Environmental: French banks lead Europe on environmental activity
European banks’ environmental efforts score 8.3 – up from 8.2 one year prior and ahead of both North America (8.1) and Asia Pacific (7.0).
With a score of 8.3, French banks rank ahead of the UK and Italy (both 7.6), Spain (7.1) and Germany (7.0) on overall environmental performance. France leads on ‘energy management’ (9.2), ‘launching green products and solutions’ (8.6) and ‘managing environmental risk across supply chains’ (8.0).
All five European economies scored close to 10.0 on key social parameters ‘data protection and privacy’ and ‘workplace safety’, depicting the strong performance of European banks compared to their global peers. In addition, France, UK, Spain and Germany all score around 9.9 on ‘fair and competitive remuneration’, which includes managing salary gaps.
Although Italian banks lag relatively on this parameter (8.0), they lead their European counterparts in terms of their ‘fair competition and business practices’ (8.2). Spanish banks are leaders in ‘policy and control related to social risks and targets’ (10). UK banks lag on both of these parameters (8.0) and are further dragged down by relatively low performance in ‘employee wellness and support’ (6.5) with below average performance on parameters such as ‘providing day care services’ and ‘supply chain health & safety training’.
German banks scored lowest on their ‘whistle-blower protection’ and ‘policy and control related to social factors’. German banks also have the lowest gender diversity with proportion of women employees at 43%, compared to the UK (56%), France (54%), Spain (54%) and Italy (50%).
Governance: UK market leads European counterparts on governance efforts
With a score of 6.6, European banks are ahead of both their North American (6.2) and Asia Pacific (5.3) counterparts. While European banks lead on ‘transparency and control’, ‘ESG governance’, and ‘board diversity’, North American banks lead on ‘compensation policy’ and ‘shareholder rights and protection’.
UK banks lead their European peers in terms of their Governance efforts (7.3), followed by France (6.7) and Italy (6.5) respectively, while Germany and Spain both lag with scores of 6.3. UK banks’ score reflects stronger performance compared to their European peers in key governance areas including ‘transparency and control’ (8.1) and ‘ESG governance’ (6.9).
UK, France, Spain and Italy all score above 9.0 for their compensation policies – with Germany lagging on 6.7. Germany also comes last on ‘ESG Governance’ (6.2), largely due to its relatively narrow ESG reporting scope, fewer banks undertaking ESG-related audits, and fewer banks linking board compensation to ESG targets.
Banks across all the five largest economies performed lowest on ‘board diversity’ (4.4), due to lower performance on board gender and cultural diversity and relative lack of clarity on board structure policy.