Guest blog: Are you ready for a green recovery?

First published in the Autumn edition of Society Matters magazine, by Peter Toole, Strategic Relationships Director, Paragon Customer Communications

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Katie Wise

First published in the Autumn edition of Society Matters magazine, by Peter Toole, Strategic Relationships Director, Paragon Customer Communications

As member expectations continue to rise and regulatory pressures around green practices burgeon, sustainability could prove a key differentiator for building societies seeking to attract and retain new members and respect the values of existing ones. But how do institutions now have a distinct opportunity to lead the way on green finance?

Organisations are under increasing pressure to play a more active and visible role in helping combat climate change, arguably none more so than a financial services industry rife with 'greenwashing'[1] and overshadowed by inconsistent measurement of emissions.

Keen to be viewed more positively than some of the large global banks – with the amount of CO2 production financed by Britain’s banks and asset managers nearly double the UK’s annual carbon emissions[2] – building societies are making a concerted effort to drive better sustainability strategies.

However, given the scale of the mountain to climb, understanding how to improve their sustainability performance remains a universal challenge. So how can institutions get ready for a green recovery?

Measuring emissions

The European Union’s Sustainable Finance Disclosure Regulation, which came into effect earlier in 2021, marked a major milestone for the industry. While not adopted in the UK post-Brexit, it was the catalyst for the UK Government to vow to establish its own domestic green taxonomy and ESG disclosure regime, central to which would be ensuring firms are accurate about their commitments to sustainability pledges.

Faced with the prospect of having to provide members with ESG-related information on the provision of their services and financial products, monitoring carbon emissions has become an integral pillar of sustainability.

If building societies are able to monitor all aspects of their businesses’ carbon footprint, including Scope 1, 2, and arguably most importantly Scope 3 ‘financed emissions’, they have a clear opportunity to stay relevant, make a major ethical play and leverage sustainability to attract new members.

Particularly as global banks come under fire for their continued financial support of fossil fuel companies[3], building societies can differentiate themselves and effectively communicate how they are doing so to potential members.

Lessening the financial risk

Of course, monitoring their carbon footprint is not simply about differentiating themselves from the competition, and doing the right thing for the environment. Rather, it is about mitigating the risk of doing nothing and the associated reputational and financial implications, as regulators become more intense in their approach

to addressing pollution.

The lack of an industry standard for measuring carbon emissions on everything from communications to scope 1, 2 and 3 financed emissions has proven somewhat of a stumbling block for many financial institutions. While a lack of ownership of sustainability strategies has proven a difficult hurdle to overcome for a number of building societies, especially when competing with large financial institutions who have the luxury of dedicated heads of sustainability.

However both remain central themes of sustainability, and ones which building societies must get a handle on in order to differentiate themselves.

A valued partner

In an era when sustainability is critical to building societies, having the support of an expert partner committed to assessing and improving the sustainability footprint throughout the lifecycle of business operations, can be fundamental to success. This should touch every part of the business from sound due diligence in the supply chain, ethical business practices, staff satisfaction and retention, efficient production, facilities management and effective relationships with all stakeholders.

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