ESG Team Structure


Onboarding everyone


ESG implementation in a Bank is multi functional role. We bring in this article on various aspects involved in roles of various units in a typical Bank and the same can differ from Bank to Bank depending upon the Bank’s organisation structure.

ESG Team Structure

In an ideal scenario, Banks should have a dedicated ESG team. But this ESG team should be under which business vertical is a matter of debate. In our view, Compliance seems to be the most suitable vertical to drive the change. However, considering the role of disclosures, Bank’s vertical looking after disclosures can also head the ESG function. These can be Bank’s Balance Sheet team which looks after financials and other disclosures, Bank’s Investors Relations Team which looks after disclosures to shareholders or the Bank’s Risk team which looks after Basel disclosures.

Bank’s can have representatives or ESG officers in different functional units. These ESG Officers can drive the change in their respective business lines. These can be both from the business side as well as support side. For business side, Bank can have ESG officers in advances, treasury, liabilities and third party products. These officials will align the working of their respective business units in line with Bank’s overall climate risk policy and sustainability agenda, In similar way, Banks can have ESG Officers in Bank’s support function who will drive the Bank’s internal change for climate change and sustainability. The verticals can be HR, IT, Premises and Operations. Bank’s Risk team has major role to play in defining risk appetite, formulating policies and conducting scenarios. Bank’s Data validation teams also need to gear up for the diverse types of data to be collected for measuring and monitoring Bank’s success towards climate change and sustainability. Audit also has an important role in providing assurance on the Bank’s climate change and sustainability progress.

Banks need to formulate committees to steer the climate and sustainability related changes in the Bank. The high level Committee can have senior representatives from various functional units. Banks can also formulate task specific Committees viz for disclosure, data collection, policy formulation etc.

For the long run success, Banks need to align performance measurement with sustainability. Banks need to devise measurable metrics for each stakeholder and fix targets for the same. These targets can be both for business side as well as support side. For business side, these targets need to be aligned with the risk appetite of the Bank.

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