ESG Initiatives Take Hold In Banking Sector

Introduction

In recent years, environmental, social and governance ("ESG") initiatives have become a driving force in many industries, and the banking sector is no different. Since green bonds first emerged in the European market in 2007,¹ sustainable finance has steadily gained momentum, with the most significant progress seen in the last five years. Global annual sustainable debt issuance more than doubled from US$769.1 billion in 2020 to US$1.689 trillion in 2021, with no signs of slowing down in 2023.²

The global push for ESG initiatives is largely driven by consumer demand. A recent study found that 83 per cent of consumers think that companies should be actively shaping ESG best practices and more than 50 per cent believe that companies should be doing more to advance ESG issues.³ Financial institutions are responding to this call to action with more than 300 banks, representing almost half of banking assets worldwide, adopting the UN Principles for