Industry Focus: Financials / Commercial Banks and Capital Markets

JUNE 26, 2019

The ISS ESG Corporate Rating universe currently includes 265 of the world’s largest commercial banks. These companies offer a broad range of financial services, encompassing lending for institutional, corporate, and retail clients, project finance and investment banking, asset management services, and counselling services.

Financial institutions operate in a dynamic market environment. While low interest rates and rising regulatory requirements pose a challenge, the industry faces potential disruptions from new technologies, such as blockchain, as well as changing consumer behavior, especially concerning the younger generation of millennials. While competition tightens, as tech giants enter the payment market, and cooperation with fin-techs becomes popular, data protection and information security are increasingly material issues for banks. The broadly envisaged digital transformation intensifies the already existing trends of job cuts and branch closures.

At the same time, green and social finance gains momentum. The European Union, through the Action Plan on Sustainable Finance, intends to unlock financial resources and to foster the transition to a low-carbon economy. Industry initiatives also aim at leveraging the sector’s ESG opportunities. These recent developments highlight financial institutions’ responsibility regarding global sustainability challenges. Against this background, ISS ESG continuously analyzes the ESG performance of this industry.

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