ESG in practice: results from a global bank survey

Study on ESG risks: Global perspectives of 111 banks

Our study shows how banks around the world are setting the course for an environmentally f

11 January 2024

A sustainable economy is becoming increasingly necessary, and regulatory attention to environmental, social and governance (ESG) issues is growing. Banks around the world are being called upon to consider the associated risks.

Global study on ESG risks of banks

For our global survey „ESG Risk Management in Banks“ , we spoke to 111 banks in over 20 countries and asked how ESG criteria impact risk assessment and management strategies.

Our 2023 Global ESG Risk Survey for Banks offers a comprehensive analysis of over 100 institutions worldwide, including actionable steps for banks to navigate the evolving ESG landscape. The contribution of our Belgian firm in this cross-country initiative highlights our commitment and vision to address this global challenge: joining forces to develop globally-leading practices tailored to our local market.

Zsuzsanna Tajti
Sr. Manager, Financial Risk Management | Advisory
KPMG in Belgium

Integration of ESG risk drivers is time-consuming but worthwhile

The results show that banks still have a long way to go. Most financial institutions expect to fully integrate ESG risk drivers by 2025 or later.

Regulators and other stakeholders are expected to increase the pressure on banks. The integration of ESG risk drivers into established processes such as lending, monitoring or ICAAP will be a key issue for future strategies.

ESG risk management is essential

As the impact of climate change and transformation efforts intensify, banks are increasingly investing in ESG risk management to manage the associated risks.

Belgian banks have made considerable progress in tackling climate-related risks and integrating those in their risk management frameworks. Yet, the journey is still long and banks across Europe are far from full compliance with ECB expectations. We therefore expect ESG (-related risks) to remain on top of the CRO agenda for the coming years, with a focus gradually shifting to the industrialization of climate risk and the adequate capture of “other” environmental risk drivers.

Julien Thiry
Director, Risk & Regulatory | Advisory
KPMG in Belgium

ESG criteria: These are the biggest hurdles

Banks around the world face similar hurdles in terms of available and high-quality data, changing regulatory requirements and insufficiently qualified staff.

ESG budgets on the rise

Despite all the hurdles, banks are taking ESG risk management seriously. This is reflected in significant and increasing investment budgets in all markets, especially among the large banks.

You can find all the results and possible fields of action in our white paper "ESG Risk Management in Banks".