Sustainability has become a strategic priority for private banks. What once started as a marketing message, or a way to meet client expectations, has now become a regulatory obligation.

ESG—short for Environmental, Social, and Governance—is the framework now shaping that obligation. It reflects how an organisation manages its environmental impact, social responsibilities, and internal governance. ESG is increasingly used to assess the long-term sustainability and ethical footprint of financial institutions.

From product transparency to ESG disclosures, banks must be able to show what they offer, track what they do, and report on it clearly. Yet attention still tends to focus on front-end products, not the systems that make ESG compliance possible.

In reality, sustainable finance starts in the back office. And that is where many banks are still underprepared.

ESG is now a regulatory reality

ESG is no longer optional. Across Europe, regulations such as the Sustainable Finance Disclosure Regulation (SFDR) and the Corporate Sustainability Reporting Directive (CSRD) have made sustainability data and clear reporting mandatory.

The pressure is growing worldwide. Supervisors are demanding greater auditability and real-time access to reliable ESG information. In the Netherlands, the regulator has taken a clear and ongoing stance. The AFM consistently emphasises the importance of reliable ESG data and expects financial institutions to disclose sustainability information that is clear, verifiable, and free from greenwashing.

This is no longer just a matter of policy. ESG compliance has become a systems issue—one that most legacy infrastructures are not equipped to handle.

Legacy systems weren’t built for sustainability

Many private banks still rely on ageing core systems that were never built for today’s data demands.

ESG information is often fragmented across systems. Attributes may be tracked manually, inconsistently, or not at all. And when it comes to reporting, many banks still depend on spreadsheets and temporary workarounds. These quick fixes slow processes down, increase risk, and make compliance harder to manage.

As ESG standards continue to evolve, banks need to adapt quickly. But in most legacy environments, change is either costly or impractical.

Sustainable finance needs operational transparency

To comply with ESG regulation, banks must ensure that data is traceable, consistent, and audit-ready. From client risk profiles to the ESG characteristics of individual products, everything must be captured, linked, and available on demand.

This level of transparency is impossible when data is spread across disconnected systems. It requires integrated technology that can track ESG attributes across the entire client and product lifecycle.

ESG reporting should not rely on manual work. It must become part of everyday operations, not an extra layer added afterward.

ESG compliance as a driver of modernisation

The same capabilities that support ESG compliance can also strengthen broader business performance.

Banks no longer have to choose between regulatory readiness and operational control. With the right core systems in place, they can achieve both.

Modern platforms bring together centralised data, flexible reporting, full audit trails, and scalable architecture. ESG requirements can be met today and adapted as they evolve — without having to rebuild everything from scratch.

The opportunity: ESG as a growth lever

ESG is not just a compliance burden. It also creates opportunities for growth.

Sustainability is increasingly important to younger clients and values-driven investors. It creates space for differentiated products, stronger positioning, and entry into emerging markets.

Banks that can demonstrate ESG readiness earn trust, move faster, and position themselves to lead.

Modern infrastructure is what enables that shift. Without it, ESG remains a hurdle. With it, it becomes part of how the bank grows.

ESG starts at the core

Sustainable finance is not just a product strategy. It is a systems strategy.

Without the right foundations, ESG compliance becomes slow, costly, and reactive. With modern core systems, banks can meet today’s requirements and adapt quickly to what comes next.

At Allshare, we believe private banks should be able to modernise at their own pace. That includes building the capabilities to lead in sustainable finance — not just keep up.