ESG Data Governance: A Growing Imperative for Banks

Banking industry is facing pressure from stakeholders and investors to meet the fast-changing demands in ESG issues.?To meet the expectations, banks must adapt their IT systems to systematically collect, aggregate, and report on a broad range of ESG data. ESG data must be woven into existing processes like credit approvals and decision making. This will require significant changes to the IT infrastructure. New applications will include not only the management and capture of ESG data but also?financed emissions models, climate risk models, ESG scorecards, climate stress tests and climate-adjusted ratings. Banks will need to define a data collection strategy and reorganize their data governance model.

According to McKinsey, about 14 percent of total client-driven revenues in 2019 were controlled by consumers?whose banking preferences were influenced by the bank’s concern about purpose and sustainability. IT leaders must quickly integrate ESG data governance into their IT systems and processes to keep pace with the regulatory environment, consumer needs and stay ahead of the competition.

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Reference: https://www.mckinsey.com/capabilities/mckinsey-digital/our-insights/tech-forward/esg-data-governance-a-growing-imperative-for-banks

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