In a recent panel discussion titled “Sustainable Finance: Examining Green Initiatives in Payments and Banking,” moderated by Madhvi Mavadiya of Finextra, industry experts delved into the evolving landscape of sustainable practices within European banking.
The panel featured esteemed speakers, including Ines Alonso Rodriguez, Executive Director of Advisory GTB Global at BBVA; Andrea Giuliani, Head of Payment Solutions at NTT Data Italia; Stephen King, Vice President of Sustainability Solutions at Visa; and Ainsley Ward, Vice President of Payment Solutions at CGI.
King commenced the dialogue by identifying sustainability as a transformative economic and industrial shift poised to create numerous opportunities for disruption. He emphasized the growing alignment of consumer values with purchasing decisions, urging companies to either embrace sustainability to stand out or face regulatory pressures.
Ward noted that while many banks prioritize sustainability, this focus should have been initiated a decade ago. He stressed that the faster institutions act on sustainability initiatives, the better equipped they will be to mitigate global climate challenges. However, he pointed out the ongoing challenges related to data collection and accurate reporting in the banking sector.
Regarding regulatory frameworks, Ward explained the complex layers of regulations banks confront across Europe, each tailored to specific issues in various regions. He mentioned upcoming regulations, such as the Digital Operational Resilience Act (DORA) and the Corporate Sustainability Reporting Directive (CSRD), signaling a transition from best practices to mandatory compliance.
King remarked that engaging in sustainability not only presents innovation and revenue opportunities but that neglecting to incorporate sustainable practices can lead to increased costs. He acknowledged that while sustainable products often carry higher price tags due to their longevity and quality, they must also be made accessible.
Ward argued that adopting sustainability does not necessarily incur additional costs; rather, it can align with modernization efforts. He cited the shift to remote and hybrid working arrangements during the pandemic as an example of how businesses can reduce emissions while evolving.
Giuliani highlighted NTT Data’s dual approach to sustainability: enhancing the sustainability of IT services and leveraging IT to support sustainable practices. He emphasized the growing intersection of payments and sustainability, noting that the two topics have increasingly become interconnected.
Key strategies for advancing sustainability include accurate measurement of data, standardizing regulations, and ensuring that sustainable products are accessible to all organizations. King emphasized the need for consumers to have search options for sustainable choices in payment systems, as many feel overwhelmed in navigating the options available to them.
Rodriguez discussed the significance of understanding different scopes of emissions: Scope 1 (direct emissions), Scope 2 (indirect emissions from purchased electricity), and Scope 3 (indirect emissions from stakeholders). Achieving Net Zero requires comprehensive reporting on all three scopes, yet many companies overlook Scope 3 in their sustainability strategies.
She reiterated the reliance on stakeholder collaboration to meet compliance and reporting requirements, particularly in light of increasing focus on climate change and Scope 3 emissions.
Rodriguez also noted a “butterfly effect” wherein financial institutions adopting sustainability practices inspire their stakeholders to follow suit, fostering a sustainable ecosystem.
Ward concluded by addressing the banking sector’s attitude towards sustainability, emphasizing the importance of integrating sustainability into business models and demonstrating that profitability and environmental initiatives can coexist. At CGI, the goal is to guide partners on this journey, assuring them that sustainable practices can also be smart economic choices.
The discussion underscored the critical necessity for financial institutions to prioritize sustainability across all areas of operations. Although the transition towards sustainable practices may be challenging and gradual, it is imperative for institutions to start with manageable initiatives and scale their efforts over time.