{"id":520867,"date":"2021-07-15T15:20:00","date_gmt":"2021-07-15T14:20:00","guid":{"rendered":"https:\/\/pulse.microsoft.com\/?p=520867"},"modified":"2021-07-15T15:20:01","modified_gmt":"2021-07-15T14:20:01","slug":"fa1-sustainable-transformation-in-fsi-now-next-and-beyond","status":"publish","type":"post","link":"https:\/\/pulse.microsoft.com\/en\/sustainable-futures-en\/finance-insurance-en\/fa1-sustainable-transformation-in-fsi-now-next-and-beyond\/","title":{"rendered":"Sustainable Transformation in FSI: now, next and beyond"},"content":{"rendered":"

The connection between sustainability and finance is not new, but it\u2019s one that is gathering pace. Capital allocation is increasingly directed towards sustainable investment projects in financial services, with Bloomberg reporting [1<\/span><\/span>]<\/span><\/span> that global socially responsible investments totalled over $30 trillion in 2019.<\/p>\n

Today\u2019s customers\u00a0also\u00a0expect\u00a0that\u00a0companies they use\u00a0not only\u00a0act responsibly, but proactively pursue\u00a0financial\u00a0activities that\u00a0make a positive impact\u00a0on\u00a0the world.\u00a0Meanwhile, r<\/span>egulators are shaping legislation to advance sustainable finance<\/span><\/i>, for example through the\u00a0<\/span>EU Sustainable Finance Acts & Directives\u00a0<\/span><\/i>stream<\/span>\u00a0of<\/span><\/i>\u00a0the<\/span>\u00a0European Green Deal,\u00a0<\/span><\/i>the\u00a0<\/span>EBA Action Plan on Sustainable Finance,\u00a0<\/span><\/i>the\u00a0<\/span>UN\u00a0<\/span><\/i>PSI<\/span><\/i>\u00a0and the Net-Zero Banking Alliance<\/span><\/i>.<\/span>\u200b<\/span><\/i>\u00a0<\/span><\/p>\n

This is impacting investors too, who\u00a0are broadening their investment criteria\u00a0from a narrow focus on returns\u00a0to\u00a0a broader prioritization of\u00a0sustainability\u00a0and social\u00a0aspects\u00a0like\u00a0carbon emissions,\u00a0diversity\u00a0and tax transparency.\u00a0In response to this, companies within the financial service sector\u00a0are realizing that they need to start\u00a0offering\u00a0investment opportunities\u00a0focus\u00a0on\u00a0environmental,\u00a0social and\u00a0governance (ESG) factors.<\/span>\u00a0<\/span><\/p>\n

All these dimensions drive sustainable transformation\u00a0<\/span>and<\/span>\u00a0present<\/span>s<\/span>\u00a0new opportunities for financial service providers. And with the right technology, all\u00a0<\/span>financial\u00a0<\/span>businesses can\u00a0<\/span>seize<\/span>\u00a0them<\/span>.<\/span>\u00a0<\/span><\/p>\n

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Creating ESG insights and enabling impactful actions<\/span><\/h2>\n

There are a number of reasons for the increasing focus on sustainable finance. Firstly, financial sector customers are now expecting to be offered sustainable investment products. Secondly, many green investment projects require substantial capital injections: EY has identified over 1000 \u2018shovel-ready\u2019 projects within the EU, which require around \u20ac200 billion of public and private investments and have the potential to create substantial sustainable value.<\/p>\n

We are seeing that both banks and insurers are facing significant challenges when planning their ESG action, including:<\/p>\n