Banking Barometer 2024 · For FY ended 2023/4 · Second edition

Financial Institution Sustainability Reporting Benchmark. The detail is where it gets interesting.

For financial years ended 2023/4. 61 institutions assessed across the full breadth of UK and Irish financial services. What the numbers say about where the sector is — and where it is heading.

61
institutions assessed
5
areas assessed
30%
have assessed materiality
52%
reporting financed emissions
Foreword

The detail is where the real story lives.

Welcome to the second of Perigon's Financial Institution Sustainability Reporting Benchmarks. It is always daunting at the start of the process, looking at the mountain of information and analysis we need to climb to produce this report. But this year, like last, we are confident that we have pulled out some important trends that sustainability professionals in Financial Services should be aware of.

The main change in recent years has been the growth in TCFD (or Climate-related Financial Disclosures), both in volume terms and sophistication. 2023 was the final year of the phased introduction of reporting requirements, with many of the smaller companies in our cohort having to disclose for the first time.

Next year, I expect we will see a similar step up in companies going further and disclosing their first climate transition plans. Meanwhile, I hope you find the wealth of information in this 2024 Benchmark of interest and of use as you work through your priorities for your next set of year-end disclosures.

Emma Walford, Founding Partner, Perigon Partners

Four recommendations for 2025

  • More ≠ better. Have the confidence to be concise.
  • Get real about materiality. Understanding is the critical foundation.
  • Harness transition plan momentum. A powerful tool to galvanise action.
  • Remember your core purpose. The socio-economic story is under-told.
Introduction · Scope of Analysis

61 institutions. An expanded cohort. A sharper picture.

This year we removed 2 companies due to M&A activity and added 9 to expand our focus on smaller, regional building societies. Coverage spans year-end dates between May 2023 and April 2024.

61
institutions assessed
22
Specialist / Challenger Banks
17
Building Societies
11
Full Service Banks & 11 Fintechs
Section 1 · Length & Sentiment

The volume of sustainability reporting kept growing. The quality did not always follow.

Average sustainability page count has risen from 8.5 pages in 2020 to 40.0 pages in 2024. The highest single page count was 188 pages.

40
Average sustainability pages in 2024, up from 8.5 in 2020
188
Highest single page count in the cohort
81%
Of ARA front-section content carries a financial sentiment
49
Average climate-related pages for the 6 largest banks, down from a peak of 60

TCFD regulations have driven a steady increase in sustainability-related ARA content. Those having grappled with TCFD requirements for longer have started to rein back on the volume and incorporate more into the ARA rather than in separate reports, a sign of maturity.

More is not better. We are seeing a trend of scaling back following a peak last year. IFRS S1/S2 will require a stricter lens on materiality and balance. The largest banks have already started pulling back. Smaller institutions should take note.

The People story dominates. Despite the growth of Climate-related Financial Disclosures, non-financial content remains overwhelmingly focused on People. Planet accounts for just 20% of non-financial content on average.

Sentiment of ARA front sections (n=51)
Average split between financial and non-financial content
Section 2 · Materiality

30% have assessed materiality. Broadly in line with last year. Two years in, the number barely moved.

Materiality remains a minority pursuit — most common among the largest institutions, largely absent among the smallest.

A Materiality Assessment is where a company follows a structured process to identify which sustainability-related impacts, risks and opportunities are most significant. Over 70% of those with more than 10,000 employees have done one — but only 22% of those with 500–2,000 employees.

80% of the cohort have not undertaken a Double Materiality Assessment, making them less sighted on risks and opportunities for impact in the sustainable economy of the future. This year, two Irish banks undertook their first CSRD-aligned DMA.

30%
Have conducted a materiality assessment, broadly flat vs 2023
80%
Have not done a Double Materiality Assessment
Materiality by employee count
% with a materiality assessment — 2023 vs 2024

The same four shortcomings persist

1

Insufficient focus

There is a tendency to list numerous material issues. The true strategic value is to enable you to pinpoint and focus on a few areas of greatest significance.

2

Value chain blindness

Many FIs focus their assessment on direct operations rather than the far more significant impacts through products, services and purchasing choices.

3

Governance gremlins

Governance shows up often as a material issue. Its place is as an important mitigant to both financial and non-financial risks — not as an impact or risk of its own.

4

Materiality for the sake of it

The outputs of a DMA should underpin strategy first and foremost. If it does neither reporting nor strategy, it was probably a waste of time and money.

Section 3 · Strategy

70% have a sustainability strategy. Less than a quarter linked it to materiality.

Having a strategy and having one grounded in evidence are different things.

70%
Have a sustainability strategy (41 FIs)
<25%
Of those with a strategy clearly linked it to materiality
8
Use "E, S, G" as their three strategy priorities, a generic approach

70% of the 2024 cohort have a sustainability strategy that they reference in their annual report. However, 8 use "Environment", "Social" and "Governance" as their three sustainability strategy priorities — a generic approach demonstrating a lack of linkage to the commercial strategy.

Integration is increasing. Three companies notably moved from separate or linked sustainability strategies to a much more embedded approach this year — Perigon's core belief is the need for a single, integrated sustainable corporate strategy.

The materiality linkage gap. Less than a quarter of those with a sustainability strategy clearly and explicitly linked it to materiality. Without that grounding, strategy risks being a collection of good intentions rather than a disciplined response to the institution's most significant impacts, risks and opportunities.

