Enabling Change in Your Company
Michelle Horsfield
25 years: Sustainable Finance
Let’s reflect on what you’ve learned on the journey toward achieving net zero, examining the risks and opportunities that come with this transformative shift.
Let’s reflect on what you’ve learned on the journey toward achieving net zero, examining the risks and opportunities that come with this transformative shift.
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Enabling Change in Your Company
6 mins 57 secs
Key learning objectives:
Identify the main takeaways
Reflect and identify ways to apply the knowledge learned to real-world situations
Overview:
Achieving net zero in banking extends beyond operational emissions, emphasising the importance of reducing financed emissions, i.e. those tied to loans and investments. Banks face significant climate risks, including stranded assets, reputational challenges, and regulatory pressures, but also opportunities for innovation and growth through sustainable finance. Human skills like problem-solving, adaptability, and communication are critical for navigating this transition, complementing technology-driven solutions. The Inner Development Goals framework underscores that sustainable transformation requires personal growth and ethical leadership. This transition is not merely a challenge but a transformative opportunity, with a lasting impact on the future of finance and our planet.
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Summary
What does achieving net zero entail for banks beyond reducing operational emissions?
Achieving net zero for banks goes beyond cutting their operational emissions; it requires tackling financed emissions linked to loans, investments, and other services. Financed emissions often constitute the majority of a bank's carbon footprint, making it essential for banks to address emissions in their portfolios. This approach redefines sustainability in banking, urging institutions to actively engage in climate-conscious lending and investment to drive real impact.
What are the climate-related risks and opportunities for banks in the transition to net zero?
Banks face climate-related risks, including potential losses from stranded assets in high-carbon sectors, reputational risks from perceived inaction or greenwashing, and increasing regulatory demands for climate disclosures. However, the transition also offers significant opportunities, such as the growth of green financial products and sustainable investments, which can attract eco-conscious clients and position banks as forward-thinking leaders in the evolving financial landscape.
How do human skills contribute to the success of sustainability initiatives in banking?
Human skills like adaptability, effective communication, and leadership are essential to sustainability initiatives in banking. While technology aids in the transition, the ability to work collaboratively, solve complex problems, and communicate sustainability goals clearly to clients and stakeholders ultimately drives success. These interpersonal skills empower professionals to build the relationships and trust needed to implement meaningful, long-lasting change in the bank’s sustainability journey.
What role do personal growth and ethical qualities play in achieving broader sustainability goals?
Personal growth and ethical qualities are fundamental to sustainable transformation, as highlighted by the Inner Development Goals (IDGs). These goals emphasise emotional resilience, empathy, and a sense of global responsibility, which are crucial for navigating complex environmental and social challenges. The IDGs support the idea that true sustainability requires both technical solutions and a human-centered approach, inspiring collaboration and ethical leadership essential for lasting societal impact.
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Michelle Horsfield
Michelle Horsfield, an environmental scientist with a climate change specialisation, transitioned into the financial sector four years ago to apply her knowledge to the largest reallocation of capital in history, as the economy moves towards a lower carbon future.
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