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European banks are emerging as global leaders in Environmental, Social, and Governance (ESG) performance, according to the latest research from EY, the Sustainable Finance Index. Despite this achievement, their actions on societal issues lag behind those of banking organizations in the US and the Asia-Pacific region, particularly in the realms of diversity and inclusion (D&I).
In ESG performance, European banks achieved an overall score of 7.4 out of 10, signaling a slight improvement from the previous year’s score of 7.3. Their performance surpasses that of banks in North America (7.2) and the Asia-Pacific region (6.3). Moreover, the European banking sector demonstrated a higher performance in overall ESG activity compared to the insurance (7.3) and asset management sectors (7.0) in Europe. According to the EY Index, the majority of ESG actions by European banks primarily concentrate on specific areas:
- Environment: Actions such as energy management and climate change (9.3), offering green products and services (9.1), and waste and water management (7.4).
- Society: Measures like data protection and privacy (10), whistleblower protection (10), and workplace safety (9.9).
- Governance: Effectiveness of the board of directors (7.6), transparency and control (7.5), and governance of ESG issues (6.9).
Challenges and Opportunities in European Sustainability:
However, lower levels of activity are recorded in diversity and inclusion (5.7), diversity in board composition (4.7), and quality focus (3.3), including the adoption of service quality systems like ISO9000. In terms of environmental initiatives, French banks lead with a score of 8.3, surpassing banks in the UK, Italy, Spain, and Germany, indicating robust environmental performance. French banks excel in energy management, offering green products and services, and managing environmental risk along supply chains. Regarding societal actions, although European banks lead overall, progress has been slower compared to the US and the Asia-Pacific region. French banks lead in Europe with a score of 7.7 in overall social performance. In governance, UK banks lead initiatives for more effective governance with a score of 7.3, followed by France and Italy, indicating stronger governance performance in these countries.
Europe | Certified Sustainability (ESG) Practitioner Program: Empowering Organizational Transformation:
By incorporating insights gleaned from the Europe | Certified Sustainability (ESG) Practitioner Program, Leadership Edition 2024, C-suite executives, and CEOs within European banks are empowered to effectively address identified gaps in ESG performance. Integration of ESG principles into strategic decision-making and operational processes emerges as a fundamental strategy for ensuring the long-term sustainability of these financial institutions. Moreover, the establishment of robust governance structures and the implementation of diversity initiatives are integral for fostering heightened transparency, accountability, and organizational resilience. As leaders within their institutions, the collective leadership holds the key to driving substantial change and embedding sustainability into the core fabric of their organizations.
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