Driving ESG success in the finance sector with automation

by wrich
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Gavin Mee at UiPath explains how software robots can support environmental, social and governance (ESG) initiatives in the banking and finance sector.  

Businesses in the banking and finance sector have long had on their agendas commitments to environmental, social and governance (ESG) initiatives. However, there is now more pressure than ever for businesses to measure their impact on the environment and take their sustainability credentials seriously in order to meet the expectations set by regulatory bodies and shareholders. 

In recent years, there has been an increase in the number of companies within the finance sector adopting these initiatives, with 80 per cent of banks having already made commitments. A number of commercial banks, for example, have recently offered Britvic a sustainability-linked credit facility of up to £400 million on the understanding that they will meet certain ESG targets. In order to run a successful ESG programme however, a large amount of complex data must be collected, processed and reported. 

For example, banks committed to green financing are likely to need to track their clients’ field operations, carbon emissions, supply chain activities, and a score of other variables. In a similar way, a bank looking to track its energy consumption would need to conduct intensive data collection and analysis across hundreds of sub-entities and locations. This large and complex process lends itself to error and would be more efficiently conducted by software robots. 

What is a software robot?

Software robots are essentially digital assistants. Think of them as an extra pair of hands to assist with the kind of repetitive and data-intensive tasks that can take up significant time in an employee’s day. By using Robotic Process Automation (RPA) and complementary technologies such as Artificial Intelligence (AI), these software robots are able to operate a computer just as a human would, only virtually and without fatigue. 

Once instructed on the correct process, these robots can read, extract and process data as necessary, more quickly and accurately than a human could. Many organisations around the world have already adopted automation to assist them in lightening the load on administrative tasks and as a result are giving their employees more time in the day to focus on value-added activities that require ingenuity and skill. 

How can software robots help with ESG?

Key decision makers within the banking and finance sector are becoming increasingly aware of the importance of software robots to the overall success of ESG. The technology’s ability to sift through high volumes of data, quickly and accurately, makes it the perfect tool to support ESG initiatives and compliance in numerous ways. 

For example, in the case of reporting processes for green mortgages, software robots are invaluable. With growing interest in green mortgages there are an increasingly high rate of financial institutions offering lower rates of interest or additional principle for loans on green properties. In order to ensure a property meets the lender’s specifications, documentation must be processed, and additional checks are required. Software robots are able to sort through this information and report back to colleagues on whether the property meets the required green standards. 

Elsewhere, software robots are being used to bolster ESG investment strategies to extract information from prospectuses, quarterly and annual reports, third party analysis and media reports, and consolidate the necessary information into the correct format. This makes it easier for portfolio managers to make responsible, purpose-driven investment decision that support their ESG initiatives. 

As well as its reporting capabilities, this technology can also be used to enact change. For example, one business process management firm that provides solutions to the banking and finance sector has used software robots to digitalise loan documents and to manage customer processes. This has bolstered its ESG initiatives by reducing reliance on paper and thus cutting physical waste. Furthermore, a Turkish bank is using the technology to process requests to postpone loan repayments for customers impacted by COVID-19 in line with its social responsibility initiatives. 

Additionally, in order for ESG programmes to be successful, auditing is crucial. Automation can also help with this. With auditing teams already snowed under, software robots can help carry the load by assisting teams with everything from sampling to monitoring, and assessment activities, driving successful ESG auditing programs forward. 

The application of automation in ESG initiatives is vast and often varies from business to business depending on their specific goals. No-matter the ins and outs, it’s evident that corporate social responsibility is becoming of increased importance to the finance industry and its customers, and as a results firms will only be expected to up their game when it comes to ESG programmes moving forward. 

Because of the increase in data related tasks, colleagues can’t be expected to pick up all this extra work. It is much more effective for them to remain focused on tasks that require decision making and strategy. Software robots, on the other hand, are the perfect candidates to assist with the data-heavy processes that come with ESG initiatives. Organisations that deploy automation that addresses their ESG needs today will be primed and ready to respond to new regulations and standards as they emerge.

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