In Banking, Sustainability is the New Digital. Now What? – Northern Lights Credit Union (2024)

FAQs

What does sustainability in banking mean? ›

Sustainable banking involves strategic planning and execution of banking operations and business activities while taking into consideration the environmental, social and governance (ESG) impact. Banks stand to play a major role in achieving the United Nations' Sustainable Development Goals (SDG).

Support for Green Bonds and Sustainable Investments: Promote the issuance and investment in green bonds and other sustainable financial instruments. Encourage banks to develop products that support environmentally friendly projects and offer customers options to invest in sustainable assets.

ESG in banking refers to the consideration of environmental, social, and governance factors in the banking industry. It involves evaluating the impact of investments and operations on the environment, society, and corporate governance practices.

A strategic focus on ESG, can lead to financial outperformance in across industries (prior research) and specifically for banks. Banks with good performance on material ESG issues outperform banks with bad performance on the same issues by more than 2%.

A path to sustainable banking

This includes specific products such as Green Loans, Green Project Finance, and Green Bonds. Supporting businesses – Tailor-made debt solutions for firms as they continue on their individual journeys to transition to a sustainable, low-carbon economy.

development of clean or renewable technology, job creation and community development. Taking account of E&S issues in making a business decision, could also lead to potential benefits to the client or the Bank providing financial services to the client. and managing environmental and social risk in project financing.

Environmental, sustainable or socially responsible banking is an emerging but familiar concept in banking markets around the world. Different from Green Banks that are publicly funded (see above), these environmental, sustainable or socially-responsible banks make loans from customers' deposits.

What is ESG in credit unions? ›

Decoding ESG for Credit Unions: Addressing Three Common Questions. In recent years, Environmental, Social, and Governance (ESG) considerations have become increasingly important for credit unions.

The American banks – Citi, Bank of America, JPMorgan Chase and Wells Fargo – are listed as having left the group of institutions that have signed the principles. The news was condemned by climate groups as “shocking” and “cowardly”.

Financial sustainability is the capacity of a firm to earn revenue or get a return on an investment that covers all expenses and makes a profit. It assesses whether a project is viable for investment and whether investing resources in it will generate a sufficient return for investors.

In 1987, the United Nations Brundtland Commission defined sustainability as “meeting the needs of the present without compromising the ability of future generations to meet their own needs.” Today, there are almost 140 developing countries in the world seeking ways of meeting their development needs, but with the ...

Sustainable banking principles are guidelines for managing environmental and social risk, footprint, and governance, as well as improving human rights, women's economic empowerment, financial inclusion, capacity building, collaborative partnerships, and reporting in the financial services sector.

Examples include active ownership, credit for sustainable projects, green bonds, impact investing, microfinance, and sustainable funds. It promotes and enhances economic competitiveness, efficiency, and prosperity now and in the future.