By Alex Lawson, Regional Director of Hedging – UK and Europe at Western Union Business Solutions
No single organisation can solve sustainability on its own; it is a collective effort, and every business has a role to play. Within the wider world of finance, we are in a transition phase when it comes to sustainability. We are gradually challenging pre-conceptions about financial organisations’ duty to take a stronger, more active role in the fight against climate change – but more can, and must, be done.
Across industries, businesses are increasingly facing pressure from customers and partners who are looking to work with organisations that are applying a sustainable lens to their business processes. Often, change can occur from functions the organisation is already running, or services they already offer, allowing for easy, yet impactful, action.
So how, and why, should financial organisations be applying sustainable practices to their business?
Finance as a force for good
In 2020 the total number of people employed in the financial services sector in the UK amounted to approximately 1.1 million. We are one of the driving forces of the UK economy and as an industry, we have significant influence. With that comes great responsibility to set a good example. In the wake of COP26, customers and partners alike are increasingly looking to work with companies that are embedding sustainable practises into their work. Financial organisations cannot afford to ignore this move.
For both reasons, it is incredibly important that we respond to the changing direction of the world’s priorities and shift our attention to the imminent environmental threat facing our planet. Going into 2022 and beyond, it is imperative that as an industry, we are able to put on a united front and demonstrate that finance can be a force for good.
Applying a sustainable lens
Far too often, businesses assume that in order to make a significant difference to the climate change effort, they need to make grand gestures, roll out business-wide sustainability programmes or pioneer new initiatives. In reality, sometimes the most impactful results can often come from making small changes to existing functions the organisation is already running, or services they already offer.
One of the easiest ways to make a positive impact is through ongoing work with customers. Day in and day out innumerable financial transactions occur. It therefore makes sense to look at how they can be adapted so that small incremental changes create a significant cumulative effect. For instance, we are now enabling all new and existing customers to support sustainable initiatives as part of their existing foreign exchange hedging strategy. By making a small adjustment to the rate achieved on a planned hedge transaction, funds are generated and invested in climate and sustainability initiatives selected by the customer, who then receive certified carbon offsets in return.
This alone can make a significant difference to these sustainable causes, but financial organisations can further amplify this impact, which is why we match the customer’s donation, with the customer receiving full credit. Whilst simple, if every financial organisation – big, medium and small – re-evaluated existing business processes and applied a sustainable lens, the resulting impact could be far greater than one grand initiative.
A trusted partner
However, there is no denying that in the finance world, customer confidence is imperative to business transactions and proceedings which is why when it comes to incorporating sustainable initiatives it is essential, for both customer belief and the wider global picture, that these initiatives are making a real, genuine impact.
This is why opting to work with an accredited organisation that embodies best practice for climate and sustainable development initiatives, can prove invaluable in ensuring an organisation’s customers can be confident in the integrity of every green investment made.
There are a variety of organisations that are dedicated to identifying sustainable and climate initiatives that are designed to quantify, verify, certify and maximise progress towards the UN’s Paris Climate Agreement and the Global Goals for Sustainable Development. For instance, we partnered with Gold Standard, a recognised climate and sustainability pioneer, to roll out our Green Hedging product. The benefit of such partnerships is that financial organisations, and their customers alike, can rest assured that their work is having maximum impact. What’s more, the business can leverage the relevant insights and expertise to expand and develop future sustainable initiatives.
Going into 2022, we hope to see more businesses layering over a sustainable lens to existing business processes, and in doing so, this movement will increasingly demonstrate how the world of finance can contribute to sustainability efforts swiftly.