In partnership with a local climate technology startup, we built an understanding of the struggles faced by financial institutions in their climate reporting efforts and identified ways to streamline the process.

Client

Climate Technology Startup

Industry

Sustainability, Financial Services

Services

Research & Insights, Strategy & Innovation

The challenge

Regulations on sustainable finance have tightened in Singapore and worldwide. With mandatory climate and greenhouse gas disclosures looming for all listed companies, PSYKHE partnered with a climate technology startup to explore how to better meet the needs of major players in the financial industry.

Financial institutions’ Scope 3 carbon emissions are mostly downstream emissions created by organisations within their customer portfolios. To help financial institutions (FIs) that are committed to positive change, PSYKHE partnered with a local startup that offers enterprise carbon reporting software. After understanding the complexities of tracking and calculating these financed emissions, we transformed these pain points into new innovation opportunities for their product roadmap.

The approach

Over 3 weeks, PSYKHE worked with our partner to plan and conduct research fieldwork. We ran in-depth qualitative interviews with decision-makers of sustainability teams across major banks and insurance providers, to discover challenges faced in carbon calculation, carbon tracking and climate strategy formation.

Key insights surfaced about the current struggles of FI sustainability teams.

1. Data collection process is lengthy and convoluted

The collection of financed emissions data is a manual, lengthy process. With no centralised database for carbon emissions in Singapore, FIs struggle to reconcile data points across different sources. Some external vendors do not have emissions data readily available, resulting in the need for tedious desktop research as well as the use of proxy data.

2. Sustainability initiatives are often met with resistance

Emissions data gathering or Environmental, Social and Governance (ESG) risk assessments often face resistance from FIs’ own frontliners as well as their SME clients. Both internal and external stakeholders currently have little incentive to support emissions tracking efforts, seeing it as more chore than opportunity.

3. Emissions data does not translate easily to business strategy

Even after data collection, FIs face difficulties in applying emissions data toward wider business and organisational strategies such as risk assessments. There is often a lack of clarity on how to capitalise on the time and resources invested into mandatory emissions tracking.

Based on our research, PSYKHE created a comprehensive customer journey map outlining FIs’ pain points, needs and motivations when preparing for carbon reporting.

The impact

3

Weeks sprint for rapid discovery and ideation 🔎

18

Defined problem statements 📍

3

Product improvement recommendations ✅

PSYKHE’s end-to-end journey map of financial institutions’ sustainability reporting process yielded 18 opportunity areas, framed as How Might We (HMW) statements, where our partner could enhance their data reporting product to meet FI needs. We also explored potential services and solutions that might ease the process for financial institutions of various maturity levels.

Our work provided greater visibility into the previously opaque carbon emissions reporting process. Beyond a clear understanding of the current challenges faced by sustainability teams, we gained insight into the roles and responsibilities of various stakeholders throughout the data collection journey, as well as the tools that might help expedite and socialise emissions reporting.

Financial institutions who struggle to disclose financed emissions data and stay on top of their net-zero goals can therefore be better supported in streamlining their reporting process.

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