Redesigning a Bank’s Climate Strategy for Growth
By supporting its customers through the climate transition, this bank will create value for shareholders while meeting its climate goals.
Companies across industries have made bold net-zero commitments and crafted climate strategies, but meeting these targets will require smart investments in new and emerging technologies. Seeing a role to play, APACBankCo*, a leader in its home market, identified the climate transition as an opportunity to support its customers while also delivering significant growth for shareholders.
We helped APACBankCo develop a climate transition strategy anchored in a clear ambition to support customers. The bank’s new strategy and operating principles will allow it to tap into a significant amount of “net new” climate-related revenue from new lending opportunities, while retaining substantial existing banking revenues that will shift to climate-related lending.
Using a blend of proprietary data and our network of ESG expertise, we began by helping APACBankCo identify what customers across subsectors would need to succeed in the transition. With this knowledge in hand, the bank could determine which areas had the most opportunity for growth.
Alongside this approach, APACBankCo knew it would need to enhance its capabilities and tools to deliver on its goals. We helped the bank identify areas to update, including data, technology, risk, credit, and communications, to support its climate transition strategy.
The bank also signed the Net-Zero Banking Alliance, requiring its lending and portfolio emissions to be net-zero by 2050. While the bank had already made substantial progress on its decarbonization agenda for its Scope 1 emissions (from the bank’s owned or controlled assets) and Scope 2 emissions (utility emissions from the bank’s energy consumption), significant work was required to ensure that the bank’s Scope 3 emissions (emissions from the bank’s customers) would meet this net-zero target.
With APACBankCo’s teams we crafted decarbonization goals for the bank’s key sectors and reconciled them with the overall climate growth strategy and value creation opportunities. Understanding the strategic implications of its net-zero targets, the bank took action and implemented new guidelines for when to offer financing. And to help the bank stay on track, it implemented a digital tool we built for them, allowing members of the frontline team to use that allows them to assess new lending opportunities against the bank’s guidelines.
APACBankCo now has a clear strategy and custom-fit tools in place to ensure it can support its customers through the climate transition while building a lending portfolio that’s on-track to meet its 2050 net-zero commitment.