Traditionally, bank executive teams had only a few key positions. There are now almost 20 distinct C-suite positions. The Chief Sustainability Officer, or CSO, is one of the newest positions to be added. Banking CSO responsibilities include everything from carbon footprint initiatives to activist investor demands to climate risk assessment.
Is it Essential for Banks to Have a Chief Sustainability Officer
The idea that banks and credit unions require a CSO is still a relatively new one. There is some skepticism that a CSO will always be required for a bank to succeed. A few organizations feel that CSOs who are aware that eventually their responsibilities may be transferred back to other departments.
It can be difficult to determine when a financial institution—especially one with smaller assets—should assign a CSO to the C-suite. Three major points” that a credit union or bank will encounter when they realize they need one, according to some experts, are at least one of the following:
· If external change is more than internal change
· Expectations of stakeholders are higher than the expectations of the management.
· If the institution feels that ESG risks are strategic in nature.
Additionally, there are regulations that are still in the works that, if financial institutions are not ready, could soon become difficult. As an illustration, consider the Federal Reserve’s plans to include environmental considerations in upcoming large institution stress tests. The OCC is also developing guidelines for U. S. banks to handle financial risks associated with climate change.
Functions of a CSO in a Bank
Many financial CSOs come from different backgrounds, and their daily tasks can be very different.
Despite the fact that each institution may have a different job title and job description, There can be the following three generic expectations for a CSO:
· Assist the credit union or bank to tweak its strategy.
· Make sense of the outside world and return knowledge to the company. And
· Offer thought leadership apart from aligning teams by connecting, educating, and engaging.
How Can the CSO Be A Part of A Bank’s Executive Team
At times, a bank will already have sustainability objectives in place, and the CSO will assist in putting them into action. In other cases, a CSO is hired to assist in creating a sustainability plan.
Similarly, a CSO may be more in charge of monitoring the issues as they arise than actually carrying out ESG strategies within a financial institution. The article has been published by the editorial board of the Fintek Diary. Happy Reading. For more information please visit www.fintekdiary.com
