In the wake of climate change and social unrest surrounding racial inequality, many companies are ramping up their environmental, social and governance (ESG) programs to highlight the importance of being a good corporate citizen with a positive impact on customers and community. Banks in particular are reimagining their role as corporate stewards, and rethinking what ESG means for them as part of a broader emphasis on corporate social responsibility (CSR). In fact, in a report focused on banks in a post-COVID world, McKinsey states that in order to thrive, banks must bring “environmental, social, and governance (ESG) considerations to the fore, along with a better sense of corporate purpose.”
According to Forbes:
“ESG issues were first mentioned in the 2006 United Nation’s Principles for Responsible Investment (PRI) report… ESG criteria was, for the first time, required to be incorporated in the financial evaluations of companies. This effort was focused on further developing sustainable investments. At the time, 63 investment companies… signed with $6.5 trillion in assets under management (AUM) incorporating ESG issues. As of June 2019, there are 2450 signatories representing over $80 trillion in AUM.”
Indeed, in the wake of COVID-19, political protests about racial inequality, and natural disasters and climate-related tragedies that have devastated many communities, we understand the domino effect that one area of inequality has on others. At SpringFour, we see these impacts every day: as renters are disproportionately impacted by job loss; as communities of color are disproportionately impacted by natural disasters; as a worldwide pandemic leads to hyper-local impacts in neighborhoods that lack access to adequate healthcare. Each one of these realities means that people struggle in a variety of ways every day–one job loss, one health care crisis, one prolonged utility outage can have a cascading impact on a family’s ability to pay for other basic necessities, like food and childcare.
And so often, those families don’t know where to go for help. For 15 years, long before ESG and CSR became household acronyms, SpringFour’s mission was to assist companies in realizing their larger role and impact on families and communities by giving them tools to help those in financial crisis become whole. We have always believed that financial institutions have not only the opportunity, but the responsibility, to be a positive force in people’s lives.
Banks seem to be on the same page in the wake of the COVID crisis. Recently, more than 60 major companies, including large financial institutions such as Bank of America, have announced that they will be adopting a new framework for reporting on ESG metrics in partnership with the World Economic Forum. This framework encompasses metrics from greenhouse gas emissions to board and staff diversity to programs to fight income inequality.
According to BankDirector, “the banks that become ESG leaders will create products that improve the long-term financial health of their retail and small business customers.” ESG programs at financial institutions include more than just retail products–they encompass community services, partnerships with nonprofits and fintechs, green investing strategies, and more. Recently, SpringFour has become an important component in ESG reporting for many of our clients, who are highlighting the social impact of their partnership with us as part of their overall corporate social responsibility strategies.
“Banks and other financial institutions play a crucial role in the fabric of every community. They are not only the places that families trust with their money–they impact community development, serve as employment anchors, influence environmental practice and lead local investment policy. Banks have an opportunity through ESG programs, in partnership with experts such as SpringFour, to showcase their values and commitment to holistically-healthy communities.”
–Katy Jacob, VP of Research and Impact, SpringFour
We know that families want to engage in a variety of ways with the companies with whom they have a financial relationship. For example, in a survey conducted by SpringFour last summer, we learned that 83% of respondents would like to get additional financial resources and assistance from their bank. Almost two-thirds would appreciate the same kind of assistance from their credit card company. People are looking for meaningful relationships with entities that they already have a financial relationship with–and they are expecting those companies to deliver.
“It was important for Mariner Finance to include its partnership with SpringFour in its inaugural ESG report. Mariner is committed to ensuring that its digital platforms and customer service initiatives provide borrowers with local support in their communities. Working with SpringFour has enabled Mariner to provide tens of thousands of referrals to its customers who are able to use the SpringFour tool to access verified and vetted food, financial, and health resources in their communities.”
A 2021 survey by MX Technologies found that 50% of bank customers don’t think their financial institution helps them become financially healthy. While this means that half of customers DO think their banks are helping their financial health, there is obvious room for improvement. This is where programs that focus on ESG come in, in addition to compliance with regulations such as CRA that demonstrate a bank’s commitment to investing in all of the communities that they serve. Financial institutions can show that they recognize the role they play in the larger community by dedicating resources to environmental and social programs–and by actively not harming the environmental and social infrastructure of their communities. ESG puts a company’s larger values on the table, and customers are hungry to understand what those values are in light of the COVID-19 pandemic that has impacted almost every economic sector and reverberated across America.
“As banks ramp up their ESG efforts and define their metrics of success, they can be assured that they are not alone. For more than a decade, SpringFour has put thousands of financial assistance resources into the hands of bank clientele. We are proud that our partnership with banks is core to their business model – and that it is a win-win-win for all, helping them meet clients’ needs, increase repayment rates, and improve the world.”
–Rochelle Gorey, Co-Founder and CEO, SpringFour
Since the arrival of the COVID pandemic, it has become clearer than ever before that many American households are living precarious financial lives. While this was true before the pandemic, these struggles are now exacerbated by historically high unemployment rates, food insecurity, and a decreased ability for individuals to band together with family and friends to overcome hardship.
Now more than ever, people need access to appropriate resources to help them through this crisis–and they need those resources right now.