May 17, 2022 | Stamford, CT — More than a quarter of U.S. small and mid-sized businesses say they are likely to choose a bank that demonstrates a commitment to ESG the next time they add or switch providers. That’s good news for the nine banks named by Coalition Greenwich as Standout Commercial Banks for Demonstrated Commitment to ESG Principles and Values.
“Growing numbers of commercial banks are adopting environmental, social and governance standards in their loan portfolios and business operations,” says Dana Schwaeber, Banking Director at Coalition Greenwich. “They are doing so in response to appetite from shareholders, employees and other stakeholders, and—as this new data shows—to meet demands of commercial clients, who are increasingly incorporating ESG into their own businesses.”
To determine which banks are leading the charge into ESG, Coalition Greenwich asked over 20,000 small business and middle-market executives participating in the Coalition Greenwich Commercial Banking Program to assess their banks’ commitment to ESG. Based on those results, Coalition Greenwich named the Q1 2022 Standout Commercial Banks for Demonstrating Commitment to ESG Principles and Values.
In Small Business Banking the Standout Banks for Demonstrated Commitment to ESG Principles and Values are First Citizens Bank, First Horizon, FNB Corporation, Frost Bank, M&T Bank, Pinnacle Financial, Regions Bank, and Synovus Financial. In Middle Market Banking the Standout Banks are Frost Bank, KeyBank and M&T Bank.
Bank M&A Could Increase Client Turnover
These banks could find themselves at an advantage in the competition for wholesale banking relationships at a time when the industry is primed for increased levels of client turnover after a spate of mergers and acquisitions. Twenty-seven percent of the small and middle-market business executives participating in the Greenwich Market Pulse report their provider merged with another bank in the past two years. Nearly 40% of those executives cite a negative client experience as a result of those deals, and more than one in five are likely to switch providers in the future as a result of M&A transactions.
Regardless of the reason for switching providers, more small businesses and mid-size companies will be assessing banks’ ESG initiatives as part of their selection process. Approximately 36% of these business executives expect to increase the amount of attention they pay to their banks’ ESG initiatives in the next five years. That shift is occurring as more companies adopt ESG initiatives themselves. About a quarter of small businesses and mid-sized companies are in the process of establishing ESG-linked goals for their own businesses and are focusing primarily on waste reduction and gender equality and diversity.
The Greenwich Market Pulse: Top Concerns for Executives Amid Global Volatility reveals a sharp decline in economic sentiment among owners and executives of small businesses and middle-market companies. Respondents cite inflation, increasing debt, staffing concerns, supply chain issues, and the war in Ukraine as the main reasons for their declining optimism. The Greenwich Market Pulse also asked businesses about digital currencies and the transition from Libor to SOFR.