Since my last ESG Market Assessment published in 2024, the public’s perception of ESG has declined due to public revelations that the carbon emission metrics used by many certifying firms are inconsistent, incomplete, and sometimes misleading. During the past year, ESG practitioners have shifted their emphasis from covering all three pillars of ESG to focusing efforts on sustainability. Correcting environmental data sourcing, analysis, and reporting will consume significant resources and provide a set of best practices for acting, tracking, and reporting once completed.

I recently spoke with Capgemini’s Sustainability practice for financial services to find out how their services have evolved and what their clients are doing to meet their sustainability objectives.

Sustainability Initiatives

Recent conversations I have had with financial institutions show they are continuing to pursue sustainability initiatives by working on:

• Data sourcing, remediation, and reporting. While the banks are implementing AI to source and analyze unstructured data, they are focusing less on AI initiatives and more on data lifecycle management and developing analytic frameworks to apply to the data
• Compliance reporting, which varies by region and requires constant change to keep up with compliance requirements
• Understanding and implementing supply chain tracking and monitoring of carbon footprints to manage overall institutional risk and understand the global impact of proposed remediation activities.

This has led institutions to adopt a more focused approach to their sustainability initiatives, emphasizing improved data management and prioritizing projects that address regulatory priorities. Currently, those priorities are:

• Extending sustainability tracking beyond the institutional borders to suppliers, buyers, and investments
• Reducing risk with improved tracking and reporting.

The application of these priorities varies by market, with the highest levels of activity in rank order coming from: Europe (the largest market for ESG services by far), Singapore, Australia, and the U.S. Because local market regulations and business conditions drive investment projects in sustainability, institutions have changed their strategy development and execution from a centrally-planned, enterprise-wide framework to a locally-planned and executed strategy with the flexibility to adopt best practices across the enterprise.     

Capgemini’s Financial Services Sustainability Practice

Capgemini has found that institutions with mature sustainability programs are no longer focusing solely on compliance. They want to achieve additional objectives: mitigating climate-related financial risks and creating new sources of business value. To achieve these goals, they need to build a strong data foundation that will enable better risk modeling and product innovation. The goal of Capgemini’s sustainability offerings is to help banks move beyond a regulatory response to embed sustainability into operations, governance, and customer offerings. This enables the banks to turn environmental challenges into opportunities for growth and differentiation.

To meet this demand, Capgemini has developed a sustainability framework that helps clients embed sustainability across strategy, execution, and reporting. It employs a four-pillar approach, with offerings under each pillar:

Sustainable Enterprise, transforming operating models to reduce carbon footprint and costs. Key offerings include:

• Energy Command Center: an IoT- and AI-enabled solution that enables real-time monitoring, predictive maintenance, and optimization of energy and asset performance to reduce costs, carbon footprint, and operational risks
• Carbon Management as a Service: which delivers auditable, and near real-time carbon data across Scope 1, 2, and 3, enabling compliance, reporting, and abatement to accelerate net-zero timelines.

Reporting & Compliance. Key offerings include:

• ESG Lens: an AI-enabled platform that detects ESG data anomalies, benchmarks performance, and provides regulatory insights and scalable ESG compliance
• ESG Reporting: a lifecycle approach to sustainability reporting from roadmap design and data integration to processing and visualization.

Climate Risk & Transition, integrating climate in LOB’s growth and risk strategy. The key offering is business for planet modeling, simulating and computing climate scenarios, stress testing portfolios, and informing transition strategies to reduce financial risk and realize financial opportunity.

Growth & Customer Experience, increasing sustainability revenue and value delivered to end clients. Key offerings include:

• Business and financial impact of sustainability: advanced modeling and advisory services that link sustainability initiatives to EBITDA through integrated financial projections and scenario analysis
• Sustainable finance: a framework and services for deal-level integration, client and relationship manager support, ESG data insights, and tracking mechanisms.

Below are two client case studies showing how Capgemini is working with banks to achieve their sustainability goals.

Leading International Bank

The bank was an early provider of sustainable finance and has a large green bonds business. However, its retail bank provides limited sustainability offerings to customers. Further, due to a lack of active promotion by the bank to the retail customer base, only proactive customers buy those offerings. The bank wanted to proactively establish a brand presence for sustainable finance in the retail market and distribute its sustainable products from its retail branch network.

Using a mobile app with a gameboard of sustainable offerings, Capgemini positioned the bank as a Sustainable Trusted Companion. This proprietary app proposes sustainable choices and offerings with delivery partners at each stage of the consumer/enterprise journey. The bank can meet its sustainability goals with its retail customers relying on the app’s open banking network of delivery partners.    

Global Banking Institution

The client wanted an automated platform for mapping EU sustainability reporting (CSRD) requirements across its supply chain. The goal was to simplify and consolidate reporting by evaluating multiple requirements and optimizing the final output.

Capgemini employed GenAI tools to create a map connecting 1.2k CSRD attributes and the bank’s sourcing partners. It then provided a remediation log to resolve unmatched attributes and an audit trail for all actions taken. Finally, it built and deployed a KPI scenario modeler to generate insights to optimize regulatory data.

The use of GenAI tools enabled highly accurate regulatory attribute mapping, provided a scalable solution across multiple sourcing providers and regulatory frameworks, and created a single source of reference.    

Summary

Capgemini’s sustainability services help banks to move beyond compliance to use sustainability as a lever for risk mitigation and business growth. Employing its four-pillar framework of Sustainable Enterprise, Reporting & Compliance, Climate Risk & Transition, and Growth & Customer Experience, Capgemini combines technology and domain knowledge to deliver measurable improvements in sustainability. This approach builds the data foundation necessary for sustainability, regulatory alignment, climate risk mitigation, and business revenue growth; and it enables sustainability to increase enterprise resilience and competitive advantage.  

By employing GenAI and relevant frameworks, Capgemini is enabling banks to analyze ecosystems, suppliers, and customers to improve business performance and reduce business risk. Importantly, the tools report to multiple stakeholders, allowing them to change behavior.