Customers are expecting more from their banks when it comes to climate change and could lose out to more green competitors if they fail to prioritise the environment.
Some 71 per cent of UK banking customers are more likely to choose a bank with a positive social and environmental impact, according to new research from Deloitte.
The survey of 1,000 customers reveals that more than three fifths would leave their bank if it was linked to any social or environmental harm, even if it had the best offer.
ESG has been a buzzword for some time but the growing threat of climate change, paired with the Black Lives Matter movement over the summer has focused minds.
“Covid-19 has highlighted how non-financial risks, such as climate change, are capable of generating significant non-financial risks,” said Katherine Lampen, UK sustainability and climate change lead at Deloitte.
As in all sectors the banking industry has faced increased pressure from investors, regulators and customers to step up and prioritise the climate.
There have been some significant moves in recent months. Earlier this month Deutsche Bank announced plans to join a small number of financial institutions that link management pay to ESG criteria.
Banks have long been accused of contributing to the environmental crisis through fossil fuel financing..
Deloitte’s research found that almost half of banking customers would move their money if they found out the bank was financing fossil fuels. Additionally climate action – 25 per cent – and the life of our planet – 17 per cent – were noted as the most common social and environmental reasons why customers would consider leaving their bank.
“Issues such as climate change and sustainability are playing a more prominent role in customers’ behaviour,” Richard Hammell, UK head of financial services at Deloitte, said. “Now more than ever, they have access to information about the impact that businesses have on society and the environment, and they’re using that to select the financial products they want.”