Strategic Focus: ESG & Sustainability Strategies In Banking And Financial Services

Published 13 March 2025 by Priyanka Bawa & Kim Knickle &
Corporate Governance Disclosure Rules, Regulations & Frameworks ESG & Sustainability ESG & Sustainability Services ESG Assurance ESG Consulting ESG Initiatives ESG Investment Consulting ESG Ratings ESG Risk Green Bonds Investor-Grade Data Sustainability Goals Sustainability People & Skills Sustainability Reporting Sustainability Risk Management Sustainability Strategy Sustainable Finance Strategic Focus

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Executive Summary

The largest banks in G7 countries are financing more GHG emissions – an enormous 2.7 billion tonnes – than the total emissions of Russia. This, along with a $700 billion annual shortfall in biodiversity funding, means the banking and financial services sector is facing mounting pressure to advance sustainable development, curb environmental risks and bridge critical funding gaps. In response, the sector is undergoing a significant transformation, increasingly adopting proactive sustainability strategies for building a resilient and inclusive financial system. This report provides an overview of the unique challenges that the sector faces and highlights strategies that the C-Suite can adopt to align with global sustainability goals. 

Table of contents

Summary for decision-makers
Financial services are the throbbing pulse of a truly sustainable world
Sustainability priorities for the banking and financial services sector
The sector faces multifaceted challenges to integrate sustainability within business functioning
Financial services firms must embed sustainability into their core business offerings
The sustainability market can equip the industry to drive ESG innovation and financial resilience

Table of figures

Figure 1. Verdantix segmentation of the banking and financial services sector
Figure 2. SDGs and the banking and financial services sector
Figure 3. Sustainability initiatives in the banking and financial services sector
Figure 4. Glossary of sustainability-related terms
Figure 5. Regulations, guidelines and voluntary frameworks for the banking and financial services sector
Figure 6. Greenwashing accusations in the banking and financial services sector in 2024
Figure 7. Examples of industry groups and alliances advancing sustainability agendas in the banking and financial services sector

Organisations mentioned

AIG, Allianz, Apple, Australian Prudential Regulation Authority (APRA), Aviva, AXA, Banco BBVA, Bank of America, Bank of England, Barclays, BlackRock, Block, Bloomberg, BMO (Bank of Montreal), BNP Paribas, Boston Consulting Group (BCG), CalPERS, Calvert Impact, CIBC, Citigroup, ClarityAI, Clayton Dubilier & Rice (CD&R), ClientEarth, Climate Action 100+, Climate Bonds Initiative (CBI), CPP Investments (Canada Pension Plan Investment Board (CPPIB)), Credit Suisse, Cube Highways Trust (Cube InvIT), CVC Capital Partners, Danske Bank, Deutsche Bank, Development Bank of Wales, Dutch Association of Investors for Sustainable Development (VBDO), DWS, E.SUN Bank, EQT Group, Equator Principles, ERM, European Central Bank, European Commission, European Investment Bank (EIB), European Sustainable Investment Forum (Eurosif), EY, Federal Court of Australia, Federated Hermes, Finance for Biodiversity Foundation, France Autorité des Marchés Financiers (AMF), Frankfurt Public Prosecutor’s Office, Glasgow Financial Alliance for Net Zero (GFANZ), Global Alliance for Banking on Values, Global Investors for Sustainable Development Alliance, Goldman Sachs, Greenomy, Hong Kong Securities & Futures Commission (SFC), HSBC, IAG, Iberdrola, Industrial and Commercial Bank of China, ING, Institute of Sustainability Studies, Institutional Investors Group on Climate Change (IIGCC), Insurance Development Forum, International Finance Corporation (IFC), International Organization of Securities Commissions (IOSCO), Invesco Advisers, Investors for Paris Compliance, IRPC Public Company Limited, ISS, Japan Post Bank, JPMorgan Chase, Kasikornbank (KBank), Kirkbi, KPMG, Legal & General, Lloyds Banking Group, Monetary Authority of Singapore (MAS), MSCI, NatWest Group, Net Zero Asset Managers (NZAM) initiative, Nippon Life, Novata, Ontario Securities Commission (OSC), Organisation for Economic Co-operation and Development (OECD), Partnership for Carbon Accounting Financials (PCAF), PayPal, Prudential Financial, PwC, Quebec Autorité des Marchés Financiers, Reserve Bank of India (RBI), Responsible Investment Association Australasia (RIAA), Responsible Investment Association Canada, Royal Bank of Canada, Safaricom, Science Based Targets initiative (SBTi), Scotiabank, Scottish Widows, Simmons & Simmons, State Street, Stichting Pensioenfonds ABP, Sustainable Energy Finance, Sustainable Markets Initiative (SMI), Sustainalytics, Sweep, Task Force on Climate-related Financial Disclosures (TCFD), Task Force on Credit Enhancement for Sustainability-linked Sovereign Financing, Taskforce on Nature-related Financial Disclosures (TNFD), TD Bank, The Alliance for Green Commercial Banks, The Good Economy, The People’s Pension, UK Advertising Standards Authority (ASA), UK Department for Energy Security and Net Zero, UK Department for Environment, Food and Rural Affairs (Defra), UK Financial Conduct Authority (FCA), UK HM Treasury, UK Sustainable Investment and Finance Association (UKSIF), UN Environment Programme (UNEP), UN Principles for Responsible Investment (UNPRI), Universities Superannuation Scheme (USS), University of Cambridge, US Federal Reserve, US Securities and Exchange Commission (SEC), US SIF, Vanguard Investments Australia, Wells Fargo, WisdomTree, World Bank

About the authors

Priyanka Bawa

Senior Analyst
Priyanka is a Senior Analyst in the Verdantix ESG & Sustainability practice. Her current research focuses on ESG and sustainability consulting services and social aspects of ESG regulations, reporting and disclosures. Prior to joining Verdantix, Priyanka led diversity, equity and inclusion (DE&I) research in the legal and environment sectors. She holds a DPhil in Social Policy from the University of Oxford.

Kim Knickle

Research Director, ESG & Sustainability
Kimberly Knickle is Research Director of the ESG & Sustainability practice at Verdantix. Her research areas encompass ESG regulations and reporting, ESG risk, supply chain sustainability, circular economy, social impact, and sustainable finance. Kim has worked for more than 20 years in the IT industry, providing research and analysis to help companies invest wisely in new technologies. Before joining the analyst industry, she held various roles in IT services, engineering and product safety testing, beginning her career at Underwriters Laboratories, Inc. Kim holds an MBA from Boston University and a BS in Electrical Engineering from Cornell.