Investors are increasingly applying Environmental, Social, and Corporate Governance (ESG) data – the non-financial metrics, as part of their analysis process to identify material risk and growth opportunities. Vincent Triesschijn, Director of Sustainable Investing at ABN AMRO, highlighted the significance and growth potential of ESG driven investing in an interview: “We’re seeing that investing according to ESG criteria is becoming more and more popular. Worldwide, sustainable investments have reached record amounts. ABN AMRO is currently managing 20 billion euros’ worth of client assets in sustainable investments, of which 1 billion euros in impact investments. We’re incredibly proud that the new Impact Equity Fund has already raised 200 million euros.”
Sustainable investing has grown in popularity thanks to a shift in investing methodology preference driven by the millennial generation. The earliest batch of millennials (born in early 1980s) are already in their late 30s by now – the prime investing years. This investment discipline shift will gradually influence all other generations when the interest is becoming mainstream. Sustainable funds are growing, with the total asset size globally just shy of US$2 trillion. The bulk of these funds are in Europe (US$1.63 trillion).
Even the banks and financial institutions, are increasingly allocating a higher weightage to sustainability metrics as part of financial loan approval.
|Image by Gerd Altmann from Pixabay|
eKYC for Positive Environmental Impact
Microsoft set a bold goal and detailed plan to be carbon negative by 2030, and even to remove historical carbon emissions by 2050.
Even in current times when physical movement is facing disruptions, many businesses are still primarily relying on physical customer servicing touchpoints in business and sales operations. This is a significant source of carbon footprints. Based on a survey done by Michael Page, the average commuting time between home and work, in Kuala Lumpur, is 44 minutes. Deriving inspiration from research done by NRDC, 1 minute on the road and assuming at ideal traffic (55mph), average carbon dioxide emissions is 291 grams/minute/car. In Kuala Lumpur alone, even if we are assuming a very low traffic volume of 100,000 cars on the road each day, the carbon dioxide emissions would reach 1,280 tonnes per day! Using the same analogy, you can derive the carbon footprints produced by your business, for all the branches nationwide, contributed by your staff and customers each day.
Outdoor air pollution was estimated to have caused 4.2 million premature deaths worldwide in 2016, and the highest concentrations of air pollution are in Asia.
Accelerated by the recent pandemic, banks worldwide are increasingly transforming transactional services to online self-service channels and reserving the reduced operating hours and branches for more sophisticated transactions, especially the corporate-related services. Customer onboarding and account opening can be automated digitally and remotely using eKYC, which is becoming a new normal for businesses. Directly, the carbon footprint is reduced from:
- Hybrid working arrangements for staff.
- Reduction in needs for face-to-face consumer-facing services.
- Reduction in electricity consumption.
eKYC for Positive Social Impact
In September 2015, the General Assembly adopted the 2030 Agenda for Sustainable Development that includes 17 Sustainable Development Goals (SDGs). The tenth goal – “reduced inequalities”, and the eleventh goal – “sustainable cities and communities”, are putting a focal point on social inclusiveness. Access to new and innovative products at lower cost should not be limited to urban folks. eKYC technology helps organisations to widen outreach of customer servicing touch points without restriction from physical locations or branches. eKYC enabled online transaction reduces customer onboarding cost, which leads to business’ ability to offer more creative products and services at competitive fees. To the consumers, we are benefitting from easier accessibility to choices. Imagine, if robo-advisory investment products were operating on branch-based operations, would this innovative investment option be easily accessible to consumers who are not residing in cities? And, even when a mobile network operator was to offer the most attractive mobile plan, could it be easily rolled out to all consumers across vast geography? Let us imagine the places of archipelago. When economic development is less constrained by accessibility to urban resources and facilities, it helps satellite cities to flourish and thrive, and eases the upsetting trend of urban poor population.
eKYC for Improved Governance
Stringent compliance to know-your-customer (KYC) rules is no longer just a requirement of BFSI (banking, financial services, and insurance) industries. With mobile cellular number becoming part of a person’s identity and a form of identity verification, losing sight of end-user registration can result in increasing online scams (using mobile cellular number registered to fraudulent identity), breach of anti-money laundering (AML) regulations, and even a compromised banking account.
To businesses, automation of identity proofing and digitalisation of customer due diligence using eKYC technologies can help to improve compliance with regulatory requirements and avoid penalties from authorities. To the extreme extend, regulatory requirement breach can even cost a business in suspension or loss of operating license.
The contentious handling of migrant labour issues in some countries relying on export manufacturing is a long-standing problem. Various reports have highlighted that the entrenched presence of middlemen in the labour recruitment system is the main obstacle preventing the reform of migrant labour management. Given political will to support underlying reform, eKYC can provide the necessary ID proofing and due diligence support in an online recruitment process, for businesses to directly recruit foreign workers from the source countries. When the entire process is transparently documented and traceable for wellbeing of labour-import according to recommended practices, it prevents unnecessary business disruption that could be resulted from sanctions by foreign customs.
Good governance is doing the right things even when no one is watching.