Media Appearances

To Advance Sustainable Trade Finance, Agreeing on a Common Definition is Paramount

In this latest op-ed, Diana Rodriguez, Vice President of International Policy at BAFT, talks about ESG, sustainable trade finance, and BAFT’s role in sustainable transaction banking.

Via Trade Finance Global

Market Standard Definitions, Methodologies, and Measurements

Sustainability and ESG have become public and private sector priorities, with consumers and corporates alike increasingly focusing on sustainability practices when making financial decisions, and governments considering a wide variety of policy initiatives to drive behavior.

As nations work to meet the UN Sustainable Development Goals (SDGs), there is an important role for the transaction banking industry to help achieve them.

Trade finance has a crucial role to play in supporting corporate efforts to position sustainability at the core of their business strategies, and throughout their supply chains.

For several years, banks have been offering ESG-linked products including green bonds and sustainable loans, and we see informal markets developing for the trading of carbon credits.

However, in order for sustainability-linked trade finance to gain traction and ubiquity, there is general agreement that market standard definitions, methodologies, and measurements are needed.

Towards a Common Standards Framework

The difficulty of defining workable sustainability standards for international trade should not be underestimated.

The volume of global trade transactions that cross multiple jurisdictions to form part of complex supply chains presents an inherent challenge to defining what constitutes sustainable trade finance – a market that accounts for more than a third of global trade.

Additionally, institutions are at different stages of their own journey toward sustainability, and have different priorities based on their geographic footprint and client base.

This complexity heightens the importance for the trade finance industry to coalesce around a common standard that reconciles the divergent banking landscapes and provides rigorous yet implementable standards.

Policymakers in certain regions are outlining public policy frameworks and taxonomies to support policy positions for companies operating within their jurisdictions.

In some cases, private enterprise is well ahead of the policy requirements, while in others they are being influenced by policy requirements.

An appropriate balance between the public and private sectors will shape policy in a way that incentivizes behavior without creating unintended consequences with negative economic implications.

Industry advocates must strive to ensure that public policy reflects some consistency across jurisdictions, so as not to create undue advantages or burdens based on geography.

BAFT’s Role in Sustainable Transaction Banking

In the past year, we have seen the market become more collaborative, with institutions working together through industry working groups and consortia to find innovative solutions to address sustainability in transaction banking.

Last year, BAFT launched a Sustainability Working Group to address the needs for standards, tools, education, and policy advocacy on behalf of the industry.

To address these challenges, the working group will be developing resources, training, and best practice standards to promote sustainability across the trade finance and global payments industry.

The working group is focusing its efforts on five work streams:

Developing standards for sustainable transaction banking
Principles on how to apply net zero to transaction banking
Guidance on sustainability reporting
Advocacy and education on sustainable transaction banking
Defining an industry approach for the full spectrum of ESG – beyond the “E”

It is the objective of this working group to advance the interests of the transaction banking industry, while complementing and leveraging the work of other bodies.

To that end, the BAFT Working Group welcomed the ICC Standards for Sustainable Trade and Sustainable Trade Finance positioning paper published in November 2021.

The roadmap is a positive development and moves the industry closer to agreement on a common standard that the industry can reference.

An Equal-Weighted ESG

As a common standard begins to take shape, much work remains to ensure broad industry support and wide adoption.

The first consideration is to ensure that equal weight is given to all elements of ESG. While social and governance factors are generally taken into account for the calculation of an ESG rating, most of the taxonomies are still primarily focused on the “E” for environment. The true impact of trade finance extends to the social and governance elements of ESG, and should be effectively represented in the emerging standard.

Second, recognizing the transition needed to make business more sustainable, such standards must not only recognize positive activity, but also guide those involved towards what best practices, or even minimum acceptable standards. While specific goods may not in themselves be sustainable, they can often be used for purposes that lead to sustainable ends.

Lastly, underpinning the development of any standard, care must be taken to be inclusive of the global nature of the business. For a global sustainability standard to take hold, geographically diverse stakeholders must be an integral part of the development and adoption.

