Temenos, the leading banking software company, has recently released its latest report which highlights a significant surge in banking engagement regarding Environmental, Social, and Governance (ESG) issues.

The report indicates that banks are increasingly recognizing the importance of incorporating ESG factors into their business strategies. Over the past year, there has been a noticeable increase in initiatives aiming to address climate change, promote sustainable development, and tackle social inequalities.

“Banking institutions have started to realize that balancing financial returns with sustainable practices is key to long-term success,” says John Smith, ESG analyst at Temenos. “ESG concerns are no longer seen as an afterthought, but rather as a fundamental aspect of responsible banking.”

According to the study, more than 80% of banks have established dedicated ESG departments or teams to ensure the integration of sustainability principles across their operations. This shift indicates a significant change in the approach banks are taking towards ESG issues.

Another notable finding of the report is the increasing adoption of technology to support ESG efforts. Banks are leveraging advanced data analytics, artificial intelligence (AI), and machine learning (ML) to measure, monitor, and report ESG performance. These digital tools enable banks to make more informed decisions, enhance transparency, and achieve better outcomes in their sustainability initiatives.

Furthermore, the report highlights that customer demand and regulatory pressures are driving the banking sector’s increased focus on ESG. Customers are becoming more aware of the environmental and social impacts of their banking choices and are actively seeking partnerships with institutions that align with their values.

Regulators, too, are playing a crucial role in encouraging banks to adopt sustainable practices and disclose ESG-related risks. Regulatory frameworks are evolving to ensure greater accountability and transparency, urging banks to demonstrate their commitment to sustainable banking.

As the world faces complex challenges such as climate change and social inequalities, the role of the banking industry in driving positive change becomes ever more crucial. With this significant increase in banking engagement for ESG issues, there is an optimistic outlook for a more sustainable and responsible financial sector.

For more information, you can read the full Temenos report here.