UN Global Compact-Accenture CEO Study: Banking Sector Report

This latest UN Global Compact-Accenture CEO Study indicates that CEOs within the banking industry already see sustainability as a critical factor in the success of their businesses. The study identifies current perceptions, and indicates the challenges that still need to be overcome.

Since the last UN Global Compact CEO study in 2007, CEOs’ views on sustainability have undergone a fundamental change. Business leaders worldwide, including those in the banking industry, now see sustainability—those environmental, social and governance issues covered by the UN Global Compact’s Ten Principles—as central to their business.

Nearly 1,000 CEOs, business leaders, members of civil society and academic experts have contributed to what is the largest CEO survey on sustainability of its kind to date. The global geographic and industry coverage of contributing CEOs further provided unique insights into the challenges and opportunities of the coming decade.

• Ninety-eight percent of banking CEOs believe that sustainability issues will be “important” or “very important” to the future success of their business.

• Ninety-eight percent of banking CEOs believe that sustainability issues should be fully integrated into the strategy and operations of a company.

• Sixty-three percent of banking CEOs report that they are incorporating sustainability issues into their strategy and operations “much more” than five years ago—compared to 34 percent globally.

• Seventy-six percent of banking CEOs cite “brand, trust and reputation” as among their top three factors driving them to take action on sustainability issues.

• Twenty percent of banking CEOs identify governments will be an important stakeholder group in impacting the way they manage societal expectations—compared to 39 percent globally.

• Fifty-six percent of banking CEOs cite complexity of implementation across functions as the most significant barrier to embedding sustainability.

• Eighty-eight percent of banking CEOs see “accurate valuation by investors” of sustainability as important to reaching a tipping point in sustainability.

• Ninety percent of banking CEOs see “merging of sustainability and financial metrics in reporting” as important to reaching a tipping point in sustainability.

• Eighty-eight percent of banking CEOs report that their company will employ new technologies to address sustainability issues over the next five years.

Demonstrating a visible and authentic commitment to sustainability is especially important in helping banking CEOs rebuild the reputation of their institutions and industry with stakeholders in the wake of the recent financial crisis. As in other industries, however, banking CEOs are inclined to assume that their bank’s reputation stands higher than the industry, perhaps indicating that they underestimate the extent of public mistrust.

The majority of banking CEOs (80 percent) feel that sustainability has already been integrated into their strategies and operations, but deeper analysis suggests that this confidence may be misplaced or that the implications of full integration have not been fully understood. Sustainability issues continue to emerge, and challenges for banks include:

• Investor uncertainty. Many CEOs believe that investors are not supportive of corporate efforts to create value through sustainability, and are failing to factor performance on sustainability issues into valuation models.

• Consumer uncertainty. CEOs are looking for clearer signs that sustainability actually drives buying behaviors.

• Regulatory uncertainty. CEOs note the need for greater clarity around the scope of future regulation.

In order to overcome marketplace and economic challenges and accelerate a tipping point in the integration of sustainability into core business, CEOs believe that a number of essential conditions need to be put in place. Businesses need to take a leadership role to bring them about, often in collaboration with wider stakeholders such as the UN Global Compact:

• Actively shape consumer and customer awareness, attitudes and needs.

• Generate new knowledge, skills and mindsets for sustainable development.

• Lead the creation of an investment environment more favorable to sustainable business.

• Embed new concepts of value and performance at the organizational and individual levels.

• Create a clearer and more positive regulatory environment for sustainability.

Banking CEOs, along with their peers from all industries around the world, are willing to step up to the challenges ahead. They recognize that our current period is “the end of the beginning” and not “the beginning of the end” in the transition to a new era of sustainability.