The sooner the industry can stand behind a shared understanding and common vocabulary of what is considered sustainable trade, the more effectively the industry can dispense with concerns over ESG-washing and realize the potential of sustainable trade finance.

The Banker: Attracting New Talent in Transaction Banking

The war for talent has never been greater, as many people have reassessed their lives and work during the Covid-19 pandemic. Transaction banking’s digital transformation, as well as its role in supporting the real economy, may give the industry an edge in attracting and retaining staff.

Via The Banker

The changing image of transaction banking – often seen as less glamorous and exciting than investment banking – is helping the industry appeal to new talent, according to panelists at industry association BAFT’s Virtual Europe Bank to Bank Forum.

Speaking on a panel entitled ‘The way we work post-Covid-19: attracting and retaining talent in transaction banking’, participants highlighted how the industry is at the forefront of innovation, making it a complex and stimulating environment. Additionally, transaction banking’s role in supporting economic growth – through cross-border payments and trade finance – is proving attractive to those wanting to make a positive contribution to wider society.

“While transaction banking is the foundation of the core product offering, it is also at the heart of the digital disruption and close to the real economy,” said Maria Chiara Manzoni, head of corporate and investment banking (CIB) people and culture strategic partner, CIB process and operational excellence at UniCredit. “As an industry, we need to communicate even more effectively to illustrate how diverse and dynamic transaction banking is.”

“It’s clearly an exciting time for transaction banking, which presents many opportunities for transformation,” added Emma Dunlop, vice-president and global head of human resources, Royal Bank of Canada (RBC) Investor and Treasury Services. She believes that demonstrating how it can link to the purpose of supporting the real economy, ESG or international trade could be a real differentiator for transaction banking. “Employees are seeking opportunities to align their personal purpose and values to an organization’s or to the work that they do. This is an opportunity for transaction banking leaders to promote and harness that thinking,” she said.

Both agreed that digital skills are essential when recruiting in transaction banking. “[For example] how artificial intelligence is changing how we process information and data – this is crucial for our people to understand. [We are looking for] more hybrid profiles, with experience in banking, fintechs and digital platforms, as well as business acumen, digital literacy and high-end skills,” said Manzoni.

The bank also looks for a vast array of soft and hard skills, she added. “For a big transformation, there are some personal characteristics that UniCredit looks for in our talent, such as accountability and constructive criticism. In one word, we’re looking for courage – the courage to take some risks but also flag when we’re taking the wrong turn,” she said.

The Human Side

“Data and digital literacy have been a huge focus for our future skills agenda, as we look to accelerate digitization of manual processes,” said Dunlop. “However, as mentioned, digital skills are only one aspect and it can’t replace some of those customer-facing human-centric skills that are fundamental to transaction banking, which is a very relationship-based business. We want resilience, as well as problem solving, critical thinking, collaboration, communication, and financial and commercial acumen.”

Dunlop reports that RBC recruits from different sectors, such as technology firms and fintech start-ups, not solely from other banks. “There many different players that banks are working with, which is far more common now than in the past. We need to look at that as an opportunity for internal talent to collaborate and learn from other players in the market,” she said, adding that this helps with retention efforts. While RBC is focused on talent development and internal mobility, it also looks in the market or to partnerships to supplement staff skills sets.

During the pandemic, the number of fintech collaborations with transaction banks have increased, according to Tarun Khosla, head of trade and working capital loans, Europe, the Middle East and Africa at Citi. In trade finance, for example, transaction banks are working closely with fintechs to develop digital solutions – “basically co-creating solutions”. He believes that this engagement is also resulting in the movement of talent between fintechs and transaction banks and vice versa. “When we are working on a holistic solution design, the traditional boundaries melt away,” he added.

Another conference panel, ‘Fintech venture experience: sitting on the same side of the table’, showcased two successful bank-fintech partnerships: Barclays and SparkChange, which provides specialist carbon investment products; and Société Générale (SocGen) and Treezor, a banking-as-a-service platform.

There are numerous reasons for a bank to partner with a fintech, such as providing specialist capabilities that the bank doesn’t have internally, as in Barclays’s case, or enabling a faster time to market, as in SocGen’s case.

