The number of ‘green’ Swiss banks has doubled in the past year, outpacing their UK counterparts in the race to corner a piece of the lucrative ‘green’ market and meet sustainability targets.
New research published in June 2022 reveals that UK trade banks are one-third less likely to win green trade finance opportunities than their Swiss counterparts.
A market study of more than 350 heads of trade, compliance, and finance in the UK and Swiss-based banks and financial services organisations, found that a staggering 90 per cent of UK financial institutions have lost out on green trade financial opportunities, compared with only 56 per cent in Switzerland.
With more emphasis being placed on climate change, more banks have begun to recognise the demand for funds that are more ‘economically, ecologically, and societally sustainable’, and developed a number of investment strategies to meet them.
These come in various forms, from green investment funds like ETFs to so-called ‘green bonds’, both of which are good ways to raise capital for trade banks looking to get out of traditional markets like oil or other carbon-based commodities.
However, it would seem that not everyone has been quick to maximise the opportunities that this shift in demand has brought about.
According to the report, which was commissioned by Pole Star, “Banks in Switzerland may be better than UK counterparts at seizing green finance opportunities but the reality is that sustainability screening and the ability to demonstrate compliance in both countries is pretty woeful.”
Simon Ring, global head of maritime trade technologies & ESG at Pole Star, also revealed that the amount of time compliance departments spend on sustainability screening was roughly the same: 43% (Swiss banks) vs 50% (UK banks) – which suggests that internal reforms between the two may be on a par.
Equally, when it came to scoring sustainability on their list of priorities, the figures between the two countries were on a par: 90% for Swiss trade banks versus 96% of UK institutions stated sustainability concerns as being of medium to high priority.
However, others are quick to point out that some ‘green’ finance opportunities may not quite be what they seem: George Falkner, head external wealth manager & multi-family offices at BNP Paribas (Suisse) SA., warns against ‘greenwashing’ and claimed that not every product marked ‘sustainable finance’ is worthy of the label.
“It is important to carefully review and critically assess each green product on offer,” Faulkner said.
“and for investors to begin by clearly establishing what their convictions, principles and objectives are with respect to sustainability.”
Perhaps, then, it is less about quantity and more about quality?
In this respect, the more cautious and conservative approach of UK trade banks, who aren’t necessarily looking for flashy headlines in order to land high net worth clientele, may well win out in the end.
As they say; ‘Slow and steady wins the race’.