Banks Journey Towards ESG Criteria

In the last three years, banks have placed MX$943 billion (US$56 billion) in financing related to ESG criteria. However, specialists point out that institutions still need to work on gender equality and sustainability inside the financial system. 

Marité Chavira, ESG Director, Citibanamex stated that increased ESG-related funding has allowed these topics to gain greater awareness among clients. However the challenge remains in communicating the importance of ESG in an accessible language for both customers and collaborators, so these issues can transcend executive areas. Matters that impact ESG financing include: cybersecurity, financial inclusion, ethics, customer experience, corporate governance, digital transformation, environmental footprint, health, risk management, product innovation, diversity and regulatory compliance.

Irma Acosta, Social Responsibility Director, BBVA, pointed out that the adoption of sustainability criteria is not new for banks. “Since 2015 banks have operated under an ESG perspective protocol. This has allowed financial institutions to implement and meet the UN Sustainable Development Goals (SDG),” she said. 

Chavira and Acosta, both members of the ESG committee of the Mexican Bankers Association (ABM), agree that gender equality is an important issue that needs to be addressed by financial institutions. “Mexican banking is still far from reaching this goal. Out of the 50 banks operating in Mexico, only one is directed by a woman,” said Acosta. 

Acosta underscored that women in the financial sector have struggled to climb positions for many years. She noted that the vast majority of high-level positions in banks are occupied by men, while female participation barely reaches 50% inside the country. In this regard, Gabriel Yorio, Deputy Minister of Finance and Public Credit, called on financial institutions to work on gender equality, particularly in management positions. “Our financial system is not yet inclusive with all people in Mexico. This is an urgent call to work on financial inclusion focused on women and sustainability,” he stated during the inauguration of the Sustainable Financing Festival 2023.

At an international level, the report "Perspectives Spain 2023: ESG," developed by KPMG in Spain, revealed that the percentage of executive directors in financial institutions that have implemented the adoption of  ESG criteria among their strategic priorities has increased in the last three years, going from 25% in 2021, to 32% in 2023. According to the study, banking, energy and tourism constitute the Top 3 sectors in which ESG issues are receiving increasing attention in the European country. 

Pablo Vañó, Associate at FS Consulting, KPMG Spain explained that ESG factors can have a significant impact on the financial performance and liquidity of banks and they can directly and rapidly change a bank's risk profile. Vañó highlighted that the entities that prioritize the inclusion of ESG criteria in their business strategy will have a significant competitive advantage, thereby strengthening their reputation and potentially attracting new clients. “The financial sector, somewhat stigmatized in recent times, is facing a great opportunity to contribute to sustainable development and convince society that its role is highly relevant and necessary,” he stressed.