This report was first published by Oliver Wyman here.
At COP26 finance took a central role in the global climate agenda for the first time, under the banner of GFANZ. And while industry leaders have already made big strides to build new capabilities, launch new propositions, and to adapt the way they do business, there is far more to do. Corporate banks will be at the centre of driving and helping their clients navigate the transition to a net zero economy. This paper focuses on actions required within corporate banking divisions and sets out five key priorities to make climate commitments real.
Five priorities for corporate banks
- Engage with clients. The most important role banks can play is partnering with their clients to help drive change. Delivering across the corporate franchise will require new capabilities, systematic campaigns, and broad training of existing teams.
- Build new propositions. Many green opportunities are very competitive and low margin, while higher-reward opportunities are high risk and complex to deliver. Banks must focus on a small number of the most impactful initiatives where they can innovate and collaborate.
- Set portfolio-emissions targets. Group commitments must be cascaded into sector and portfolio-level targets that are carefully calibrated to balance ambition and commercial feasibility.
- Embed climate considerations across the corporate bank. Translating targets into action means changing the way decisions are made—including new metrics to assess performance and changes to the credit-underwriting process.
- Develop climate analytics. Given the complexity and emotion of the climate challenge, bankers need robust and granular data in a format that can support decision-making and client dialogue.
This paper explores these five key actions in depth and outlines how banks can act quickly support clients in the transition to net zero. It will require investments in new technology, changes to operating models, as well as enhanced skills and capabilities, but by taking these steps corporate banks can make their net-zero commitments a reality.