Financial Institutions Prioritize ESG and Climate Risk Management: Insights from BCT Digital Survey

BCT Digital, in collaboration with Chartis Research, released a survey analyzing how global financial institutions incorporate ESG and climate risk factors in their risk management. The study reveals that most firms plan substantial investments in ESG technology and face challenges in regulatory compliance, GHG accounting, and integrating climate risks into product lines.

BCT Digital, a leading global digital transformation company, along with Chartis Research, has unveiled the results of an extensive ESG and Climate Risk Survey. The 'Chartis Market View: ESG and Climate Risk Survey' meticulously examines how worldwide financial institutions are embedding ESG and climate risk considerations into their risk frameworks and investment strategies.

The survey polled 77 practitioners from financial institutions managing assets between $1 billion and $500 billion across APAC, North America, Europe, and MENA regions. It found that over 72% of global financial entities plan to allocate $500,000 or more to ESG technology. However, over half cite adapting to evolving regulations as the primary ESG-related challenge.

Key survey findings indicate that most firms reassess their ESG strategies quarterly, with annual expenditures averaging between $250,000 and $500,000. North American and European institutions are inclined to surpass the $500,000 mark. Upcoming investments are likely to focus on ESG data products, governance systems, and compliance tools.

Specifically, 52% of respondents view regulatory compliance as the biggest ESG hurdle, while 48% find risk assessment and ESG integration into workflows equally challenging. Regarding climate risk, major issues include regulatory stress tests (67%), accurate GHG emissions accounting (56%), and operational integration of climate risks (50%).

Speaking on the report, Jaya Vaidhyanathan, CEO of BCT Digital, stated, "This survey aims to pinpoint trends and strategic priorities in ESG and climate risk management. It highlights the absence of uniform reporting standards, posing difficulties for multinational corporations and underlining the importance of a cohesive ESG and climate risk framework."

Sid Dash, Chief Researcher at Chartis, added, "Adherence to ESG norms is challenging, particularly due to the critical role of data management. Comprehensive frameworks that manage data across the value chain are essential for compliance." The report also covers various industry sectors, including retail banking, asset management, and microfinance.

(With inputs from agencies.)