FINANCE
Hanken Finance Day Sustainability Agenda Seen as Crucial in Banking Strategies as Consumers and Investors go Green The topic “Sustainability in the Banking Industry” was of great interest to researchers, alumni and students on Hanken’s Finance Day this year. The annual event was held online for the second consecutive year on 17th March 2021 and was fully booked. TEXT: NINA WINQUIST | ILLUSTRATION: ISTOCK
According to the three main speakers, sustainability strategies in the banking industry are clearly no longer merely optional or to be considered window-dressing; modern-day consumers and investors demand “greenness”. Two of the speakers representing the European Central Bank (ECB) kicked off the event with a presentation of a regulator’s view on “Euro area financial stability – risks, vulnerabilities and supervisory responses to the pandemic”. In their presentation, ECB Lead Supervisor Magnus Andersson and ECB Senior Supervisor Simon Schulz identified four key risks to the financial stability of the euro area: growing vulnerability of asset prices to correction, further weakening of bank profitability amid higher credit losses, rising debt
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servicing challenges for firms, households and sovereigns, and fourthly, increasing credit and liquidity risk of non-banks amid renewed risk-taking. The ECB speakers highlighted that sustainability has to be considered in relation to profitability and equity aspects such as price-to-book ratios. According to the speakers, restoring bank profitability after the “extraordinary shock” and economic fallout of Covid-19 is related to overcoming challenges of overcapacity in some financial systems, diversification of income sources, embracing opportunities from digitalization, and general cost-saving measures. Are banks currently provisioning enough in this low-level interest rate environment? This is a topical key question this spring for the ECB, with
its central mandate of ensuring price stability. The third main speaker Veronica Palmgren, Head of ESG Analysis, Group Sustainability at Nordea Bank, focused fully on the sustainability agenda. Palmgren pointed out Nordea’s strong commitment to sustainability and noted the significant growth in four areas of sustainability products during the last years: assets under management in sustainability-enhanced funds, green corporate loans, transaction volumes for sustainability-linked loans, and green mortgages – the ramp-up of the sustainability agenda is clear for all to be seen. History highlights show that in the past few years after the Paris Climate