From the fintech’s perspective, a bank can help validate its business or product proposal, provide investment (SocGen acquired Treezor in 2019; Barclays led SparkChange’s $4.5m funding round in late 2020), as well as act as a dedicated sales and distribution partner, an advocate and a marketing machine.

But fintechs still have a difficult time accessing the right people within the bank. That is why SparkChange joined the Barclays accelerator program. “We partnered with Barclays [three years ago] because we heard good things about its accelerator program and found them to be very accessible and progressive in their views towards working with start-ups,” said Joff Hamilton-Dick, founder of SparkChange.

Onboarding Issues

Additionally, the onboarding process remains onerous. “We had to overcome some pain points when we [started working] with SocGen in terms of compliance, security, best practice, processes, etc.,” said Éric Lassus, co-founder, CEO, Treezor. But once it is completed, this can be a competitive advantage for the fintech, especially when dealing with corporates, according to Jean-François Mazure, head of cash clearing services at SocGen.

One of the biggest challenges is aligning the culture of a large incumbent with a start-up. In both panel examples, this was solved by a degree of independence for the fintech. Treezor, for example, remains a standalone project with its own roadmap and budget, and it is free to follow its strategic objectives, according to Lassus.

SparkChange has had “zero interference from a strategic perspective” from Barclays, according to Hamilton-Dick. “But, as with any good investor, Barclays is not afraid to challenge our decision-making from time to time, which makes it a very welcome and much needed sounding board to our strategic operations,” he said.

Trade Finance Global: A World Without LIBOR – Perspectives on the Transition from BAFT, ITFA and JPMorgan

Via Trade Finance Global

Almost two weeks have passed since the retirement of the world’s most important number: the London Interbank Offered Rate (LIBOR).

For almost half a century, LIBOR functioned as a benchmark for global interest rates, and its ups and downs influenced an entire universe of financial instruments.

From short-term unsecured loans, to floating rate contracts such as derivatives, corporate debt, mortgages, and home loans, LIBOR affected the cost of credit across regions, industries, and currencies.

It was calculated through a daily survey of major global banks, who were asked what their borrowing costs were expected to be over a number of timeframes, up to 12 months.

The highest and lowest quotes were dropped, while the rest were reduced to an average that formed the rate.

So integral was LIBOR to the global financial system, that at its peak in 2020, over $400 trillion in outstanding contracts were exposed to it.

It should come as no surprise, then, that with LIBOR’s demise came a sense of foreboding for the trade finance world.

As the Bank of England’s Alastair Hughes told Trade Finance Global: “If you’re burying your head in the sand because someone’s told you LIBOR was going to continue, or you don’t have to do anything – that’s definitely not the case.

“LIBOR will cease, so you do need to engage, you need to understand what your exposure to the LIBOR rate is, both in terms of future use of products, and, indeed, those legacy products.”

A Financial Millennium Bug

Some worried that LIBOR’s cessation – which took place at midnight on December 31, 2021 – had the potential to cause a ‘Y2K moment’ for global finance.

Also known as the ‘millennium bug’, older readers will recall that this mysterious creature had once threatened to bring down the world’s computer systems overnight.

As 1999 gave way to the year 2000, technicians worried that the widespread use of only two digits for years in the date format of computer programs could cause a global IT crash, as the clocks ticked over at midnight December 31.

Thankfully, however, the transition from 1999 to 2000 passed mostly without issue, and the bug turned out to be quite the anti-climax.

In a similar manner, lights off on LIBOR hasn’t led to a financial meltdown.

On the contrary, the trade finance world has adapted quite smoothly to life without LIBOR, thanks to a new menu of alternatives for banks and corporates both large and small to choose from.

LIBOR Alternatives in Practice – The View from ITFA

As chairman of the International Trade and Forfaiting Association (ITFA), Sean Edwards has had a unique view of the LIBOR transition.

Speaking to Trade Finance Global, Edwards said that the transition has caused very few issues so far for ITFA’s 300-plus members.

“For those currencies where LIBOR is no longer quoted, such as sterling and yen, the transition process has been largely successful,” he said.

“There was a small overhang of deals into the New Year, which we expect to be cleared up in Q1.”

