ESG strategy for banks: How to unlock new business opportunities

The current EU taxonomy encourages stakeholders from European banks and insurance companies to focus on sustainability, social and governance criteria and better consider ESG factors and issues in their decision-making process. The situation is similar in the UK, which initially adopted the EU taxonomy, and subsequently introduced its own UK Green Taxonomy for financial and non-financial firms, strongly mirroring the EU structure.

While the new regulations and directives pose challenges, they also create new perspectives for banks in the UK and Europe, allowing them to open up new revenue streams.

In the face of climate change, the need for banks to implement sustainability initiatives, focus on preserving the environment, and mitigate climate risks has become increasingly evident, especially after COP 28.

For banks, striving towards sustainability goals can involve a variety of initiatives that help reduce carbon emissions and environmental impact. There's a wide range of possibilities, from focusing on sustainable finance or supporting green projects (renewable energy, etc.) to reducing their investments in fossil fuels.

Another compelling way of striving towards a more sustainable business model is by integrating ESG criteria more effectively into their strategies. This particularly applies to their credit portfolio assessment and risk management processes. By doing so, they can quickly identify and mitigate climate risks. In addition to conducting thorough analyses of credit portfolios, incorporating ESG factors into their advisory processes presents financial institutions with interesting cross-selling and upselling opportunities.

How ESG reporting allows banks in the UK to explore new business opportunities

The UK property market continues to see declining levels of transactions. HMRC data shows a 19% decline in residential property transactions between 2022 and last year. This affects the mortgage market in the UK’s banking industry and makes it more important for banks to find new business areas to help them thrive.

In this context, the analysis of ESG risks is highly beneficial for banks in the UK and across Europe. Banks can actively highlight opportunities for renovations to a client’s property to make it more energy efficient and provide the necessary funding to take the work forward. Products from the FinTech and PropTech sectors make this easier too, with fast, cost-effective and fully integrated solutions. These assist in analysing current real estate portfolios and credit obligations, focusing on energy and CO metrics within traditional residential properties.

Leveraging digital ESG data solutions

PriceHubble’s solutions allow companies in the banking and financial sector to gain access to reliable, comprehensive EPC and ESG data. Our in-depth property data, available via our underwriting APIs and other solutions, allows them to identify the level of energy efficiency of every individual property and understand the potential value increases that can be achieved thanks to energy renovations. These companies are empowered to help their customers make well-founded investment decisions, advise them in the best possible way on ESG matters and create new revenue streams for green financing and renovation loans.

By leveraging PriceHubble’s solutions, banks can also ensure regulatory compliance and mitigate risks related to their portfolios.

Real estate as a key touchpoint for financial institutions

ESG integration in customer advisory offers compelling opportunities for banks in the UK and Europe, provided they can access current and reliable real estate data. Property Tracker from PriceHubble continuously provides clients across Europe with updates on their properties. At a time when ESG compliance gains relevance for the banks, staying informed about the latest developments in property values is crucial.

Providing clients with real-time real estate data is critical for banks and financial service providers. It helps them offer advisory services to preserve or increase the value of their properties. Using suitable tools, they can visualise various potential solutions for clients and recommend insurance and financial products tailored to those.

Exploring new avenues for sustainability

In the current economic and political climate, financial service providers in the UK and Europe face the challenge of rethinking their business strategies. With declining revenue from traditional banking and insurance products and rising awareness of ESG topics, there is an increased search for new, innovative approaches to support clients on ESG performance matters. Lenders must rely on solution providers that offer reliable valuation methods for assessing existing credit portfolios while considering energy efficiency as a central component to ensure business continuity and profitability.

With the integration of solutions by PriceHubble, lending institutions can successfully tap into new business areas and align with current ESG requirements, effectively mitigating climate-related risks and maximising profitability.

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