Why Sustainable Banking is The Future of Finance

Climate change has become a major source of concern worldwide. Many industries are assessing their operations to see how they can reduce the effects. Surprisingly, the banking sector is one of such. Financial institutions are constantly working to solve this global challenge through sustainable banking. Wondering how they do it? Well, relax for we have all that covered in here. Just read to the end.

Often, banks and credit unions are the strongholds of every community. They affect how their customers do their jobs. And since climate change is triggered by what we do for a living, banks that focus on sustainability and green economy have a role to play here. Through loans and any other funding, these banks participate in fuelling certain industries, not to mention affecting purchases.

What is Sustainable Banking?

Green or sustainable banking is a term that was coined in the 1990s to describe a variety of products and services. Generally, the program refers to the steps taken by financial institutions to decrease their carbon footprint, promote environmentally friendly activities, and assist clients in their efforts to be more environmentally. Environmental and social governance (ESG) is another name for this approach.

Many large companies have begun to publish annual ESG reports in recent years to keep investors and clients up to date on their efforts and results in this area. For example, the Western Union's most recent report describes their objectives and pledges. Some of them include energy-efficient office location criteria, waste reduction initiatives, and digital alternatives to physical travel. By doing so, they aim to achieve sustainable banking.

Customers prefer sustainable banking

Unsurprisingly, the banking sector is always crowded. People need to save money while others want loans. However, customers don’t just pick a bank at random. Their selection is always based on how trustworthy the institution is. Therefore, any bank intending to remain healthy in the competition must incorporate strategies to win customers’ trust. One of the notable strategies is environmental conservation.

Banks focusing on sustainability and green economy tend to stand out from the crowd. Most customers trust financial institutions funding environmental initiatives. As such, they’ll remain loyal to such banks. This means that the bank will continue making profits. And by the way, the environmental initiatives will help the banks reach more prospective customers. Therefore, the institution itself is one of the beneficiaries.

Advantages of sustainable banking

Sustainable banking is not just about reducing or preventing emissions or environmental damage. It defines how a company operates as a steward of the environment at large. Furthermore, it reveals the relationship between customers, employees and the community at large. Therefore, banks with sustainability will have such strong relationships. This will help them outdo their counterparts by attracting and retaining customers.

What’s more, green banking is much more cost-effective. It helps reduce or even eliminate some, if not all, costs. For instance, doing away with checks will save printing costs. More so, customers will no longer need to present the checks in banks physically. This will save them transport costs. Besides, this will make management easy as the bulk of paperwork is eliminated.

Is sustainable banking right for your institution?

While making the transition to green banking may be a daunting task, it’s the right move for any financial company. Compared to risks and costs, the benefits are more. Besides, it won’t just benefit you as the bank. Customers too will be happy. Isn’t that what you want for them? Interestingly, no big changes are required. Just a few adjustments and things will be in place.

Getting started with green banking

Green banking is a continuous process that requires commitment to be productive. Through several baby steps, you’ll be surprised to see the bank achieving this goal. Notably, nothing unique needs to be done. Just simplify tasks and you’ll find yourself doing better than you even intended. Also, keep in mind the social issues surrounding your business environment. From diversities to labor standards, be sure to manage everything well.

Using technology to get things done

Arguably, every industry uses technology in one way or another. The key objective is to simplify things because that’s exactly what technology does. During older days, all banking transactions needed in-person attendance. Therefore, people had to travel long distances hereby incurring travel costs. However, banking online can solve this problem. Clients can send and receive money from the comfort of their homes.

Moreover, sending and depositing checks is costly and time-consuming. When you switch to electronic payment options, you’ll notice significant savings on the time and cost. Who wouldn’t want that? However, we can’t deny the risks involved. When security measures are ignored, technology can do more harm than good. Therefore, you should integrate robust security protocols into your systems to make sure that customers’ money is always safe.

Final thoughts on sustainable banking

As with any other industry, climate change is largely affecting the banking sector. So, green banking is inevitable. And it’s no longer a choice. According to Mark Carney, a governor in England, failure to adapt will render you bankrupt without hesitation. The best thing is that sustainable banking will work to your organization’s growth. That’s why this is the future of finance.