As previously reported by Trade Finance Global, among the alternatives to LIBOR is an interest rate known as synthetic LIBOR.

Synthetic sterling LIBOR is based on the sum of the one-, three-, or six-month Sterling Overnight Index Average (SONIA) reference rate, which is provided by the ICE Benchmark Association (IBA) and the International Swaps and Derivatives Association (ISDA).

Edwards said he sees synthetic LIBOR as a “refuge for the desperate only”, but added that it is “unsurprising” that it has nonetheless found a user base, given that there is “really no choice but to find an alternative.”

Transition from USD LIBOR presents a greater challenge, however, as it will continue to exist in some form until mid-2023.

“With pre-2022 committed facilities continuing to be priced on this basis, there is a competing and confusing array of alternatives to choose from,” said Edwards.

“The regulators – both in the UK and the US – have been clear that they wish to see no new USD LIBOR-denominated transactions, and require banks to reduce the number of legacy transactions.

“However, globally, not all regulators may take the same view, and it is not always crystal clear how a new transaction is defined. This is the problem of new drawings under pre-2022 uncommitted facilities.”

From the menu of available alternatives, Edwards’s personal recommendation is on the Term Secured Overnight Financing Rate (SOFR).

Term SOFR is an observed rate based on real transactions, and is published by the Federal Reserve Bank of New York as both an overnight rate and as 30-, 90-, and 180-day compounded averages of observed rates.

“The direction of travel is clear, not least because Term SOFR is where the liquidity is and where it percolates through,” said Edwards.

“Needless to say, ITFA will be doing its best to clear up the confusion.”

Trade Finance Global has also been involved in clearing up that confusion, having partnered with ITFA to launch a LIBOR For Trade Finance Hub in June last year.

BAFT Calls for ARRC to Endorse 12M Term SOFR

Observers at another industry body, BAFT (Bankers Association for Finance and Trade), have had a similar experience as ITFA’s Edwards.

Diana Rodriguez, Vice President for International Policy at BAFT, agreed that no one rate will replace USD LIBOR in the short-term.

Instead, it will be up to banks to decide which one best suits their needs, now that two tenors of USD LIBOR have ceased, and regulators have been clear that the remaining tenors are for new contracts or renewals.

At BAFT, Rodriguez said she has seen a “significant uptick” in the use of Term SOFR, which was endorsed by the New York Fed’s Alternative Reference Rates Committee (ARRC) in July last year.

She added that the Bloomberg Short-Term Bank Yield Index (BSBY) is also under consideration among BAFT members for certain trade finance products.

“For now, what we are seeing is that one rate will not replace LIBOR,” said Rodriguez.

“Regardless of which rate an institution chooses, bank examiners will want to see that a bank is meeting the safety and soundness principles laid out by regulators.”

Rodriguez stressed that banks should have a clear understanding of the composition of the rates they intend to use, and should have transition plans in place for committed and uncommitted facilities alike.

They should also have plans to effectively communicate with clients throughout the transition process.

“In the final months of 2021, regulators issued clear regulatory guidance, stating that banks need to employ risk management plans to pivot from LIBOR to alternative reference rates,” she said.

“In the coming weeks and months, the trade finance industry would like to see the ARRC formally endorse the 12-month Term SOFR rate, as well as greater industry coalescence on the credit adjustment spread.”

Communication is Key – JPMorgan on Delivering LIBOR Transition to Clients

At JPMorgan, America’s largest bank by market cap, the challenge of communicating LIBOR transition to clients has also been a high priority.

Natasha Condon, Global Head of Core Trade at JPMorgan, said that LIBOR transition presented not just one challenge for the bank, but several challenges rolled into one.

”Firstly, a strategic one, to align the bank’s funding model with regulatory guidance, which has changed multiple times during the preparation stage,” said Condon.

“Secondly, a technology challenge, as not only our systems, but all of our clients’ systems need to be updated to handle the new risk-free rates.

“And thirdly, and most importantly, a communication challenge for the bank with its clients – both corporates and financial institutions.”

Echoing both ITFA and BAFT, Condon said the transition at JPMorgan was well managed, thanks to early preparation and close cooperation with clients.

