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ESG Taking Off in Corporate and Transaction Banking: Leveraging Traditional and Emerging Technology

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3 September 2022

Abstract

The belief that banks and corporations are responsible not only to their shareholders and customers but also to people and the planet, in general, is becoming the norm. Hence, together they are aiming for the stars in their ESG initiatives. In the process, they are harnessing a variety of technology, ranging from mature to emerging technologies.

Figure: A Range of Technology Is Being Used to Realize ESG-related Products and Services

Customers and the broader public are increasingly expecting their banks to undertake due diligence regarding borrowers, their ESG impact, and their combined ability to realize their ESG goals. Bankers are increasingly taking on the role of positive agents of change.

  • Select global banks began by supporting climate-friendly import/export and project financing.
  • Over the past couple of years, attention and action have grown in the area of sustainable supply chain finance.
  • Incentivizing social goals is relatively nascent.

Banks in the ESG vanguard are reporting strong increases in corporations’ interest in a sustainable supply chain and protecting themselves from reputational risk, particularly regarding Scope 3 emissions. At the same time, clients are seeing an increase in financing appetite from banking partners due to ESG factors, especially in the US.

In this report, Celent examines how banks have been encouraging and supporting ESG initiatives via their corporate/transaction banking product portfolio. We profile seven ESG players, five banks and two fintechs: Citi, Citizens, DBS, OakNorth, Rabobank (Acorn), Previse, and Stellar.