How Fifth Third Bank Supports Sustainable Finance

Can you give us a brief introduction to your role and responsibilities at Fifth Third Bank? 

I'm Chief Sustainability Officer at Fifth Third Bank - what we call a super-regional bank. We are about US$215bn asset size.

Our commercial clients are all across the US and our consumer banking footprint is Midwest and Southeast primarily.

Tell us more about how the bank approaches sustainability and how it underpins its strategic direction

Our ethos is that we want to do well by doing good. The word sustainability has evolved over time, but for us it is about operating with ethics and good governance, doing good by the customers and communities and employees, and supporting the economy of the future.

That means focusing on the current, but also being ready for the future, whether it is sustainable transition, resiliency or finance. How do we not only focus and continue to help our customers innovate, do a great service, but also help them thrive in what is to come?

Our approach to sustainability is much broader, but fundamentally it is what you would call good business.

How important is it that then banking sector plays a role in driving the sustainability conversation?

Fundamentally, philosophically, we are all aligned on the broader definition of sustainability.

When it comes to operationalisation, some of the strategy, then it becomes a prioritisation exercise – what is the need of the customers and communities? What is the regulatory environment and where is the opportunity?

We are definitely supporting the sustainable economy, the sustainable transition and the economy of the future. We are supporting our clients on their renewables, transition finance and resiliency finance. We are also focused on what we call place-based economics, with a focus on solving the affordability issue and access to finance.

So we are aligned in terms of execution, prioritisation and strategically. We have realised a lot of business opportunities from helping the clients and communities thrive through these different phases of their life and business.

What about energy affordability, access and resilience? How is Fifth Third Bank having an impact here? 

Sustainability merges well with business when we really understand the drivers for the needs and what may be the opportunity – specifically when it comes to providing financial capital.

Affordability in the energy space, in general even, is becoming a big issue, whether it is housing, whether it is the energy itself, even water.

Resource affordability is also becoming a big issue. We think about solving it by building tools, products and business awareness around what is not only risk reward, but also what is the payback or the ROI for making certain investments.

Whether you are a residential customer or a small business or a large business, we believe that, because the cost of energy or energy inflation has been increasing exponentially, finding solutions which are more local, which are more mid to long term, and which do not come with a lot of operational costs, are really good solutions.

The other piece where we believe there is going to be a significant need is availability of energy itself.

We all know that the growth of the US economy, driven by recent advances in AI, is going to come with a lot of energy demand, and if you look at the energy grid of the US, it is severely under capacity.

So how do we support our clients in what is called distributed energy generation and storage, so that it not only provides affordable energy for the long term, but also provides continuous access to the energy?

And then the last piece I would add is the ever increasing cost of insurance. Again, it goes back to affordability, but it all adds up.

So we are looking at innovative ways for financing or mitigating the increasing cost of insurance.

For businesses, there may be challenges around supply chain continuity: for single family homeowners, it may be around the cost of insurance itself or even the availability of insurance in certain markets.

So we are looking at financing products as well as building products, but also we are looking at how we can participate in activities to build the market for us to introduce these products.

And not one company bank asset manager can do it. It is something that we need to come together and solve, so that we can have an end-to-end solution across the entire value chain.

What about sustainable finance? What proportion of the bank's finances fall under that umbrella?

The definition of sustainable finance itself is evolving for us.

The way we define sustainable finance is really lending that helps our customers, from a residential or a single family to middle market to large businesses – any lending or investment that helps them solve their societal needs as well as finance that helps them build energy affordability or sustainable energy sources.

So for us, the definition of sustainable finance includes a lot of social finance, affordable housing, access to finance, small business lending, access to our workforce development.

All of that is part of our definition of sustainable finance as well as financing of renewable energy, circularity, sustainable bonds or sustainable capital instruments.

Currently we have a goal of US$100bn of sustainable finance that we want to provide to our customers by 2030.

At the end of last year, we already provided about US$45bn in sustainable finance. So it is a fairly ambitious goal for the size of our bank, but we definitely are making good progress.

Can you explain how the bank is having an impact in place-based economic development?

We are a super regional bank, so we are really embedded in communities. That's how we thrive, that's who we provide solutions to. And over the years, we have realised that, while the challenges of the communities are generally similar across the country, the need for solutions and how those can be deployed must consider the regionality, the locality, the demographic mix,economic growth or projection and workforce readiness.

About four or five years ago, we piloted the Neighbourhood Programme, where we decided that, rather than stretching ourselves thin, we will bring the full force of all the solutions of the bank and start deploying them at community levels.

And eventually we ended up calling it place-based economic development. But the idea is to identify the local needs of the communities and bring the solutions – financial capital, social capital, political capital – with the mindset of creating economic growth for those communities.

So it is more of a deployment mechanism to solve the local needs and the challenges and provide solutions which are specific to the needs of the communities.

The five pillars of our place-based solution toolkit are: affordable housing solutions; small business lending; energy and infrastructure solutions; workforce development solutions and access to finance.

These are the five big tools in our toolkits that we bring from the bank to solve the needs of different communities.