Asian and globally headquartered banks and financial services corporations operating in the region have communicated their sustainability credentials more aggressively than any other industry over the past few years, but consumers are sceptical that they are helping emerging economies in Asia move towards a more sustainable future, according to a study by media company BBC.
The week after a high-profile report sounded the alarm on the vulnerability of Asia to climate change, the BBC’s study of 1,271 Asia-Pacific (APAC) consumers found that people want financial services companies to play a more active role in supporting more environmentally and socially sustainable economies but the sector appears to be lacking sustainability leadership. Just 9 per cent of consumers feel that financial entities are sustainability leaders.
Just 14 per cent of consumers in the region believe that banks and financial services companies understand the need to support sustainable development, and only 11 per cent feel that they support environmentally and socially responsible development in emerging economies.
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Only 14 per cent think that financial players are supporting large corporations with their sustainability practices, and even fewer believe they are helping small to medium sized businesses (12 per cent) or communities (10 per cent) take up sustainable practices.
The companies in the study include Indian bank ICICI, British financial services company Standard Chartered Bank, Japan’s Mitsubishi UFJ Financial Group, United States’ entities including American Express, Visa, Mastercard, and Japanese insurer Mitsui Sumitomo Insurance Group Holdings.
The study of consumers in countries including Australia, India, China, Malaysia, Vietnam and Singapore found that people have low trust in financial services corporations and their sustainability pledges compared to the faith they have in other sectors, such as automotive and technology.
They also have lower expectations that financial entities can pursue sustainable working practices that can reduce the harm to the planet and the waste of resources. Automotive and tech brands trumped the financial sector with 87 and 79 per cent of respondents, respectively, believing that they will initiate environmentally-friendly polices in their processes and workplace compared to 60 per cent of consumers expecting the same from financial firms.
They are also far less aware of financial brands’ sustainability efforts, despite a study from analytics firm GlobalData in May showing that Asia’s financial services firms have communicated sustainability in corporate filings more heavily than any other industry in the region in the Covid-19 era. Some 63 per cent of APAC consumers surveyed were not aware of financial brands’ sustainability portfolios.
BBC’s study also pointed to the perils of greenwashing - which conveys a false impression about how a company’s products are more environmentally sound that they actually are - for brand credibility. While 81 per cent of respondents said they agree that clearly demonstrating a commitment to sustainability adds value to a brand, more than half (57 per cent) said they would stop buying a product they were previously loyal to if they discovered it was not true to its sustainability commitments.
In January, a group of investors worth US$2.4 trillion said they suspected HSBC of greenwashing, because the bank continues to fund coal projects despite pledging to go carbon neutral. Japan’s largest banks, including MUFG, Sumitomo Mitsui Financial Group and Mizuho have rolled out high-profile climate action pledges over the past two years, but continue to draw criticism for funding coal power in developing countries.
Over the past five years, no company in Asia Pacific has talked about sustainability more than Bank Rakyat Indonesia (BRI), Indonesia’s largest state-owned bank, according to GlobalData research, but BRI is one of the country’s biggest funders of coal and has been flagged as a deforestation-risk due to its finance of commodities such as palm oil.
The study found that 79 per cent of APAC consumers say sustainable practices and commitments are an important consideration when making purchase decisions, and 68 per cent are happy to pay more for brands with strong sustainability and eco-friendly practices.