Partner & Director, Sustainable Investing & Social Impact
Banks have a major opportunity when it comes to social impact. They can not only address critical issues—such as financial inclusion, human rights, and the advancement of a just climate transition—but also expand their business.
Consider that globally, about one-quarter of the population, some 1.5 billion people, do not have a bank account. Meanwhile, an even greater number—2.8 billion—are underbanked, meaning they have limited access to financial services. In addition, BCG has found a link between institutions’ financial performance and their performance on environmental, social, and governance (ESG) metrics; institutions that perform strongly on each pillar also generate higher total shareholder return and lower cost of capital. Among these pillars, the link was strongest for social metrics.
These data points raise several questions: Are banks moving to seize this opportunity? How does the social imperative compare with—and how is it tied to—banks’ push to net zero? What is motivating and blocking banks’ actions on social topics? And how does the approach to the social opportunity differ by region?
To find answers, we conducted a global survey of 360 senior executives from 40 banks headquartered in 33 countries, and we interviewed dozens of respondents. We then supplemented our analysis with insights gleaned from our extensive work with clients. The slideshow presented here provides some key findings from our research.
A sound social strategy can deliver real value for banks. As financial institutions seek to define and sharpen that strategy, they should keep in mind some important likely developments:
So how does a bank up its game and make a bigger difference on social topics? There are some clear steps: create a broad social strategy, assess bank performance in key social topics, identify where the bank can have the most impact, and track and report KPIs. Some banks have taken some of these steps, usually as part of a wider ESG push. But these efforts are often limited in scope and are not built around leveraging the core business to have social impact.
To truly lead on social impact, banks need to think creatively. We see a number of actions—many not yet widely adopted—that can move the needle. They include:
In our discussions and work with banks across the industry, we hear a common message: while climate issues have been and will remain a major priority for financial institutions, the social agenda will become more and more important in the years ahead. Banks that move proactively today can position themselves to seize the opportunity.