“The working group at JPMorgan did a fantastic job of managing this transition on all points, and from a technology perspective, I could not have asked for a smoother switchover,” she said.

“But especially in trade finance, I think our key strength has been in client communication, which turned out to be the most critical issue of all.”

Condon acknowledged that, for clients, the LIBOR transition has the potential to be “very confusing”, since different banks may take different approaches to the pricing of a deal, which can make it difficult for clients to compare quotes between providers.

“Our clients in trade finance vary from the most sophisticated banks and corporates – who are already set up to handle multiple rates and fully understand the differences – to smaller clients who have never heard of any of the alternative rates, and have been working happily from LIBOR for many years,” she said.

In practical terms, Condon said that much of the heavy lifting behind the LIBOR transition at JPMorgan therefore fell to the sales team, who were called on to educate and inform clients, and pitch alternatives that best suit their needs.

“The key for our transition was to agree a very simple, extremely transparent communication plan, so that every client who gets a quote from JPMorgan understands exactly what rate they are being offered, and how that compares to the rate they might have been used to before,” she said.

“A lot of the burden fell on our sales team to take our message to the clients, and to ensure they were completely clear on what we were doing.

“As soon as we started communicating in this way, we found that our conversations with clients improved dramatically, and they were much more comfortable doing business based on the new rates.”

Global Trade Review: ICC Targets Digital Trade Legal Reform in 100 Countries with Industry-Wide Board

Via Global Trade Review

The International Chamber of Commerce (ICC) has formed an advisory board comprising intergovernmental, policy and industry actors in the global trade and trade finance industry, in order to accelerate progress on the worldwide legal reform needed to enable digital trade.

Launched today under the auspices of the ICC’s Digital Standards Initiative (DSI) governance board, the Legal Reform Advisory Board (LRAB) is co-chaired by Chris Southworth, secretary general of ICC UK and Valentina Mintah, customs and logistics expert and member of the ICC executive board. Its members so far include the Asian Development Bank (ADB), BAFT (Bankers Association for Finance and Trade), the Commonwealth, ICC France, ICC Germany, ICC Mexico, the International Trade and Forfaiting Association (ITFA) and the United Nations Commission on International Trade Law (UNCITRAL).

GTR understands that 30 organizations in total have agreed to join the board, although these are yet to be announced.

The aim of the LRAB is to combine its members’ reach and influence to drive a globally harmonized, digitalized trade environment. “We have made enormous progress on legal harmonization over the last two years. The LRAB will play a vital role in helping us scale legal reforms,” says Southworth.

He tells GTR that the board will immediately get to work on numerous fronts. One of these will be on maintaining momentum at the G7, following the commitment made earlier this year by the intergovernmental group’s digital and technology ministers to adopt electronic transferable records in international trade transactions. In addition, the LRAB will focus its efforts on scaling the initiative up through the G20 – aiming to achieve a similar commitment in 2022.

Another area of work is within the European Union, where the LRAB will set its sights on getting an EU-wide mechanism in place to facilitate the alignment of EU laws to the UNCITRAL Model Law on Transferable Electronic Records (MLETR).

Other tasks on the to-do list include obtaining a Commonwealth ministerial commitment at the Commonwealth Heads of Government Meeting, which will be held in Rwanda in 2022, as well as working to incorporate legal harmonization into the framework of the African Continental Free Trade Area. Southworth tells GTR that LRAB will seek to secure funding for lower-income countries to enable them to implement the necessary legal changes.

“Digitalization is key to narrowing the US$1.7tn trade finance gap, but we can’t get there without an enabling legal environment. Reform is needed and the LRAB will help us scale existing efforts,” says Steven Beck, head of trade and supply chain finance at the ADB.

The LRAB also intends to work with the World Trade Organization to include a commitment to MLETR alignment in its plurilateral e-commerce agreement.

Finally, the LRAB will support individual governments to use their bilateral trade negotiations – such as those already agreed or underway between Singapore and the UK, the Abu Dhabi Global Market and China, as a vehicle to align legal frameworks and build out a network of modern digital trade highways.

