# Financiers are leading the fight for a greener future
Author:  Pal Sinha, Barnali 
Author URL: https://financedigest.com/author/pal-sinha-barnali
Published: 2021-06-07
Category: FINANCE
Category URL: https://financedigest.com/category/finance
Meta Title: The Rise of ESG Activists in Finance: Driving Sustainable Change
Meta Description: Discover how banks and financial institutions are driving sustainability initiatives, putting pressure on businesses to act in a more sustainable way. Learn
URL: https://financedigest.com/financiers-are-leading-the-fight-for-a-greener-futurehtml

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_By **Amanda Gray,** Partner at Addleshaw Goddard_

Climate change is the biggest risk of the 21st century, and we’ve seen many regulatory and policy changes from multiple governments and industry groups in a bid to help businesses set and hit targets. But there is an unlikely group of ESG activists emerging.

This year, banks and [financial institutions](https://www.financedigest.com/the-future-of-financial-institutions-in-2023.html "The Future of Financial Institutions in 2023") with collective assets of over $70 trillion have committed to cutting their greenhouse gas emissions by 2030, with an overall goal of reaching net zero by 2050. Barclays, HSBC and Axa are among the 160 [firms that have joined the Glasgow Financial](https://www.financedigest.com/top-north-east-financial-adviser-firm-talks-corporation-tax.html "Top North East financial adviser firm talks corporation tax") Alliance for Net Zero (GFANZ), chaired by Mark Carney, former governor of the Bank of England. This public commitment from [leading global firms has the potential to really drive change](https://www.financedigest.com/how-to-lead-organizational-change.html "How to Lead Organizational Change").

Recent research by Addleshaw Goddard confirms that finance providers are putting sustainability at the heart of their strategies: 45% of the finance community [say that sustainability sits in their top two priorities](https://www.financedigest.com/malaysias-new-pm-anwar-says-first-priority-is-cost-of-living.html "Malaysia’s new PM Anwar says first priority is cost of living"), and that percentage is set to rise.

And businesses are taking notice. But, with just 21% of companies putting sustainability in their [top two priorities](https://www.financedigest.com/survey-finds-regulation-remains-top-financial-services-priority-for-2017.html "Survey finds Regulation Remains Top Financial Services Priority for 2017"), are they doing enough to retain the support of these key stakeholders?

[**Money talks**](https://www.financedigest.com/more-than-one-in-ten-brits-are-embarrassed-to-talk-to-anyone-about-their-money-issues.html "More than one in ten Brits are embarrassed to talk to anyone about their money issues")

Our research reveals that [companies are feeling the pressure from financiers](https://www.financedigest.com/how-financial-services-companies-can-successfully-utilise-low-code-and-no-code-technologies.html "How financial services companies can successfully utilise low-code and no-code technologies"). In fact, pressure from [banks](https://www.financedigest.com/factbox-global-banks-take-axe-to-jobs-as-cost-pressures-mount.html "Factbox-Global banks take axe to jobs as cost pressures mount") is outstripping pressure from every other source, including staff, media and end-customers. And it is having an impact: over nine in 10 business leaders say that [banks have been significant in influencing their business to act more sustainably](https://www.financedigest.com/deutsche-bank-names-eigendorf-new-chief-sustainability-officer.html "Deutsche Bank names Eigendorf new chief sustainability officer"). This means that [banks now hold more influential power over businesses than governments](https://www.financedigest.com/governments-and-central-banks-risk-inflation-bank-of-england-has-done-its-bit-now-the-politicians-turn.html "Governments and central banks risk inflation, Bank of England has done its bit, now the politicians’ turn") (87%).

The research also shows that although [banks are exerting the most pressure](https://www.financedigest.com/analysis-china-central-bank-under-pressure-to-ease-is-hemmed-in-by-inflation-fed-jitters.html "Analysis-China central bank, under pressure to ease, is hemmed-in by inflation, Fed jitters"), it is investors that are currently asking for the most evidence. Almost all businesses (99%) have been asked by investors to provide evidence of their sustainability performance over the last 12 months, while almost half (47%) have been asked for evidence by banks, and a fifth (19%) have been asked by [insurers](https://www.financedigest.com/different-countries-different-insurance-cultures-how-insurers-can-adapt-their-products.html "insurers").

Businesses are becoming aware that their approach to [sustainability will increasingly influence their access to funding](https://www.financedigest.com/global-citizen-seeks-up-to-1-billion-for-six-sustainable-impact-funds.html "Global Citizen seeks up to billion for six sustainable ‘Impact’ funds"). To [ensure future](https://www.financedigest.com/42-of-retailers-say-payment-over-time-solutions-are-very-important-to-ensuring-future-digital-innovation.html "42% of retailers say payment-over-time solutions are ‘very important’ to ensuring future digital innovation") success, boards must now ensure that sustainability is a strategic priority.

