As environmental, social, and governance (ESG) principles become central to the financial industry, banks are striving to align with a growing list of global and regional regulations. Spearheading initiatives like the Monetary Authority of Singapore (MAS)’s Gprnt, Green Finance Action Plan and the Bank for International Settlements’ (BIS) Project Gaia, regulators are working to integrate ESG standards into financial practices. Yet, the journey towards standardised reporting, authentic sustainability measures, and greenwashing prevention remains fraught with challenges.

In a recent interview, Temenos’ Chief ESG Officer, Kalliopi Chioti, and Business Solutions Director, Frankie Wai, shared insights on how Temenos is assisting banks in navigating these complexities. They discussed the importance of technology in standardising ESG data, facilitating transparent reporting, and providing actionable insights on carbon impact – all vital to fostering real, measurable progress in sustainable finance.

Harmonising ESG standards: Bridging regional and global gaps

Achieving consistency in ESG reporting is a pressing concern for financial institutions as they adapt to varying regional standards. Chioti explained that data standardisation is essential to enable comparability across global markets. “Regulators worldwide are driving towards a more aligned approach,” she notes, citing MAS’s Green Finance Action Plan and the European Union (EU)’s Corporate Sustainability Reporting Directive (CSRD) as examples of rigorous regulatory frameworks aimed at ESG alignment.

One of the challenges is the disparate maturity levels of ESG data across regions. Wai points out that Temenos actively collaborates with initiatives like MAS’s Gprnt, which fosters transparency and provides clear frameworks for data consistency. Chioti added, “Start early, even if the standards are evolving, as aligning early on can ensure a smoother integration of future requirements.”

By partnering with regulatory bodies and leading initiatives such as MAS’s Gprnt, Temenos helps banks implement a more unified, robust ESG data structure that allows for seamless compliance across regions, empowering them to make informed, sustainable decisions.

Preventing greenwashing

With the rise in ESG-focused investment, the issue of greenwashing – where companies exaggerate their environmental efforts – has become a significant concern. Financial institutions must demonstrate credible and verifiable contributions to sustainability, especially as investor scrutiny grows. Chioti emphasised that providing credible data from use of its products and preventing greenwashing is at the core of Temenos’ ESG strategy. “Transparency and credibility in data are essential,” she said. “It’s not about green platitudes but genuine progress backed by data.”

One of Temenos’ key initiatives in this regard involves assessing the decarbonisation potential of its technology solutions. Since 2021, Temenos has been conducting an internal analysis of its cloud-based infrastructure, revealing that leveraging the cloud, modernisation and engineering efficiencies have resulted in 50.2% carbon emission efficiency. In 2024, Temenos conducted an additional analysis of how Temenos clients can decarbonise their own digital footprint by leveraging Temenos SaaS powered by the hyperscalers. The analysis revealed that a leading digital bank in North America achieved sector leading 63% carbon efficiency post migration to Temenos SaaS. Chioti explained, “This data-driven approach allows banks to quantify their sustainability efforts accurately, comply with banking regulation and avoid the pitfalls of greenwashing.”

Temenos’ focus on data transparency extends to partnerships with banks and clients, enabling them to measure and disclose their carbon footprints accurately. By aligning their technology with regulatory expectations and providing detailed assessments, Temenos supports banks in demonstrating authentic ESG progress and ensuring accountability.

Leveraging technology for ESG

Data is central to Temenos’ approach to ESG, providing banks with the tools they need for effective carbon footprint management and real-time ESG reporting. Wai underscored the significance of a consolidated data foundation, enabling banks to streamline ESG reporting and regulatory compliance. “A single data foundation ensures that banks can meet the diverse requirements of global markets while supporting sustainability,” he explained.

Wai added that Temenos’ platform offers predictive analytics that supports banks to proactively manage and reduce their environmental impact. For example, cloud technology reduces energy consumption by optimising data storage and processing, a shift that enables banks to minimise both their operational costs and environmental footprint. “Our digital solutions offer real-time insights into carbon impact and ESG performance,” Wai noted, emphasising how this capability empowers banks to make informed decisions aligned with their sustainability goals.

By digitising ESG data, Temenos also reduces banks’ reliance on manual data entry, a process that often leads to inconsistencies and inefficiencies. With automation and AI-driven insights, banks can ensure data accuracy and avoid greenwashing, while staying aligned with rapidly evolving regulations and reporting standards.

Future of sustainability through technology and partnership

As the financial industry embraces ESG principles, the role of technology and data becomes even more critical. Chioti and Wai emphasised that achieving meaningful, measurable ESG goals requires collaboration with technology partners who can provide the infrastructure, insights, and data transparency needed to meet regulatory demands and investor expectations.

“Digital transformation and sustainability are not mutually exclusive,” said Chioti. “With the right tools and partnerships, banks can achieve a balance that supports both regulatory compliance and genuine progress.” Temenos’ efforts in data standardisation, carbon efficiency, and ESG reporting reflect a commitment to not only supporting financial institutions in meeting their obligations but also enabling them to contribute meaningfully to global sustainability goals. In the ever-evolving landscape of finance, technology will remain pivotal, allowing banks to pursue ESG goals with accountability and transparency.