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Tuesday, June 25, 2024

The irresistible trend for banking

By Van Cong Binh (*)

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Sustainable development is emerging as an undeniable trend within the finance and banking sector. Beyond traditional economic and capital safety considerations, financial and banking institutions must now also factor in environmental and social deliberations. According to a survey conducted in 2010 by The United Nations Global Compact, involving 766 CEOs of multinationals, including 41 CEOs of global banks, a staggering 98% of these CEOs concur that aligning their businesses with sustainable development and incorporating sustainability into their operations is the key to future success. Benefits of pursuing sustainable development There are numerous advantages associated with pursuing sustainable development in the banking industry. Various studies have highlighted these benefits, including bolstering the business’s reputation, mitigating operational risks, fostering customer loyalty, expanding opportunities to attract new customers, enhancing financial performance and operational efficiency, and encouraging stakeholder engagement in evaluating bank activities. From a quantitative perspective, these studies suggest that for every 1% increase in investment in environmental initiatives by banks, there is a potential increase of 0.071% in return on equity (ROE) (Nizam, Ng et al. 2019). How to assess sustainable banks Studies and surveys examining the activities of banks as they embrace sustainable development have found that the sustainable development banking […]
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