European banks lead the world in their ESG (environment, society and governance) performance, according to the latest edition of EY’s Sustainable Finance Index survey. However, European banks’ action on social issues lags behind banking organizations in the US and the Asia-Pacific region, particularly on the diversity and inclusion (D&I) agenda.

In ESG performance, European banks achieved an overall score of 7.4 out of 10, a marginal improvement on the previous year (7.3). At the same time, their performance is rated higher than the performance of banks in North America (7.2) and the Asia-Pacific region (6.3). The European banking industry also scored higher in overall ESG activity compared to the insurance (7.3) and asset management (7.0) industries in Europe.

According to the EY index, most ESG actions of European banks are mainly focused on the following sub-sectors:

– Environment: “Energy management and climate change” (9.3) “offering green products and services” (9.1) and “waste and water management” (7.4).

– Society: “Data protection and privacy” (10), “protection of whistleblowers” (those who make complaints about irregular behavior) (10) and “safety in the workplace” (9,9).

– Governance: “Board effectiveness” (7.6), “transparency and control” (7.5) and “governance of ESG issues” (6.9).

The lowest levels of activity are recorded in “diversity and inclusion” (5.7), “diversity of board composition” (4.7) and “focus on quality” (3.3), which includes the adoption of quality systems services such as ISO9000.

Commenting on the research findings, Giorgos Poulopoulos, partner and head of the Financial Services Sector of EY Greece, said: “European banking institutions – including Greece – seem to be listening to the expectations of their customers, society and shareholders and have make significant progress on ESG issues. This development has a positive impact on society and the economy while, at the same time, making European banks more attractive to their shareholders, employees and customers. However, they should step up their efforts on issues of diversity and inclusion, for example by getting more women into positions of responsibility, as performance in this area needs improvement. In this way, banks in Europe will better align with the profile of the customers they serve, while at the same time strengthening their competitiveness by creating high-performing teams, encouraging innovation and creating added value.”