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With sustainability legislation booming in the financial services sector, many institutions are seeking help from Synechron to ensure they are compliant – but the firm is helping them realise that they should not stop with that ‘bare minimum’. Rajul Mittal and Sander Boleij spoke to Consultancy.org about how regulatory demands can act as a trigger for driving innovative new strategies.
With more than 14,000 professionals operating worldwide, Synechron is one of the larger global consultancies and technology providers in the financial services landscape.
As matters in the field of environmental, social, and corporate governance (ESG) become the hottest topics on the boardroom agenda, Synechron is playing a leading role in helping financial institutions not only adapt to the rapidly changing ESG regulatory space, but also the evolving expectations and needs of consumers.
Sander Boleij, Associate Director at the firm in the Netherlands, explains, “Sustainability is by definition, something that goes beyond the law. It traditionally has been that way in finance because over the past decades, there were no specific sustainability laws. So, everything we did in the sector was beyond the law.”
“But over the last five years, those laws have come in – and suddenly most of the focus is simply on implementing the laws. At Synechron, we strongly believe in the opportunity – and benefit – of going beyond. While it is important to comply with regulation, that should be the bare minimum of the objective.”
Data explosion
In today’s data-driven world, data stands at the heart of compliance and performance improvement. “When we help our clients implement sustainability regulations, for example, we encourage them to also take into account that they can use this data in a more commercial environment.”
“By looking at data from a different angle – that requires technology and innovation – a massive opportunity in the market can be unlocked.”
Looking at one client as an example, Synechron is currently working with a major European bank on its entire data architecture for regulatory reporting. “We helped them understand the data requirements of the regulatory change, create data warehouses, and the required reports to meet the standards.”
“As soon as compliance was achieved, we helped the client extend the data warehouses with other types of commercial and sustainability data. This has enabled them to build commercial products, improve the management of portfolios and upgrade decision-making to better embed ESG within their own operations.”
From consulting through to technology
This is where Synechron’s broader palette of offerings come in, says Rajul Mittal, Head of Sustainable Finance and ESG at Synechron.
Along with a small group of enthusiastic colleagues, Mittal helped start the Sustainable Finance and ESG practice at Synechron, which now has a global footprint – with the Netherlands among the key centres of excellence alongside the United States and the United Kingdom.
“We do plenty of work on sustainable finance regulations (the firm works across 12 large regulatory buckets). Other pillars are ESG strategy, climate and ESG risk, and ESG data management and implementation – where our consulting and technology capabilities blend together.”
The practice also has innovation accelerators and technology solutions such as ESG Navigator and the ESG Booster. Explaining what an ‘accelerator’ is in this instance, Mittal notes that it is an offering which “shows the art of the possible” – providing a flexible platform which can both inspire clients, and give them a head-start in their ESG endeavours.
ESG Booster is a tool that helps financial institutions with assessing their ESG performance through portfolio-level analysis against custom ESG metrics. ESG Navigator meanwhile helps respond to what Mittal describes as “one of the largest data black holes” in the sector.
“While large companies have started to self-report on their ESG performance, small and mid-sized companies rarely have the capacity to do so. As a result, there is currently very little data on those companies in the public domain – while small and mid-sized businesses comprise the bulk of economic activity.”
“Regulations are coming which will require financial institutions to keep track of their ESG portfolio across their entire client base, meaning they will have to somehow understand how to rate their smaller sized clients as well. With our ESG Navigator, we provide them a powerful tool to help navigate this challenge.”
“The European Commission has the ambition to become the world’s first “sustainable continent” by 2050,” adds Boleij. “A large part of that relates to an action plan for the financial sector, which spans all kinds of regulations that help steer money in the right direction.”
“This calls financial institutions to outline every asset in their possession – as well as how much of their balance sheet is in line with the ESG ambition. Without the help of technology and a data platform, this is an impossible task.”
Personal connection
Looking to boost the sustainability efforts of the financial services sector is more than just work for Synechron’s team, asserts Mittal. “Our staff are expert and practical people with a personal sense of responsibility too.”
“As a firm, we take our full responsibility in leading the way when it comes to sustainability, from mobility and company operations through to the individual choices we make.”
Described by fellow colleague’s as a ‘sustainability fanatic’, Mittal says that he does “whatever little I can do, without going to the extremes – be vegetarian, drive an electric car, have solar panels on my roof – I try to be a conscientious consumer.”
It is a way of living echoed by Boleij. “We do our utmost to decrease our own footprints – I personally try to eat less meat, and use public transport. I helped set up a sustainable farm in my town, seven years ago, and there are now 14 more across the Netherlands.”
The two leaders emphasise that they are not alone within Synechron’s Sustainable Finance and ESG team. “Everyone who is involved with our services tends to practice what they preach. You can do a lot if you want – and I think it can even be fun. It’s not just about doing less, it’s about finding ways to do things different,” says Boleij.
“Sustainability can be a doorway to new experiences and rewards. It’s very similar to how we advise our clients to think of sustainable finance as an opportunity, not only some sort of necessary sacrifice,” concludes Mittal.
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