Sustainable Finance - ‘Best in class CEO’ scenario

Sustainability is one of the important topics of our time and financial services are a key factor to achieve it. In the last couple of years we talked to many financial service providers about regulation and Sustainable Finance. We met with very different views in the market. As a result, the following fictive interview presents a summary of the best in class CEO reactions on Sustainability: strategic-driven, proactive and with a positive and open mindset.

Our next publication will cover the opposite view to show how you rather shouldn’t face the Sustainable Finance regulations as a CEO.

RegHub: Hi Sarah, we are really happy that you have taken some of your spare time to talk with us today about Sustainable Finance.

Sarah: Hi RegHub team, the pleasure is mine!

RegHub: Sarah, Sustainability is a pressing topic and the EU Commission is really pushing its Sustainable Finance initiative. You are the CEO of a fictive global Retail bank and thus in the center of this regulatory initiative. What is your opinion on Sustainable Finance?

Sarah: I think I like it [PAUSE] This is maybe the first time that I am saying this about a regulatory driven initiative [LAUGHS].

I am a CEO, but I am also a mother. I am well aware of our global environmental, political and social challenges. I am convinced that we have to act today to preserve our habitat for future generations. I am also aware that necessary changes will be costly and economically painful, but also that they are without alternative.

Financial industry is the only industry able to guide huge global capital flows to sustainable projects and investments.

Thus, Sustainable Finance can be a chance to put the financial service industry in the driver seat of one of the most important journeys of our time and to reclaim a good reputation and increase economic value, which have greatly deteriorated, especially over the past 10 years.

RegHub: Your attitude is honorable, still Sustainable Finance is a complex regulatory topic with hundreds of pages of additional regulatory requirements, which have to be implemented in your company while, at the same time, increasing complexity of your internal processes.

Sarah: We have spent ~90 Million Euro one-off costs to implement MiFID II, PRIIPs, MAD in the last 5 years in our European entities, with some implementations still ongoing. And this is the Consumer Protection part only.

We have front office teams spending 30% of their time with regulatory related project work or administrative tasks. That are 30% less time for customer experience improvements and business increasing initiatives.

In the context of an ongoing low-interest environment, sideways moving markets, changing customer expectations and increasing regulations it is my job to find a new mid- and long term strategy to increase or at least preserve revenues and ten thousands of jobs.

From my perspective this is also a kind of sustainability.

RegHub: What is your current status of Sustainable Finance implementation and what are your planned next steps?

Sarah: We have set up a working group with active C-Level participation. We have bi-weekly meetings. Our first action was to define what we call a ‘Promise to Sustainability’. By 2024 we want to be the leading sustainable Retail bank in the world. We are aspiring to become the first contact for our client base when it comes in supporting economic challenges and chances in the context of sustainability. Our assumption: In 2030, more than 60% of global retail investments in infrastructure, housing and mobility will be directly or indirectly related to sustainability. We will win in this market with adaptive, connected green products, tools, services and data.

By the way: By 2024 we will comply with the EU standard worldwide, even though other nations may introduce weaker requirements, and we will be in the forefront to establish common global benchmarking and retail product standards.

Currently we are feeding our promise with a strategic concept, which is the basis for a future implementation program. Meanwhile we have nominated a global program manager, who is currently setting up his organisational management team and local project managers. I will actively support this program in the next 4 years.

We will start different marketing campaigns in order to motivate our clients to join us on this journey. We are planning to start the implementation of sustainable finance initiatives this year.

RegHub: This sounds fantastic and very ambitious. What do you see in the market?

Sarah: The main takeaway from my conversations with peers is, that the majority is waiting for some more official standards and specifications. I guess some impact assessments and deeper regulatory analysis have already started. The focus still seems to be very much on regulation.

We do it the other way around: we have initiated a strategic initiative to transform our business to sustainability and on this mission we will ensure compliance with all new regulatory requirements.

RegHub: Thank you very much for your time Sarah. We really honor your goals and are very proud to be part of your mission.

Sarah: Thank you very much for your support! My team is really looking forward to working with you guys to implement Sustainable Finance most efficiently.