PA’s latest report on financial services and sustainability is extensively covered in an article in Børsen. The article explains that sustainable financing is a huge opportunity for banks and the rest of the financial sector.
The article quotes Jon Plate, one of PA’ sustainability experts, who says:
"As I go through the survey results, and this applies to many industries, there is a desire to do your part for the climate and the green transition, but when it comes to taking substantial action yourself, people are actually quite passive."
The article looks at how consumers are currently facing a critical knowledge gap which should serve as a wake-up call to financial service providers to accelerate their efforts to both educate and innovate around ethical and sustainable finance options.
"The current commitment is not that great considering how much talk there is about the topic," Jon says, but emphasises that the majority of respondents are well aware that something needs to be done radically to reduce CO2 emissions.
As many as 82 per cent of the 500 Danes who participated in the survey believe that sustainability is important. In comparison, 86 per cent of all participants across all five countries believe that sustainability must be a priority.
Jon goes on to say: “Right now, consumers don’t yet realise how big a positive impact their financial choices can have on their ambitions to live more sustainably – a positive impact which is up to 20 times more effective than other lifestyle changes, and the choice of green investments is seen as not being adequate to their needs.”
Jon, who has a background as an economist, concludes that when Danish consumers shop, they most often do so based on trust - and especially individual trust. He points out that even though Denmark is a society with high levels of trust, consumers, interestingly enough, often trust individuals more than they trust brands
Oftentimes, Danish consumers trust their financial adviser on a very personal level, rather than the bank he or she works for. Consequently, he recommends that banks should use their frontline advisors to spread the message that customers can make a much greater contribution to the climate by thinking green when choosing a pension scheme, investments, car loans or other financial products.
The road to greener financial products requires more products to choose from, and this in turn require the banks to continue to be innovative, according to PA Consulting’s assessment. The climate challenge and green investments in particular,are a way in which the financial sector can maintain its development momentum and continue to be relevant in the world of sustainability conscious consumers.
“One of the really important conclusions for me was the lack of knowledge about how big a positive effect green investment products actually have. If that knowledge was much more widespread, a sense of duty to individually move our pensions to greener options is likely to develop,” Jon says.
He continues: "It is mainstream to decide to become vegan or to fly much less, but it is far less known, and definitely not mainstream knowledge yet, that you can have a positive impact on the climate which is 20 times bigger by shifting your pensions to green financial products."
The survey shows that, in addition to the limited knowledge of green financial products’ excellent track record, there is also a rather limited product range for consumers to choose from as well as a general low confidence in financial institutions. For that reason, it is necessary to educate Danes about what brilliant opportunities they actually have and perhaps create a bit of positive peer pressure to use those opportunities, Jon believes.
"If I was working in a bank, I would feel proud that we have something this effective to offer our customers, but I would also know that we need to be even more innovative than we have been so far and come up with a lot more exciting green products, and I would know that we need to become much better at communicating our green products."
The article concludes with Jon saying:
"The financial world has embraced digitalisation and struggled with it for more than ten years, and we all benefit from it now. Green finance is yet another way for the financial world to do something for society.
"Banks can and should continue to make themselves relevant to the part of the customer base who look to them to join their quest for a more sustainable world. By educating their customer base, continuing to innovate and continuing to communicate honestly and transparently, they will most definitely be part of their customers very personal sustainability journey."