Banks Facing Increasing Pressure to Embed ESG Risk into Core Controls

A senior leader responsible for sustainability risk management at an international bank says it’s imperative that financial institutions embed ESG into existing traditional risk management practices.

Speaking at a CeFPro’s 2025 Risk Evolve conference, the executive told delegates that sustainability is no longer a peripheral theme but a transformative force reshaping risk strategy, client engagement, and enterprise architecture across the sector.

During her session, she reflected on her own experience and noted that the biggest challenge in ESG risk management is the absence of a clear, universally accepted regulatory rulebook. 

Unlike financial crime compliance, which benefits from decades of structured guidance, she said ESG operates in a fluid and evolving environment.

This, in turn, means firms must therefore rely on internal frameworks, strategic clarity, and self-imposed commitments to translate broad sustainability pledges into practical, enforceable risk processes.

A core pillar of her institution’s approach has been the deliberate choice to embed ESG considerations directly into existing governance ecosystems rather than creating separate, siloed mechanisms. 

She emphasized that integrating sustainability requirements into credit systems, non-financial risk controls, and client due diligence workflows is both more scalable and more effective than building entirely new infrastructure.

She highlighted policy as the backbone of this integration effort. Sector-specific commitments, such as coal phase-out timelines, are operationalized through automated classification controls that sift through more than one million client relationships. 

These controls, she says, identify in-scope clients using existing data points and feed into onboarding, periodic review, and transaction monitoring processes.

One of the most innovative developments she described is the adaptation of financial crime infrastructure for ESG screening. 

Traditional negative news screening tools, long used for anti-money laundering purposes, have been repurposed to detect sustainability and reputational risks using external data providers. 

This creates consistency, provides an audit trail, and avoids redundant tooling.