Harnessing AI to accelerate climate action in financial services

At COP28, accelerating the scale and deployment of finance across sectors continues to be a high priority to drive climate action. In the COP28 President’s letter to all parties, Dr. Sultan Ahmed Al Jaber stated that “Finance is a critical enabler of climate change.” The good news is the financial services sector is stepping up in its role to accelerate industry decarbonisation and find innovative financing solutions for issues like climate risk, water & food stress and nature loss.

Companies like HSBC and ING have made massive commitments toward providing access to sustainable financing and investments over the past few years, including HSBC’s commitment of $750 million to $1 trillion by 2030 and most recently $600 million from ING and the European Investment Bank to help fund climate transition initiatives.

Working with customers in Europe, Middle East and Africa, we are keenly aware of this impact challenge and how Google Cloud can help to solve for climate change with technology. Specifically, we’ve focused on how AI and data can help companies unlock the capabilities they need to meet their climate commitments.

Recently, our AI capabilities have exploded with the rise of generative AI and large language models (LLMs), putting enhanced powers of data aggregation and analysis into our customers’ hands. Using natural language to ask questions of your data will become the new normal, and we expect that this will be key to unlocking new innovations in the future. Two stories from European banking customers help illustrate this.

The first is HSBC. Noel Quinn, CEO has said they are “committed to the transition to net zero.” HSBC has long been innovating using Google Cloud technology for their customers. One example is HSBC’s risk advisory solution built on Google Cloud. This project helps their fixed-income traders improve their what-if simulations and their ability to service their customers in the context of climate impact. HSBC uses this technology as a reflection of their philosophy that sustainability and climate risk are no longer isolated categories within a business. Rather, they are a part of every person’s job.

Similarly, ING has built a solution that generates early warning signals related to client behavior for their wholesale banking portfolio managers in near real-time, based on external data, (e.g. world-wide news, climate risk, ESG impact, human rights abuses, bankruptcy, fraud, etc). What is compelling about this solution is the sheer volume of data that is processed daily for these portfolio managers using AI. Climate impact cuts across all aspects of company operations, and this solution helps ING’s commercial banking division surface relevant insights to act upon.

Companies must urgently respond to the climate agenda - both to decarbonise but also act on the climate risks to their business. AI and cloud technologies will be critical in bringing business insights for targeted action and unlocking new sources of value.

To learn more about how we help companies solve their sustainability challenges using data and AI, in the finance sector and others, please visit our site, or connect with us on LinkedIn.

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