**Survival of the greenest**

With [financiers in all their forms driving their own sustainability](https://www.financedigest.com/cobots-in-the-financial-workplace-reducing-costs-attracting-talent-and-enhancing-sustainability.html "Cobots in the financial workplace: Reducing costs, attracting talent and enhancing sustainability") initiatives, having a strong sustainability strategy in place is crucial, not only for businesses to survive, but to thrive. ESG strategies are being used as a barometer for success: our research shows that almost three-quarters (74%) of lenders, investors and [insurers believe that a business’s sustainability strategy is a key indicator of its future](https://www.financedigest.com/insuring-themselves-for-the-future.html "Insuring themselves for the future") profitability and viability.

Furthermore, almost two-thirds (65%) of the [finance community say they already always formally assess organisations](https://www.financedigest.com/cyber-threats-for-finance-organisations-to-watch-in-2023.html "Cyber threats for finance organisations to watch in 2023") on ESG or sustainability criteria, and 84% won’t offer services to companies lacking a clear net-zero strategy.

However, there is an emerging disconnect between what these stakeholders are looking for and what [businesses are currently](https://www.financedigest.com/how-to-overcome-the-current-challenges-facing-your-fintech-business.html "How to overcome the current challenges facing your fintech business") providing. While 86% of finance providers [say that the sustainability strategy communicated by a company’s CEO](https://www.financedigest.com/stanchart-ceo-says-at1-bond-wipeout-has-profound-impact.html "StanChart CEO says AT1 bond wipeout has profound impact") is critically important to access their services, only 7% of businesses proactively communicate their strategy externally. If they want to keep the [financial community](https://www.financedigest.com/how-mifid-ii-will-impact-financial-advisor-communications.html "HOW MIFID II WILL IMPACT FINANCIAL ADVISOR COMMUNICATIONS") on side, businesses need to show that their environmental agenda is being championed from the top-down.

[**Turning off the tap**](https://www.financedigest.com/barclays-warns-of-sub-parity-euro-5-ppt-gdp-hit-if-russia-turns-off-gas-taps.html "Barclays warns of sub-parity euro, 5 ppt GDP hit if Russia turns off gas taps")

Sustainability is directly influencing access to funding – and this situation is only going to accelerate. Companies that fail to make sustainability a [strategic priority risk being cut](https://www.financedigest.com/uks-made-com-to-cut-jobs-and-launch-strategic-review.html "UK’s Made.com to cut jobs and launch strategic review") off in the not-too-distant future.

These findings show that this is a very real threat: one hundred percent of financiers surveyed plan to turn off the funding tap in at least two [sectors within the next four years](https://www.financedigest.com/2020-the-paradoxical-year-that-has-reshaped-the-future-of-motor-insurance-and-related-sectors.html "2020: The paradoxical year that has reshaped the future of motor insurance and related sectors") to businesses that lack a transition strategy. By 2030, almost all finance providers anticipate that they will stop lending to any [business that has failed to adequately address](https://www.financedigest.com/addressing-the-human-aspects-of-business-transformation.html "Addressing the human aspects of business transformation") this. For the [half of companies that don’t currently have a plan](https://www.financedigest.com/elon-musk-plans-to-cut-half-of-twitter-jobs-bloomberg-news.html "Elon Musk plans to cut half of Twitter jobs – Bloomberg News") in place, this is a daunting prospect.

**Time for action**

Time is running out and [business leaders need to step](https://www.financedigest.com/how-to-start-an-ecommerce-business-easy-steps-to-get-started-with-an-ecommerce-business.html "How to Start an Ecommerce Business – Easy Steps to Get Started With an Ecommerce Business") up, and fast. The transition to a sustainable future is happening, and early movers have demonstrated that this doesn’t have to [come at a cost – the investment](https://www.financedigest.com/birmingham-beats-brooklyn-and-brisbane-when-it-comes-to-off-plan-property-investment.html "Birmingham beats Brooklyn and Brisbane when it comes to off-plan property investment") required can be cost neutral or result in a net gain. You must have a transition plan if you are to [secure future](https://www.financedigest.com/the-future-of-cyber-security.html "THE FUTURE OF CYBER SECURITY") funding.

But although the fear of no [funding may be the ultimate catalyst for change](https://www.financedigest.com/hungary-pledges-legal-changes-to-secure-eu-recovery-funding-govt.html "Hungary pledges legal changes to secure EU recovery funding – govt"), funding alone is not enough to help business leaders make the right decisions with respect to social and environmental impact. All stakeholders [need to effect positive change for business to unlock the full opportunities of a sustainable](https://www.financedigest.com/why-coding-needs-to-be-re-evaluated-for-sustainability-objectives.html "Why coding needs to be re-evaluated for sustainability objectives") future.


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