“The Covid-19 pandemic massively accelerated digital transformation across a range of sectors, but outdated legal frameworks continue to inhibit the digitalization of trade finance,” says Raoul Renard, deputy director of legal reform at the DSI. “I look forward to working with our co-chairs and LRAB members – such as the ADB – to enable the necessary legal reform and bring trade finance into the 21st century.”

“Everyone coming together within the LRAB sends a strong message to policymakers and governments worldwide that industry is serious about effecting legal reform as well as ensuring a level playing field so that no-one is left behind,” Southworth tells GTR.

He adds that he expects to see “upwards of 100 countries” getting on board over the course of 2022-23.

Global Trade Review: BAFT Appoints Scott Stevenson as Senior Trade VP

Via Global Trade Review

BAFT (Bankers Association for Finance and Trade) has appointed Scott Stevenson as senior vice-president of trade, following the retirement of industry veteran Stacey Facter.

Stevenson joins from AF Capital Partners, where he was a senior advisor providing expertise on structured and project finance for developing banks in emerging markets.

He previously spent more than 14 years at the International Finance Corporation (IFC), including a role as senior global manager for trade and supply chain solutions, and has also held positions at International Financial Consulting and the World Bank Group.

Stevenson was also previously regional head of financial institutions at Standard Chartered Bank in Singapore, and between 2017 and 2020 was chief executive of Savia Trade Management Company, an Africa-focused financial intermediary that directly targets smallholder farmers and agri SMEs.

He takes over the role previously held by Facter, who stepped down after more than eight years in the position. Prior to that she worked in a variety of trade and securities roles at JP Morgan over a period of over 11 years.

BAFT’s president and chief executive Tod Burwell hails Stevenson’s “wealth of experience in trade”.

“His diverse geographic experience, coupled with his commercial banking and multilateral development banking background, is a great foundation to provide our members around the world with the insight, tools and resources they need to help them succeed in trade finance,” he says.

Global Finance: Adversity Breeds Opportunity

Via Global Finance

After a horrible 2020, transaction banking is poised for a rebound.

Optimism permeated discussions during the 2021 annual meeting in June of the Bankers Association for Finance and Trade (BAFT). More than 2,000 attendees from 66 countries actively discussed the status and future of trade finance during the four-day virtual event.

The opening and closing keynotes provided strong economic outlooks as bookends for the event. Economists from Bank of America (BofA) and HSBC estimated that the global GDP was on track to reach a 5% or 6% growth rate in the second half of the year.

Individual GDP growth will vary country by country, noted Brian Moynihan, chairman and CEO of BofA and the closing keynote.

According to Michael Roberts, CEO of HSBC USA and the opening keynote, there are some areas of weakness. “Brazil and India see some improvement despite their horrific experiences with Covid-19.” However, the markets with strong growth correlate with areas that have higher vaccination rates, he added.

Meanwhile, BofA economists predict that US GDP growth could reach as high as 7% in the second half of the year, after reaching a 5% growth rate in 2020. This would be a doubling, or even a tripling, of GDP growth for the US, which has seen its GDP growth fluctuate between approximately 2% and 3% for the past few decades.

According to Moynihan, much of the growth could be tied to unspent stimulus payments sitting in customer accounts. “We estimate that 65% to 75% of it is still in our customers’ accounts,” he said. “And there is still the possibility of even more stimulus.”

If businesses continue to face supply chain issues, it could constrain GDP growth, he added.

Knock-On Effects

Covid-19’s near shutdown of the global economy in 2020 changed the face of transaction banking by quickening technology adoption while eliminating many inefficiencies.

The pandemic forced every bank to digitalize its offerings, according to Moynihan: “If we did the Paycheck Protection Program via mail, we would never have gotten there.”

Digitalization went from a “nice to have” to a business imperative for most banks. For example, HSBC expects to digitalize 80% of its controls in the next eight to 12 months.

“Clients are not waiting around for banks to get their act together,” said HSBC’s Roberts. “That is why we are maniacally focused on this.”

