products they buy.”

In a rare moment of positivity, Dutch lender bunq revealed that its SuperGreen card is off to a flying start since it launched on 2 April. Through a scheme designed to plant a tree for every €100 spent, bunq customers are expected to have planted 144,000 trees with around $15.6m (€14.6m) spending. bunq is now partnering with Mastercard to offer its SuperGreen card across Europe.

GlobalData’s ESG thematic research has taken a deep look into the opportunities that ESG practices can give financial services. One of those has been the fund industry: ethical funds, for example, have grown increasingly, having outperformed non-ethical funds over the course of 2019, the last three years, and the last five years.

Ethical funds are also popular with the industry itself, with funds able to charge premium fees for ethical funds due to their market novelty.

Long concludes: “ESG funds have also proved more resistant to COVID-19 market shocks, with Bloomberg showing them falling on average half as much as non-ESG funds during the COVID-19 crisis, on part due to their non-dependence on the oil sector.”

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