UK banks shelve sustainability amid economic turmoil

UK banks shelve sustainability amid economic turmoil

In a surprising twist, the number of UK banks considering sustainability as a central business strategy has dropped dramatically by 40% within a year, reveals a new report by digital transformation facilitator Hexaware Mobiquity.

The prevailing economic crisis and the mounting concern that environmental, social, and governance (ESG) initiatives may affect profitability seem to have overshadowed the green agenda.

Hexaware Mobiquity’s 2023 Benchmark for Sustainable Banking Report uncovers a significant decline in sustainability prioritisation among UK banking leaders. A mere 60% of them now perceive sustainability as a key business strategy, compared to 100% just a year ago. Immediate problems, including surging interest rates, waning consumer confidence, and the pressing need for profitability, have inevitably taken centre stage.

In fact, an astounding 34% of banking leaders believe that prioritising ESG initiatives could hurt profitability, and might not show immediate financial returns. Consequently, 60% of UK banks have hit the pause button on sustainability-related actions, indicating a prominent shift away from sustainable behaviours and outcomes.

Banks are also investing less in offsetting their unsustainable practices through carbon credit schemes – a mere 29% are currently doing so, marking a significant drop from 50% in 2022. Concurrently, the number of banks assigning an executive at the board level to oversee sustainability strategy has dwindled from 83% last year to just 54%.

Hexaware Mobiquity’s VP Global Digital Banking, Peter-Jan Van De Venn, expressed concern over these findings, cautioning that banks are running the risk of ignoring the long-term benefits of sustainability due to their short-term focus on the economic crisis.

Meanwhile, banks recognise the pivotal role technology plays in the path to sustainable growth. A significant 76% are employing digital transformation initiatives for driving sustainable outcomes. Interestingly, over a third of banks (35%) are using advanced technologies such as machine learning, AI, cloud, and analytics to make digital services accessible to customers remotely. Moreover, an impressive 93% of banks have invested in or plan to invest in the metaverse, aiming to harness the potential of virtual and augmented reality in banking.

Van De Venn emphasised that despite difficult trading conditions, UK banks must persist with their sustainability strategies, highlighting the crucial role emerging technology can play in sustainable growth.

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