Sustainable banking in 2023
What will sustainable banking look like in 2023? Here’s your starters guide for the trends to watch and the areas of opportunity to seize when addressing climate change in the new year.
2023 marks the third year into the most decisive decade for our climate. With only seven crucial years left to make real, long-lasting progress for the years to come, the banking sector must jump into action.
Sustainable banking has been reshaping the industry. Virtually every financial institution is now interacting with sustainability, some more genuinely than others.
2023 will be crucial in separating the green innovators from the sustainability slackers.
The field has changed massively since the beginning of the decade. In lockstep with technological innovations, sustainable banking in 2023 will help banks address issues of climate inaction and lackluster digital offerings.
Smart spending, green budgeting in the face of a recession
Inflation was the hot button topic for the economy in this year. Post-pandemic supply chains struggled to return to their former glory in a post-pandemic world, a malady further exacerbated by war in Europe.
As a result, life became more expensive in 2022. These major events will carry over into 2023 as central banks around the world raise interest rates in a desperate effort to rein in stubborn inflation.
With a recession around the corner, many consumers will tighten purse strings. Sustainable banking in 2023 will need to reconcile a planet in crisis with an economic downturn.
Many are employing sustainability strategies as a cost-saving tool for increased efficiency, with more than 90% of companies looking to increase their sustainability budgets over the next year.
As the climate crisis worsens, customers will look to their financial service providers for guidance to help bring their fiscal budgets in line with their carbon budgets.
Radical transparency coming to sustainable banking in 2023
False and misleading claims on environmental efforts came under heavy scrutiny in 2022. This will intensify into the new year as more pressure builds on the financial sector to back up announcements with real action on climate change.
The best medicine for avoiding the uncomfortable and dangerous position of greenwashing is embracing so-called “radical transparency” – an unyielding determination to being open and honest. Being transparent about the impact and limitations of your sustainability efforts invites collaboration rather than criticism.
Pairing radical transparency with a genuine commitment to environmental well-being allows financial institutions to build trust with the public and their customer base. Not only is there the opportunity to win new sustainability-focused customers, but there is also the opportunity to become a leader in this new field that will shape banking for decades to come.
The place most banks will start in 2023 is to partner with digital solutions and experienced partners who value transparency and openness as core values with a focus on scientific methodologies.
Scalable solutions for climate progress
The first three years of this decade gave way to a new field of climate tech solutions. These next-generation financial service providers were built with banks in mind to be deployed at a scale, matching the urgency of climate action.
Sustainable banking in 2023 will be a story of cooperation and strategic partnerships. The most innovative in their class will help banks develop the green retail banking products that customers want.
From environmental footprinting and community building to ESG performance, consumers know their money has an impact. For what exactly that impact looks like and how to best reduce it, banks will need these climate tech solutions, which have combined the best of data analytics, calculation methodologies, and behavioral science.
Deployment at scale will increase in importance in 2023. As heat waves become more frequent and flooding more intense, pressure to act will build. Being able respond with dynamic and agile solutions for digital natives will be crucial in separating the most serious of sustainability contenders.
But that’s just scratching the surface when it comes to sustainable banking in 2023.
Stay ahead of the pack on an industry in flux. Get your roadmap for the top five trends for sustainable banking in 2023 here.