ESG and Regulation Pressures Weigh Heavy on Financial Sector
More than 70% of senior managers in financial services now view regulatory compliance as one of the top challenges facing their businesses this year, according to a new survey by IT services firm Auxilion and its partner HPE.
The findings highlight growing concern among leaders about the ability of their organizations to keep pace with changing regulations, especially those tied to emerging technologies and sustainability standards. A quarter of respondents said they were not confident their company would meet requirements under the Corporate Sustainability Reporting Directive (CSRD). An equal number also expressed doubts over whether existing regulations around the use of artificial intelligence (AI) in the industry are adequate.
The report sheds light on the increasing role of Environmental, Social, and Governance (ESG) frameworks in shaping business strategies. Two-thirds of respondents believe ESG positively affects financial performance, driven by pressure from investors, boards, and customers, along with internal goals such as risk mitigation and employee satisfaction.
In response, nearly 70% of managers reported undergoing training in ESG and sustainability, signaling a move toward long-term thinking and responsible business practices.
Read More: The Rise of Mandatory ESG Reporting Under CSRD: What Organizations Need to Know
Yet, challenges persist. Regulatory changes are having a direct impact on IT investment plans for more than two-thirds of the firms surveyed. At the same time, a quarter of respondents shared that the current market fails to offer suitable managed services to meet their organisation’s evolving needs.
Director of Strategy, Innovation & Transformation at Auxilion, Eleanor Dempsey, stressed the importance of robust compliance strategies: “There are no loopholes or shortcuts when it comes to addressing governance and compliance. Companies, especially in highly regulated sectors, including financial services, must step up their strategies and investments in this area. As well as training people, that means deploying technologies that support ESG efforts.”
She warned that falling short of regulatory expectations could damage investor and customer trust, risking the long-term growth and performance of the business.
Also Read: The EU Has ‘Fixed’ ESG Reporting. Here Is How
As regulations continue to evolve, firms in the financial services sector will need to stay agile, investing in the right tools and practices to remain compliant while aligning with broader ESG goals.
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Source: Echo.ie