According to panelist Andy Kollegger, group managing director and head of Corporate and Institutional Clients International at UBS, client companies also have raised the bar on the quality of the digital offerings they demand. “They don’t want to get weekly reports in stacks of papers,” he said. “They want to access online and real-time information. They don’t want to authenticate using a myriad of little machines using code. They want to authenticate online with a secure system.”

From the start of the pandemic lockdowns, client concerns over deposits and principal lessened while they pressured banks for more-granular monitoring of cash flows and improved forecasting capabilities. “Some days [the forecasting] was a day in advance and sometimes a week in advance,” said co-panelist Diane Reyes, group general manager, global head of Liquidity and Cash Management at HSBC. “Then it went quarterly, and then six months in advance.”

Return to Normality?

Tom Wolfe’s novel You Can’t Go Home Again might as well have been about transaction banking. The pre-Covid economy no longer exists and has been replaced with shortened and simplified supply chains since the start of the pandemic.

“Many businesses are moving from just-in-time strategies to just-in-case strategies, which reduce the reliance on certain suppliers,” said panelist Michael Spiegel, global head of Transaction Banking at Standard Chartered Bank.

Such moves have introduced new markets and trade corridors, as more investments pour into markets like India, Bangladesh, Vietnam, Mexico and various Central and Eastern European countries, he added.

On a more personal level, banking heads are still mulling how to bring remote workers back into their offices. The conversation is no longer “if,” but “when” and “how.” For some, it will mean going back to the old way, perhaps with slight modifications. “At the end of the day, we are a ‘work from the office’ company,” said BofA’s Moynihan, while acknowledging that “we might have to redefine what that means.”

Moynihan believes the prolonged time away from the office has already adversely affected tens of thousands of employees the bank has hired since 2019. “The kids we hired in 2019 worked in the office for only a short time and those we hired in 2020 and 2021 have never been in the office,” he noted. That has hindered new employees in gaining the benefits of informal conversations with mentors and experienced colleagues. For Moynihan, at least, “to get the culture right and the risk management right means getting back to the office.”

Yet, some institutions found benefits from remote work, including increased productivity, and seek to leverage the new capacity. HSBC is among those expecting to take a hybrid approach, splitting employee schedules between working from the office and working remotely. “We can perform in a remote environment and have proven so,” said Roberts.

ESG Blooms

According to various conference speakers, one topic that the pandemic did not sidetrack, even temporarily, is the continued growth and interest in sustainable development and the investments that enable it. If anything, the pandemic seemed a reminder of rising risks to sustainability.

“I don’t know of a sector or a CEO who has not thought about it and is not addressing it,” said HSBC’s Roberts.

On April 21, 43 banks founded the Net-Zero Banking Alliance, whose current 53 members commit to aligning their investment portfolio with achievement of net-zero carbon emissions by 2050 in tandem with the United Nations’ Race to Zero initiative.

HSBC, a founding member of the Alliance, expects to reach zero emissions within its operations by 2030, he added.

UBS, also an Alliance member, signed the Principles for Responsible Investment of the Financial Stability Board’s Task Force for Climate-related Financial Disclosures and declared that sustainable investment was the default for discretionary accounts, said UBS’ Kollegger. “That is a big move for the world’s biggest wealth manager.”

BofA already discloses its metrics for sustainable investment using the environmental, sustainable and governance (ESG) reporting framework developed by the “Big Four” accounting firms and released in 2020.

Meanwhile, HSBC has expanded its ESG offerings beyond simply the asset side of its balance sheet.

“During Covid-19, we felt that clients should be able to participate on the depositor liability side of the bank’s balance sheet,” explained HSBC’s Reyes. “There are such things as green deposits” that enable clients to pledge their deposits toward offsetting green financing and permit them to claim credit in their corporate filings.

“We started hosting these offerings in three markets and will move into many more markets this year,” she added.

According to Moynihan, these initiatives are the only way the world will solve its most significant problems. Without incorporating sustainable investments within finance, he believes, there is not enough money to meet the United Nations’ 2015 Sustainable Development Goals, which he estimates would take $6 trillion annually. By using defined metrics, like those established by the World Economic Forum’s International Business Council and others, companies can deliver to their shareholders and society. “They are not mutually exclusive,” he concluded.

Address

Phone

Sitemap

Social