Cooperative banks - ESG & sustainability

ESG is gaining relevance

Cooperative banks today are facing a multitude of challenges on account of the rapidly evolving economic landscape. The topic of ESG (Environmental, Social and Governance) is becoming ever more relevant in this context, owing to four key drivers:

Customer expectations

Firstly, more and more customers expect sustainable financial products and services. Cooperative banks that can offer their customers ESG-oriented options not only boost customer satisfaction, but also promote long-term customer relationships. The growing awareness of sustainability and social responsibility has an impact on customer demand, which requires cooperative banks to adapt their offerings.

Earnings potential

Secondly, sustainability itself represents an earnings opportunity, especially in corporate banking. The transformation of the German economy towards sustainability requires considerable investments, which in turn creates significant earnings potential for banks. Around EUR 322 bn must be invested each year in order for Germany to achieve its climate goals. This makes it clear that sustainability is not just a regulatory obligation, but also comes with real sales opportunities.

Competitor environment

Thirdly, cooperative banks are experiencing increased competition for ESG financing solutions. Corporate banking used to be focused on large international companies. However, there are more and more offerings for German SMEs, also within the business and commercial customer segment, as well as banking and beyond banking solutions for retail customers, e.g. in the context of investment or construction financing. This competition requires cooperative banks to stand out against their competitors and continually innovate their ESG financing solutions in order to stand their ground in the market.

Regulators

Fourthly, cooperative banks are facing strict regulatory requirements, including the reporting of non-financial information, stress testing and risk management. These regulations have a direct impact on their business practices and require suitable adjustments to strategies and processes.

Overall, ESG is a highly relevant topic for cooperative banks, not only as an external requirement, but also as an opportunity for growth and differentiation. The comprehensive integration of ESG principles into their business models and strategies is becoming a key success factor.

“Sustainability is the key challenge for cooperative banks. It is not just about regulatory compliance, but also about the bank’s positioning on the market. Therefore, it is essential to pursue a systematic approach that takes both aspects into account.“

Sara Könemann, Senior Manager

ESG and sustainability solutions

Banks have become an important agent in the sustainable transformation of the German economy as it is their task to channel capital flows. For cooperative banks, ESG transformation is a regulatory requirement, but also an opportunity for sales that contributes to long-term financial stability. At zeb, we support banks on this path in line with the cooperative values and to the benefit of society, the environment and the economy.

We offer cooperative banks proven approaches and project plans for their ESG transformation. Based on a comprehensive status quo analysis of their ESG practices, zeb helps these banks develop an ESG strategy and implement the resulting agenda for action in concrete terms. As sustainability is a dynamic and constantly evolving topic, we continue to support our clients beyond the implementation itself. This includes ongoing monitoring assistance and, if necessary, steering measures such as regular ESG fitness checks.

Status quo analysis

We carry out a targeted and comprehensive analysis of our clients’ current setup in terms of ESG. This involves identifying strengths and weaknesses in comparison with other banks and in light of current regulatory requirements. To this end, we use our established zeb.ESG framework, which follows a holistic and prioritized approach and covers a wider variety of ESG aspects than the BVR’s sustainability cockpit and “ReifegradFächer” (maturity fan) model.

Areas of action and measures

The status quo analysis allows us to derive key issues to be addressed in the customized ESG road map, in which we define specific to-dos, flesh out a potential action plan and define responsibilities and time lines in collaboration with the bank.

Prioritization and implementation

We support the ESG strategy implementation from regulatory compliance to employee training. To this end, we offer modules that can be used directly in projects, e.g. training and certification options as well as tools for sustainability reporting or ESG advisory services.

Monitoring and adaptation

We help our cooperative bank clients establish and monitor suitable ESG performance indicators that are based on or complement the German Cooperative Financial Network’s values. Moreover, we support them in defining suitable measures for ongoing management and control. On top of that, our zeb.Taxonomy tool helps them keep an eye on regulatory changes.