- Banks will generate $44 billion
in incremental revenues annually through 2030 from financing the
transition, primarily via corporate loans
- American banks will see the largest opportunity this decade,
with Asia Pacific then taking the
lead through 2050
- Pioneering banks who finance the transition could increase
profits by up to 30% by 2050
LONDON, May 15, 2024
/PRNewswire/ -- Global banks and financial institutions have an
annual $44 billion revenue
opportunity through 2030 from an increasingly pressing requirement
for financing and investment in the low-carbon transition, Bain
& Company research reveals today in a new analysis.
Bain's study highlights a $600
billion "addressable opportunity" for banks and other global
financial institutions to fill a gap for financing and investment
in the transition. The financial role for banks eclipses a
$430 billion contribution expected
from industry and an anticipated $350
billion from governments to meet a total $1.4 trillion financing requirement through
2030.
Until 2030, the most significant opportunity for financial
institutions will be in the Americas, Bain's analysis shows. It
projects North American banks could capture $19.3 billion in annual incremental revenues from
financing the transition over the period, with a further
$3.7 billion for South American
banks. Bain projects banks and financial groups in Asia-Pacific would secure incremental revenues
of $8.4 billion, European banks some
$7 billion annually, and those in the
Middle East and Africa $5.5
billion.
The analysis comes from Bain & Company's recently launched
proprietary Transition Finance model, which provides input for
banks' strategic decisions. The tool considers three transition
scenarios, the country-specific nationally determined contributions
(NDCs) as well as 1.5° and 2° reduction paths, providing detailed
insights into projected incremental revenue pools for regional,
sectoral, and product perspectives.
"The low-carbon transition represents a substantial investment
opportunity for banks, with significant revenue pools opening up
this decade," said Christian Graf,
leader of Bain & Company's Sustainability & Responsibility
Financial Services practice in EMEA. "Yet a wide financing gap
remains at current investment levels. The entire global economy
will need to increase investment in clean energy and low-emissions
technologies to meet the agreed upon reduction pathways. Our
analysis shows that the banks which see this gap as an opportunity
stand to reap significant rewards."
Looking beyond 2030
From 2031 to 2050, the incremental investment needed will rise
to $2.3 trillion per year. Banks who
lead on low-carbon investments stand to increase profits by up to
30% by 2050. Bain expects banks in Asia-Pacific to lead the way during this
period.
Essential steps for banks to harness the energy
transition
The research underlines five essential steps for banks to
harness the transition:
- Determine how demand will emerge by industry, geography,
financing vehicle, and client.
- Prioritize the largest opportunities based on clients'
current capital spending.
- Assess current offerings for each segment and identify
adjustments to be made.
- Tailor products and advice to clients' transition
goals.
- Raise employee skills to deliver distinct
offerings.
Media Contacts:
Gary Duncan (London) —
Email: gary.duncan@bain.com
Katie Ware (New York) —
Email: katie.ware@bain.com
Ann Lee (Singapore) —
Email: ann.lee@bain.com
About Bain & Company
Bain & Company is a global consultancy that helps the
world's most ambitious change makers define the future.
Across 65 cities in 40 countries, we work alongside our clients
as one team with a shared ambition to achieve extraordinary
results, outperform the competition, and redefine industries. We
complement our tailored, integrated expertise with a vibrant
ecosystem of digital innovators to deliver better, faster, and more
enduring outcomes. Our 10-year commitment to invest more
than $1 billion in pro bono services brings our talent,
expertise, and insight to organizations tackling today's urgent
challenges in education, racial equity, social justice, economic
development, and the environment. We earned a platinum rating from
EcoVadis, the leading platform for environmental, social, and
ethical performance ratings for global supply chains, putting us in
the top 1% of all companies. Since our founding in 1973, we have
measured our success by the success of our clients, and we proudly
maintain the highest level of client advocacy in the industry.
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SOURCE Bain & Company