Climate leads; socio-economic growing. Climate continues to be the most common element. The story of positive impact from FIs' core business model is seldom told clearly or well. This is an opportunity.

Sustainability strategy — Yes / Partial / No (2024)
70% have a strategy; 18% partial; 12% none
Section 4 · Transition Plans

13% have published a transition plan. 23% intend to do so this year.

In 2023, the Transition Plan Taskforce finalised its gold-standard framework. A leading group of 8 FIs have already published. Many more are on their way.

With guidance now in place, a leading group of FIs have set out their first transition plans. 14 FIs stated their intention to develop one in the coming year. Perhaps surprisingly, six of these had only just published their first Climate-Related Financial Disclosures — this rapid acceleration suggests smaller institutions will quickly be on par with their larger peers.

Transition planning can galvanise action. This is a sensible step regardless of where you are on your climate journey. It provides a construct to start out smartly and re-align existing, sometimes disparate, efforts. For institutions without a net zero target, a transition plan is still a valuable organising framework.

63% chose to publish within the ARA. A narrow majority of those with a transition plan chose to publish it within their Annual Report and Accounts, rather than as a standalone document.

8
Full transition plans published (13%)
3
Partial transition plans (4.9%)
14
Stated intention to develop one this year (23%)
Transition plan status (n=61)
Full, partial, intention or none
Section 5 · Emissions

Scope 1 & 2 near-universal. Financed emissions catching up fast.

34% made a good attempt at reporting their full GHG inventory — up from 12 FIs last year. The single largest jump: financed emissions rose from 33% to 52%.

~99%
Report Scope 1 & 2 — now near-universal
87%
Report at least partial operational Scope 3 emissions
52%
Report financed emissions — up from 33% in FY23
46%
Report supplier (upstream) emissions — up from 26%

Financed emissions typically represent around 90% of a financial institution's total footprint. The jump from 33% to 52% reporting financed emissions is the single largest advance in emissions coverage. The largest banks are stepping back from carbon neutrality claims and moving towards Beyond Value Chain Mitigation (BVCM).

The most common emissions intensity denominator was FTE: average 0.2 tCO₂e/FTE for scope 1 and 2 only; 2.0 for scope 1, 2 and operational scope 3; and 12.9 for scope 1, 2 and 3 excluding financed emissions.

GHG emissions reporting coverage, 2023 vs 2024
% of cohort reporting each scope category
Recommendations

Four things to prioritise going into the next reporting cycle.

1

More ≠ better — have the confidence to be concise

We are seeing a trend of scaling back following a peak last year. IFRS S1/S2 will require a stricter lens on materiality and balance. Have the confidence to say less, more clearly.

2

Get real about materiality — understanding is the critical foundation

The right approach to assessing Double Materiality can be immensely valuable for strategy setting as well as reporting. It can and should be done proportionately. Quality is still mixed.

3

Harness transition plan momentum — a powerful tool to galvanise action

This is a sensible step regardless of where you are on your climate journey. It provides a construct to start out smartly and to re-align and accelerate existing, sometimes disparate, efforts.

4

Remember your core purpose — the socio-economic story is under-told

The story of positive impact from FIs' core business model is seldom told clearly or well. Core business strategy and ESG are still too often unlinked. This is an opportunity.

Appendix · Institutions & Definitions

61 institutions assessed. All listed here.

Full Service Banks (11)

Allied Irish Bank
Bank of Ireland
Barclays
Co-op
Lloyds
Metro
NatWest
Permanent TSB
Santander UK
TSB
Virgin Money

Specialist / Challenger Banks & Fintechs (33)

Allica Bank, Atom Bank, Chetwood Financial, Funding Circle, Monument, Monzo, OakNorth, Revolut, Starling, Tide, Zopa, Aldermore, Arbuthnot Group, British Business Bank, C. Hoare & Co., Cambridge and Counties, Castle Trust Bank, Charity Bank, Cynergy Bank, Gatehouse Bank, Hampden & Co., Hampshire Trust Bank, One Savings Bank, Paragon, Redwood, Recognise, Secure Trust Bank, Shawbrook, Tandem, United Trust Bank, Vanquis Bank, Weatherbys

Building Societies (17)

Bath BS, Beverley BS*, Cambridge BS, Coventry BS, Darlington BS, Dudley BS, Earl Shilton BS*, Ecology BS*, Harpenden BS*, Leeds BS, Melton BS, Nationwide, Newcastle BS, Penrith BS*, Skipton BS, Suffolk BS, Yorkshire BS

* New additions to the 2024 cohort.

Glossary

ARA
Annual Report and Accounts.
BVCM
Beyond Value Chain Mitigation — investment in GHG reduction outside the value chain.
CSRD
Corporate Sustainability Reporting Directive — EU regulation from 2024.
DMA
Double Materiality Assessment — assesses both financial materiality and impact on people and planet.
GFANZ
Glasgow Financial Alliance for Net Zero — coalition committed to net zero lending.
IFRS S1/S2
ISSB sustainability (S1) and climate (S2) disclosure standards.
SECR
Streamlined Energy and Carbon Reporting — required for large unquoted UK companies.
TCFD
Task-force for Climate-related Financial Disclosures — now subsumed into the ISSB.
TPT
Transition Plan Taskforce — developed the gold-standard framework for transition plans.
UK SRS
UK Sustainability Reporting Standards — based on ISSB standards, replacing TCFD.