Three in Four UK Financial Firms To Bring ESG Management In-House With Permanent Hire

Environmental, social and governance (ESG) adherence has become central to the operations of many financial institutions. So critical is the matter, that many corporations are now appointing a permanent figure to handle and maintain efforts.

This task has been accentuated by the findings of the London-based financial service innovation platform TISAtech and its partner The Disruption House, which revealed how three out of four businesses are prepared and planning to make a permanent hire specifically to handle ESG.

The duo surveyed over 200 decision-makers for UK financial services firms, to understand their preparedness and attitudes towards ESG regulations.

Failing to prepare is preparing to fail

The research brought to light the fact that while 72 per cent are confident they’ve prepared enough for the arrival of future ESG regulations, more than 80 per cent feel they should be doing more.

The data revealed that 86 per cent of businesses have performed an ESG assessment, but that lack of clarity over how to perform this assessment is the leading reason businesses have yet to do so.

The data presents a counterpoint to the view of ESG regulation as confusing, excessive and performatively adopted.

However, it still reveals areas for improvement. Social was the lowest priority of the three, with just 24 per cent of respondents citing it as the highest priority; contrasting with the environment at 42 per cent and governance at 34 per cent.

And beyond these numbers, the research illustrates the reasons why or why not businesses are motivated to address ESG. The moral obligation was most frequently cited as the primary reason for adopting ESG; collecting 21 per cent of responses beyond regulatory (18 per cent), financial (15 per cent) or competitive necessity (13 per cent).

Amongst those yet to assess ESG or implement a strategy, confusion over how to do so is the key limiting factor. This further suggests that far from needing to be forced into change, there is an appetite for a more sustainable financial services sector, if regulators can provide clarity on how to do so.

With the UK’s anticipated ‘SDR’ measures yet to be formulated, this research crucially shows that far from being paralysed by fragmented, confusing regulation, and engaging in ESG only as ‘greenwashing’, leaders across the financial services are ready for regulation, and may even be in favour of stronger regulations.

The potential benefits of doing so are clear, with 76 per cent of businesses affected by the EU’s ‘SFDR’ measures agreeing that it has meaningfully changed the way they do business, and internally consider ESG.

“The UK has long been at the cutting edge of financial services. However, this is a time of unprecedented technological and operational change, causing institutions across the sector to re-examine how and why they do what they do. I am heartened to see that the industry is overwhelmingly prepared for regulation, and indeed that there is scope to go beyond regulations and hire specialists,” said Gary Bond, CEO of TISAtech.

“I hope regulators take notice of this appetite when drafting SDR, ensuring that the UK can not only retain its place as a global leader in financial services, but establish itself as a moral leader too.”

Rupert Bull, CEO of The Disruption HouseRupert Bull, CEO of The Disruption House
Rupert Bull

Rupert Bull, CEO of The Disruption House, added: “Preparedness for ESG is no longer negotiable in financial services, and this is evidenced by our research. But businesses can still go further.

“If we look at the pace of change in sectors like retail, it’s clear that the financial services sector still has the potential to improve, and that regulation can and will go further. The rewards are great for the businesses who take the lead here.”

  • Tyler is a Fintech Junior Journalist with specific interests in Online Banking and emerging AI technologies. He began his career writing with a plethora of national and international publications.