At TISAtech, helping FinTechs and financial institutions assess and improve their ESG performance is one of our core principles – and to do this, we need to know the current state of play.
Last month we commissioned an independent survey of over 200 senior decision makers across the UK financial services industry to gauge their attitudes and current progress towards higher ESG standards, as well as perceived areas for improvement. The results painted a picture of an industry primed for change, with respondents well-prepared for current and upcoming regulations, with ambitions to go even further.
The data was wide-reaching, but in this article, we wanted to share the five most noteworthy results and trends we saw – and what these might mean for the UK financial sector.
- The specialist sustainability officer or ‘head of ESG’ looks to be in high demand
One of the most interesting revelations to emerge from the findings was the appetite for an internal specialist to lead on all things ESG. With ESG becoming a business priority for forward-looking businesses, 77% of respondents plan to onboard a dedicated head of sustainability. This emphasises the recognition of ESG as a long-term strategy, and the need for a specialist to focus entirely on it- not marginalising it as an extra function of an existing role.
Evidently, a new and important function is being carved out within the financial services industry, tasked with demystifying ESG and implementing an effective strategy.
- The ‘S’ remains marginalised
Once branded the “ugly duckling of ESG”, the social dimension remains the most overlooked of the three Our research found that less than a quarter of respondents view the S as their primary focus. This is partly due to the difficulty of standardising and quantifying ‘Social’ performance, leading to a bias towards governance and environment, for which more established frameworks exist.
Fragmentation between E, S, and G emphasises the need for a more holistic approach to ESG, and the need for assessment providers to prioritise scoring and providing a roadmap to better performance – a gap that The Disruption House is working tirelessly to plug.
- Irrespective of regulation, many feel a moral obligation to do more
Despite respondents overwhelmingly reporting that they were prepared for current and future regulation, over 80% believe that irrespective of this, their business should be making more of an effort to improve its environmental, social and governance standards. This demonstrates scope for UK regulation to go further, and also for leaders to be brave when implementing ESG – going beyond current regulatory requirements and sounding out staff at all levels to ensure ESG strategy is rooted not just in compliance, but in morality and purpose.
- The significant success of SFDR… and scope to go further
EU SFDR is arguably the most stringent ESG regulation yet released, and encouragingly, it appears to be having an effect. 74% of affected respondents say it has meaningfully changed how they do business, and internally consider ESG. This is encouraging, as it shows that stringent regulatory measures go beyond a box-ticking exercise and can promote genuine operational and cultural change. With markets like the US and UK yet to release comparable regulations, SFDR can serve as a template from which to build effective ESG frameworks
- A lack of clarity over how to perform an assessment is the number one reason some are yet to assess their ESG
It quickly became clear through the research that most respondents are taking the necessary steps to future-proof their business and ensure their ESG performance continues to match the evolving standard. Yet one glaring issue facing those that are trailing behind is the lack of clarity over where to even begin.
Businesses with the right intentions are finding themselves at a loss when it comes to introducing effective policies. Indeed, among those yet to assess their ESG performance or implement a strategy, confusion over how to do so is the key limiting factor – cited by a third (32%) of those affected. Currently, ESG strategy and assessment are dominated by expensive specialist consultancy packages- putting ESG improvement out of the reach of growth fintechs and mid-size financial firms.
That’s why as part of a TISAtech membership, we give access to The Disruption House’s ‘ESG essentials’ assessment, providing growth and mid-market firms with the knowledge, context, and roadmap they need to begin on their ESG journey.
At TISAtech, we understand that ESG is complicated. That’s why we work with The Disruption House, which specialises in helping fintechs and financial services businesses get their ESG right, whatever their size or stage of growth.
Get in touch to learn how you can kick-start your ESG journey