Gustavo Quiroga

New research has revealed 43 per-cent of Australian banks aren’t measuring their ESG impact as part of sustainability targets, raising concerns of greenwashing.

When broken down into the ESG verticals, the report confirmed only 58 per-cent of Australian banks admitting to reporting on environmental measures, and 57 per-cent reporting on social and governance targets.

The findings were revealed in Mobiquity’s sustainable banking report series, which today released its third and final edition — Battle of the Sustainable Banks 2022: Challenger vs Traditional — that highlights the key differences in challenger and traditional bank strategies to meet ESG impact targets.

In addition to highlighting the lack of ESG reporting, the report also reveals significant inconsistencies in the sector for those that are making the effort to report on targets.

Of the challenger bank respondents, 64 per-cent admitted reporting on governance, 62 per-cent for environmental impact and 48 per-cent on social impact when reviewing their ESG targets. In stark contrast to their challenger counterparts, traditional banks prioritised social impact (63%), but fell short on governance (53%) and environment (56%) reporting.

Gustavo Quiroga, General Manager for Mobiquity in APAC said that despite the inconsistencies in reporting between challenger and traditional banks, the bigger concern is that the findings highlight a large number of banks aren’t reporting on their ESG targets at all.

“The third release of our sustainable banking report series highlights the industry’s biggest challenge which is fundamental to enlisting sustainable practices — reporting. Our initial research findings unveiled the vast opportunities that emerging technologies like Web3 and the metaverse offer in achieving ESG targets. But, without consistent and measurable results the impact of such initiatives just becomes anecdotal and the true value comes into question.

“Our final research release confirms that the priorities of challenger and traditional banks differ, for obvious reasons. But there is a bigger concern at play here. The report highlights that around half of Australian banks — challenger and traditional — aren’t reporting on their ESG initiatives at all. This begs the question as to whether banks are in fact meeting targets, or whether they are in fact greenwashing.

“For the banking sector to truly show its contribution in creating a positive impact, standardised and consistent reporting on ESG targets will require implementation, along with the need for regulation on when and where such reports are delivered and held. This will help bypass the reporting complexity challenges that the industry is currently facing,” said Mr Quiroga.

When reviewing the differences in challenges that traditional and challenger Australian banks face when adopting sustainable behaviours, the report revealed that the lack of universally recognised regulation (33%) and lack of demand from customers (29%) were the top two hindrances for traditional banks. Meanwhile, challenger banks listed long-term commitment to execution (30%) and budget implications (29%) as core barriers.

Mr Quiorga said that while Australia lacks universally recognised ESG regulation, many Australian banks are missing out on the opportunities sustainable banking unlocks through technology.

“Our research confirms the Australian banks that are exhibiting sustainable behaviours are citing a plethora of benefits including improved profitability and operational efficiency. Using technology as a tool to enable sustainable banking practices provides a cost-effective, agile solution for banks to continuously innovate at the speed of society,” said Mr Quiroga.

The report also reveals that despite the barriers identified, overall support is slowly growing in favour of sustainable practices across the board, with 64 per-cent of challenger and 59 per-cent of traditional Australian banks taking active steps to foster sustainable behaviours and outcomes.

When listing strategic imperatives that form part of the sustainability agenda, challenger bank executives surveyed identified the need to mitigate climate risks by assessing portfolios (35%) as a top priority. Meanwhile, traditional banks cited the need to embrace technology for remote digital services (32%)

Mobiquity, part of Hexaware, works with banks across Asia Pacific including Pepper Money, CitiBank, Bank of Sydney and ME Bank to help create frictionless digital experiences for businesses, specialising in working with banks and financial institutions.

Download Battle of the Sustainable Banks 2022: Challenger vs Traditional.

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