Beyond encouraging sustainable practices among their customers, financial institutions can leverage sustainability criteria in their investment decisions and collaborate with portfolio clients to reduce financed emissions.

However, a recent study reveals that many financial services firms are still in the early stages of implementing and evaluating their sustainability initiatives. Conducted by Cognizant, in partnership with Oxford Economics, the study surveyed 3,000 senior business leaders globally, including 295 from the financial services industry. While committed to achieving net-zero goals, the financial services industry appears hesitant to make the tougher decisions and allocate the necessary resources.

Shifting these sustainability ambitions into concrete actions, financial firms can reap numerous benefits, including:

• Reduced exposure to risky investments in high-emitting businesses or disaster-prone regions
• Avoidance of legal liabilities for environmentally damaging investments
• Cost savings through eco-efficient internal operations
• Enhanced brand reputation among sustainability-conscious customers
• Compliance with emerging disclosure standards and regulations

To bridge the sustainability gap, the study recommends three key actions for financial services firms to take to close the sustainability gap:

1. Prioritize data and technology: Leverage data analytics tools to improve sustainability performance, as 70% of respondents who use these tools rate them as effective or highly effective.
2. Rethink sustainability governance, culture, and skills: While 67% of respondents believe their organization has a strong sustainability culture, success requires action. Clarifying roles, mobilizing teams, and establishing incentives are crucial.
3. Tackle Financed Emissions: While many firms focus on reducing their internal emissions footprint, financed emissions are often significantly higher. Collaborate with clients and partners to identify and reduce environmental impacts across the value chain.

By prioritizing data-driven decision-making, fostering a proactive sustainability culture, and addressing financed emissions, financial services firms can play a pivotal role in accelerating the transition to a sustainable future.

For more information on the study findings and to take a deeper look at our recommendations, read the full e-book Deep Green: How financial firms can turn sustainability ambitions into action.