Advancing your financial services strategy with Azure sustainability

Many CEOs and senior business leaders have used the COVID-19 and economic crisis as an opportunity to focus on redesigning their business. Like others, they’ve felt compelled to re-examine their business and operational models, driven by the internal necessity for digital transformation, as well as external consumer and regulatory pressures to advance sustainability efforts. Across most, if not all, industries we’ve also seen the COVID-19 pandemic accelerate the pace of sustainability efforts, with executive spend expected to increase over the next few years in this direction (see figure 1).

The pandemic has also elevated the priority of social issues among executives, with consumers and employees alike granting greater credibility to corporate transparency in shareholder disclosures and the environmental impact of global operations. Within the financial services industry in particular, sustainability and climate risk can play a significant role in company valuation, as investors and other stakeholders assess the physical and transitional dimensions of climate risk in a firm’s financial assets and investments.

Given the growing importance of sustainability, this article will address how sustainability strategies can be utilized as a catalyst for business growth, particularly in the financial services industry, and how Microsoft Azure is uniquely positioned to help our customers achieve these goals.

Figure 1: Per Gartner CEO and Senior Executive study, more than 90 percent of executives reported an increase in Sustainability spend.

Building blocks and benefits of a sustainability strategy

The first step towards building an effective sustainability strategy is to define it for your business (see figure 2). Establish a shared understanding of what sustainability looks like across your organization, and how each department contributes to the overarching goal.

The next stages involve analyzing real-time data to inform your strategy; data options can include historical energy consumption, real-time IoT signals on space occupancy, carbon emissions, and waste creation. Combining traditionally massive and disparate sources of data for insights requires having a modern data platform, one that can use the power of high-performance computing and advanced analytics to quickly process and derive insights from massive data sets.

The Microsoft Azure cloud platform can help here as it provides a broad spectrum of infrastructure, application, data management, and analytics tools to build a modern data estate. Microsoft’s sustainability solutions include technologies like Azure Machine Learning to assess risk and uncover climate trends, and Azure IoT Hub, which provides real-time connected device insights that lead to better-informed decision making. Being able to reason over data allows firms to both identify and monitor opportunities that introduce more sustainable practices, and discover additional revenue drivers as they scale.

Lucas Joppa, Microsoft’s Chief Environmental Officer, shared Microsoft’s sustainability report outlining how we’re making steps towards sustainability in our own businesses, working toward being carbon negative by 2030 and removing historic emissions by 2050. The report describes how Microsoft has worked across suppliers, customers, partners, and governments to progress towards the goal. Another major benefit is compliance consistency. As regulatory standards evolve, we’re intentional in helping our customers meet and prepare for them. Our technology portfolio meets a comprehensive set of compliance certifications that align with over 50 private and government national international standards, making Microsoft an optimal partner in sustainability.

Figure 2: Digital solutions are among the top options companies use to address sustainability.

In addition to establishing compliance and consumer credibility, it’s also important to note the additional benefits that enterprises gain with a sustainable strategy: new partnerships, innovative products, and better business outcomes.

New partnerships

Executing a sustainability strategy requires collaboration with an ecosystem of partners, which could enhance your business. Currently, institutional and individual investors are prioritizing Environmental, Social, and Governance (ESG) visibility, examining disclosures to understand how ESG progress is being made, where companies stand, and where they are going in the future. Having a sustainability plan progresses future partnership consideration past table stakes and into real value.

Microsoft, as a partner, can help monitor non-traditional data points like social media, open data sets, and local news sources to help firms quickly react to changing market conditions or potential risks to financial assets. This can help inform discovery and future innovation.

An example of business transformation through a partnership is how startup Flowe, founded by one of the largest Italian banks, Banca Mediolanum, sought to help banking customers add sustainability—and purpose—to their lives and gained their desired millennial audience through a differentiated and competitive value proposition. Flowe, in partnership with the Microsoft Consulting Services, built a banking app that went beyond transaction and integrated social matters like sustainability, nutrition, and exercise to engage a banking community of customers who also then participated by sharing sustainability experiences; all powered by Azure AI. They were also able to benefit from their Azure (carbon neutral since 2012) partnership by becoming carbon neutral-certified quickly, providing transparency into the carbon footprint of the company’s resource usage.

Innovative products

Consumers and retail investors are now purchasing more with their conscience than ever before, generating an opportunity to create new evidence-based ESG products aligned to your company’s value proposition. Producing ESG solutions can help differentiate firms and drive competitive advantage as ESG initiatives are beginning to drive a new group of financial products like green and social bonds.

Because ESG is centered around research and data, insights may be uncovered through internal reporting and ESG ratings that could help inform new product development. Post-production, data insights can assist firms in reacting to market conditions and client requests with agility.

Capital Markets firms are uniquely positioned to influence and measure the progress in this space with new products, other financial services providers have incorporated ESG into offering responsible investment solutions to asset management clients. To help, Azure services empower firms to uncover evidence-based ESG financial products, centered on data reporting, quality insights, and trust.

Better business outcomes

Executives at transformational enterprises rank resource efficiency, innovation, and reduced costs as top benefits achieved in their organization’s sustainability program. Some of this comes by turning complex datasets across multiple sources into enhanced risk management models, reporting, and insights, which help develop new capabilities. 

Microsoft Azure solutions like Azure Cognitive Services and AI can help firms understand the full scope of materiality and find the needle in a haystack that could impact alpha generation and business risk.

The data and compute solutions from Microsoft and Microsoft partners help to assess climate risk by layering non-traditional risk factors on top of traditional and uncovering materiality with a potential fiscal impact. With this new ability, firms can run models faster and more often, enhancing the what-if analyses and its ability to manage emerging risks.

For a comprehensive solution, the upcoming Microsoft Cloud for Sustainability offering will deliver a set of integrated and automated sustainability data insights and tools that can help organizations record, report, and reduce their emissions and accelerate their sustainability goals.

Ultimately, better business outcomes are possible with a sustainable plan—see Microsoft CVP Bill Bordens’s message on Microsoft Cloud for Financial Services and Microsoft’s commitment to helping Financial Services institutions achieve sustainable growth.

Begin your journey today

Gartner refers to sustainability as a “mission-critical priority,” and with good reason. With the growing risk that climate events pose to financial assets and global supply chains, and the weight of consumer social sentiment, to not take action on sustainability efforts would mean to increase the risk of both business disruption and customer churn. Rather than overlooking or minimalizing this effort, consider how adopting a sustainability strategy can accelerate your business growth and generate new opportunities. With investment, the gains could include improved stakeholder engagement, enterprise innovation, and a competitive advantage.

Source: microsoft.com