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What should banks be reading? Part three: better banking

This series has so far explored several key themes that will likely shape the direction of the banking industry in a post-Covid world. From raising questions about the future operating model for banks, to covering the race to find new means of digital innovation to boost profitability, FT journalists have provided readers with coverage of how the industry is changing from all corners of the world.

In the final part of our series, What should banks be reading? we turn our focus to the environmental, social and governance (ESG) agenda and what role this will play in the coming years. While the pandemic has helped to shine a light on the importance of banks to society, climate change remains one of the defining stories of our time. The FT acts as a trusted guide to ESG for businesses and this post highlights several important pieces for banks from respected FT and guest commentators.

All FT articles referenced in this post are free to read until June 2021.

Are banks becoming more racially diverse?

While the Black Lives Matter protests in 2020 brought greater attention to the theme of racial diversity in the workplace, how much progress is actually being made by banks and other financial institutions?

The FT’s Diversity Leaders special report assessed over 800 European companies on the diversity of gender, age, ethnicity, disability and sexual orientation in their workforces. While chief business commentator Brooke Masters reported that ethnicity was where most companies listed scored lowest, the FT has also reported on real examples of banks committing to boost representation across their organisations. Nikou Asgari and Nicholas Megaw highlighted Lloyds Banking Group’s programme to promote more black employees to senior roles, and the credit implications of reducing the bank’s exposure to social risk.

There appears to be strong correlation between overall employee satisfaction and their approval of the way their companies handle diversity and inclusion.

Brooke MastersChief business commentator

Equally, how can the regulators use their powers to ensure improvements in racial inclusion? Leader writer Caroline Binham described a plan being weighed by the UK’s Financial Conduct Authority to impart greater regulatory scrutiny on financial institutions that aren’t doing enough to improve both racial and gender diversity at senior levels.

Racial diversity is undoubtedly being taken more seriously by the industry, but in his guest piece for the FT, entrepreneur and corporate adviser Shayne Ebudo warns banks against hollow proclamations of ‘doing better.’

How can banks continue to address gender imbalances?

Banks have taken some positive strides on the issue of gender equality, but how might the impact of the pandemic affect future progress? Associate professors of human resources at IE Business School, Monika Hamori and Rocío Bonet, used their guest contribution in the FT to outline how organisations must recognise the realities of remote working to address gender imbalances.

Wall Street has been trying to tame its gender problem for more than a decade. Ms Fraser’s sex should not matter. Ms Fraser’s sex matters very much indeed.

Laura NoonanIreland correspondent and former US banking editor

Jane Fraser becoming the first female chief executive of a big Wall Street bank looks like a watershed moment for the sector. The FT’s Ireland correspondent and former US banking editor, Laura Noonan wrote that Fraser’s rise to the summit of Citigroup is a boost to women across the industry. Noonan’s interview with Fraser provided additional insight into a leadership style where standing out was used to an advantage.

Another female leader of a large financial institution, Kjerstin Braathen of Norway’s biggest bank, DNB, provided her perspective on how to continue the progress the sector’s been making on gender diversity. In an interview with the FT’s Nordic bureau chief Richard Milne, Braathen outlined several crucial factors, while cautioning that there’s no silver bullet and implementing the right changes requires patience.

How will the climate change agenda impact the banking industry?

As banks promote their commitment to helping the fight against climate change through setting 'net-zero' targets for 2050, there has been criticism for the lack of detail around these pledges. Shareholders, customers and campaigners want to see banks start to ‘walk the walk’ and understand how the sector intends to start working towards these goals in the immediate future.

FT Moral Money’s Billy Nauman worked with banking editor, Stephen Morris on a deep-dive into the fossil fuel financing that conflicts with the green pledges made by large global banks. In a sign that investors will increasingly hold banks to account on their climate goals, Morris and investment correspondent Attracta Mooney, detailed a potential shareholder revolt that was only resolved when HSBC agreed to set near-term targets to reduce its lending to coal, oil and gas companies.

Retail banking correspondent Nicholas Megaw noted that in the UK, calls for banks to take more action on climate change is leading to a wave of new green products hitting the market. In the US, Wells Fargo became the latest of the country’s six largest banks to announce a net-zero target for 2050. However, as investors become more alert to ‘greenwashing’, the FT’s US business editor Andrew Edgecliffe-Johnson sounded a warning to banks and other organisations that they won’t be able to put off their 2050 targets until 2049.

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