Energy Transition for Banks: A Dual Challenge of Energy Efficiency, Both In-House and for Clients

Regulatory context and responsibility of banks in the energy transition

The energy transition has become imperative for all sectors. In Europe, the Green Deal and the targets of reducing CO2 emissions by 55% by 2030 impose strict measures on companies, including banks. They must not only ensure their own energy efficiency but also encourage their customers to adopt more sustainable practices. 

European banks are also subject to standards such as the EU Green Taxonomy, which determines which investments are considered sustainable. These rules require increased transparency of investments in supporting green projects. 

Moreover, extra-financial reporting obligations within the framework of Corporate Social Responsibility (CSR), especially the Corporate Sustainability Reporting Directive (CSRD), require banks to publish information on the banks’ sustainable development practices, including CO2 emissions linked to their energy consumption. 

To support these efforts, the United Nations created the Net-Zero Banking Alliance (NZBA). This initiative commits banks to achieve carbon neutrality by 2050 by aligning their investments and loans with this goal. Banks must reduce their own energy consumption and encourage both individual and corporate clients to adopt sustainable practices, particularly through financing. A concrete example of NZBA action is the commitment by some banks to stop funding new fossil fuel projects and increase financial support for renewable energy initiatives. 

Regarding their own buildings, French banks are also subject to the “Décret Tertiaire” (the French tertiary sector decree), which requires the calculation and communication to the ADEME (French Environment Agency) of the energy consumption of buildings over 1000m², as well as a consumption reduction plan. This particularly affects their office buildings and datacenters. 

In addition, some energy regulations imposed on other sectors also impact banks. This is the case, for example, in France with regulations prohibiting the rental of energy-intensive housing, which has a direct effect on the solvency of certain banking establishments' customers. Indeed, an owner of a poorly energy-rated home could see his ability to rent or sell his property diminish, thus increasing the risk for banks. 

Conversely, regulations also offer new opportunities for banks. Indeed, the financing needs for the energy transition of companies and individuals represent a new branch of activity for banking institutions. Thereby, they are developing new products and services adapted to energy renovation projects for buildings or to the financing of new equipment. 

Finally, the widespread deployment of smart meters throughout Europe allows banks to support their customers in managing their energy consumption, helping them to better understand and optimize their energy expenditure. 

Energy consumption in the banking sector: situation report and key challenges

While banks may not be the largest energy consumers compared to other industries, their consumption is still significant. A 2021 study from the Bank of England shows that the average bank agency uses about 350 kWh per m² annually, which can account for up to 20% of a bank's operating expenses.  

The main energy consumption items in the banking sector are: 

• Bank agencies and their infrastructure: lighting, air conditioning, heating. 
• Datacenters: these digital infrastructures, essential to the operation of modern banks, are very energy intensive. 

These two types of buildings are very different. Bank agencies consume relatively little energy but are often numerous across the territory, leading to significant overall costs. Conversely, datacenters are very localized but also very energy-intensive, particularly to ensure the cooling of computer servers. 

Banks must therefore identify appropriate strategies for reducing energy consumption that are tailored to these two types of buildings. This especially involves calculating, monitoring ans improving the energy efficiency of their buildings and infrastructure and better managing their consumption. 

Energy optimization of bank agencies and datacenters

Banks have several ways to optimize the energy management of their agencies and datacenters. The challenge is to reduce their consumption while guaranteeing the comfort and security of the premises. 

• Modernization of agencies: starting from a comprehensive energy diagnostic, many bank agencies in Europe have already performed energy renovation work by replacing energy-consuming equipment with more efficient solutions such as LED lighting and installing smart thermostats. Thermal insulation of buildings, often neglected, is also an important area for reducing energy losses. 
• Green Datacenters: the transition to green datacenters with the adoption of cloud computing services powered by renewable energy can also reduce the carbon footprint of banks. By optimizing the use of servers and using virtualization solutions, it is possible to reduce the energy consumption of these infrastructures while ensuring the continuity of digital services. 
• Monitoring and managing energy consumption: by having a better understanding of the energy consumed at each moment, in each building and for each use (heating and air conditioning, lighting, hot water, IT equipment, etc.), banks can easily identify energy-saving areas and thus modify their habits and change and manage their equipment to reduce their energy bills. 

These optimizations are part of a global energy management approach, contributing to the reduction of banks' operational costs and the improvement of their energy performance. 

The ISO 50001 standard ensures the implementation of an Energy Management System to achieve these savings. Datanumia's iBoard contributes to this approach by providing a complete view of the energy consumption of buildings and facilitating the implementation of an action plan. 

Supporting customers in the energy transition: tools and incentives

In addition to reducing their own consumption, banks can also support their customers in reducing and better managing their energy consumption. There are many levers for action: 

• Loans for energy renovation: Many banks offer advantageous financing to encourage energy renovation work, such as insulation or replacement of doors and windows. These offers allow companies and individuals to improve the energy performance of their buildings while increasing the value of their property.  
• In the Netherlands and Germany, incentives such as green mortgages encourage customers to carry out energy efficiency works by giving them access to favorable rates, a model that banks in other European countries could follow to support their customers' energy transition. 
• Electrification of uses: Banks can also offer financing solutions for the acquisition of electric vehicles, the installation of charging stations at home and in offices, or the installation of solar panels, thereby reducing their customers' energy bills and CO2 emissions. 

European banks are increasingly encouraged to integrate these tools into their offers to provide a response to the financing difficulties of individuals and businesses and help them cope with rising energy prices. 

Artificial intelligence as a catalyst to support the energy transition

Artificial intelligence (AI) and machine learning can be a game-changer for banks in guiding the energy transition. Indeed, with solutions such as Datanumia's AI-based calculation engine, banks could provide personalized recommendations to their customers, consistent with their budget and investment capacity, guiding them as effectively as possible based on their financial means to help reduce their energy bills. 

Our engine analyzes consumption data, environmental factors such as weather, and other parameters to provide personalized recommendations to individuals. By using this technology, banks could: 

• Reduce their customers' energy bills. 
• Improve the energy performance of real estate. 
• Lower their customers’ CO2 emissions, thereby contributing to the fight against climate change. 
• Recommend financing solutions relevant to their clients' energy needs and investment capacities. 

This tool enables the estimation of potential savings in terms of kWh, euros and CO2 for each recommended action. It is fully in line with the goals of banks seeking to be players in the sustainable energy transition. 

Conclusion

The banking sector plays a key role in the energy transition. By reducing their own consumption and supporting their clients in their efforts to become more energy efficient, banks can have a major impact. The use of innovative technologies such as AI, technologic partnerships and better exploitation of data will enable banks to position themselves as leaders in the global energy transition. By adopting these strategies, banks not only contribute to the reduction of CO2 emissions, but also to the improvement of the value of real estate assets and better environmental performance of their clients. 

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