Financial services providers falling short as consumers demand sustainable finance revolution
PA Consulting (PA), the consultancy that’s bringing ingenuity to life, has today published new global research revealing that an overwhelming majority of people expect sustainable financial services to become the norm (93%) – and almost half expect this to be the case by 2025. Yet the research shows consumers are currently facing a critical knowledge gap, which should serve as a wake-up call to financial services providers to accelerate their efforts to both educate and innovate around ethical and sustainable finance options.
PA surveyed 3,500 consumers globally and found that consumers across all age groups and geographies are looking to live, shop, and bank more sustainably. Two thirds (63%) of consumers are looking for more sustainable options for products and services across all aspects of their life, and over half are more likely to buy financial products from providers who demonstrate sustainable values. However, despite these intentions, most consumers don’t realise how much of an impact their financial decisions can have on sustainability; only a third of people (33%) think that their personal finances can have an impact, and only forty-two percent have considered investing as a way to positively impact the environment.
As well as a lack of education (57%), the research revealed that pricing (62%); trust (57%); availability (56%) and accessibility (55%) are key barriers to adoption of sustainable finance products. Fifty-five percent of consumers think that it’s not fair to pay a premium for sustainable products or services, whilst over half (53%) think that financial institutions are absent from debates around sustainable living and conscious consumerism – but have a key role to play (64%).
With the majority of consumers (53%) also saying there is an urgent need to introduce new sustainable finance products to the market, financial services firms must urgently address gaps in knowledge and consumer trust to drive adoption over the next four years and seize the sustainable finance opportunity whilst cementing their position as positive social actors.
Mark Lancelott, sustainability expert at PA Consulting, says: “Our survey reveals a worrying gap between consumers’ expectations of their financial services providers and their confidence in, and understanding of, the products currently available to them. Right now, consumers don’t realise how big an impact their financial choices can have on their ambitions to live more sustainably – which can be multiple times more impactful than other lifestyle changes – and there is too little choice and education available. But they are increasingly looking to ‘make their money matter’ and providers need to step up – and fast – if they are to seize the opportunity, engage and retain new conscious consumers, and build their reputation as positive social actors.”
Jason Hill, financial services expert at PA Consulting, continues: “Pressures to meet the challenge of making sustainable finance mainstream by 2025 will come not just from consumer demand; there’ll be new non-financial reporting requirements and rules to prevent ‘green-washing’ coming into force imminently, while other banking regulations are likely to incorporate sustainability and ESG measures.
“Our research highlights the pent-up demand for financial products and services that have a positive impact. Failing to meet expectations will compromise customer retention, the ability to meet increasing regulatory requirements, profit, and scope for financial services organisations. There are three core initiatives businesses must commit to pursuing to have the greatest impact: build credibility, educate, and innovate. It will take investment and ingenuity, but it is critical the industry pivots, now.”
Download PA’s Financial Services can change the world report here.