Given the increasing Indian and global consciousness regarding climate change, adherence to and fulfilment of Environmental, Social, and Governance (ESG) goals have emerged as guiding principles for sustainable and responsible business.
While Banks are making efforts to enhance the sustainable performance of their operations and supply chain, aligning with principles of responsible investments, a critical process that has often been overlooked, which contributes significantly to environmental degradation, is their reliance on paper-based processes.
According to the Environmental Paper Network, over 40% of the global industrial logging goes towards paper production. Additionally, paper manufacturing and the logistics of transporting and storing it is a significant source of greenhouse gas emissions, contributing to climate change. With these facts in mind, it’s crucial for businesses, including banks, to find more sustainable alternatives.
The role of physical paperwork in banks and its environmental impact
In the complex ecosystem of banking, physical paperwork is a foundational element that supports numerous operations. Internally, banks rely on a plethora of documents such as memos, which serve as tools for internal communication, and employee agreements, which formalise the terms of employment.
Externally, the paper trail extends to vendor agreements that outline the specifics of service provision, legal agreements that bind parties to regulatory compliance, and partner agreements that cement collaborative endeavours. A significant portion of paperwork is dedicated to loan documentation, covering various forms like the loan application, sanction letter(which marks the approval of the loan), stamp paper and the loan agreement, detailing the terms and conditions of the loan.
The environmental toll of this established practice is substantial. The production of paper necessitates the felling of trees, a process that not only reduces the planet’s green cover but also disrupts ecosystems. Each sheet of paper represents a fragment of a once-living tree, a silent testament to the environmental cost of doing business. Furthermore, the transportation of documents contributes to carbon emissions, with vehicles ferrying stacks of paper across cities and countries, leaving behind a trail of greenhouse gases.
This carbon footprint is worsened by the sheer volume of paperwork processed daily in the banking sector, highlighting the urgent need for sustainable alternatives.
Why fulfilling ESG goals is critical for business survival
Understanding ESG goals is crucial in banking, as ESG refers to a set of criteria used to evaluate a company’s societal and environmental impact, along with its governance practices. These encompass issues like climate change, human rights, diversity, data security, and ethical business practices.
By adhering to ESG principles, banks aim to reduce risks, stimulate trust, and create long-term value for all stakeholders. Underlining the significance of integrating ESG considerations into business strategies, a 2023 ESG preparedness survey by Deloitte also revealed that 88% of financial services executives perceive that sustainability regulations will directly impact their businesses and will ensure long-term success.
As stewards of capital and catalysts for economic growth, banks wield considerable influence over global sustainability efforts. Embracing ESG principles not only enhances brand reputation but also attracts socially conscious investors and customers, and encourages resilience against regulatory scrutiny and market volatility. Moreover, addressing ESG concerns aligns with broader societal expectations, positioning banks as responsible corporate entities committed to positive social and environmental outcomes.
As financial institutions navigate the complexities of ESG integration, the transition from physical paper based documentation to an end-to-end digital documentation process has emerged as a critical imperative in realising these objectives. This shift not only promises enhanced operational efficiency but also aligns with the overarching goals of sustainability and responsible corporate citizenship.
Digital Paperwork For Achieving ESG Goals
Digitizing paperwork has been ardently serving as a cornerstone in banks’ ESG strategies by focusing on the above considerations and driving efficiency, transparency, and sustainability across various operational facets:
Reducing their carbon footprint: Traditional paper-based processes entail significant resource consumption, including paper, ink, and energy. By digitizing paperwork, banks can minimise their environmental footprint by reducing paper usage, waste generation, and carbon emissions associated with printing, transportation, and storage.
Facilitating Remote Collaboration: In an increasingly interconnected world, remote collaboration has become indispensable for business continuity and agility. Digital paperwork solutions enable seamless collaboration, communication, and document sharing across geographically dispersed teams, empowering employees to work efficiently from anywhere while minimising travel-related emissions. Moreover, these digital solutions also benefit bank customers, allowing them to finish off their transactions and paperwork remotely, thereby reducing travel-related emissions.
Powering India’s Future with ESG Integration
With the Indian government’s increasing emphasis on sustainable development and corporate responsibility, there’s a growing momentum for businesses to integrate ESG principles into their operations. Digitizing paperwork not only streamlines processes, but enhances transparency, and facilitates data-driven decision-making, thereby enabling companies to better track and report their ESG performance.
And as India continues to enhance its digital transformation, leveraging technology to meet ESG goals will strengthen the country’s position as a responsible participant in the global economy, where growth is driven by sustainable development.
(The author is Founder & CEO of Leegality; Views are personal)
