There’s a moment many bank risk teams know well. A concern is flagged about a borrower. The portfolio team pulls up the file. The most recent resilience data they hold on that company? Collected at onboarding. Eighteen months ago. Via a form the client half-filled in.
This is not a niche problem. It is a structural one — and it is quietly becoming one of the most significant gaps in commercial banking risk management.
The snapshot problem
For decades, collecting information at onboarding and refreshing it periodically made sense. For financial data, that still mostly holds. But for transition risk, physical climate risk, and operational resilience, a periodic snapshot is functionally useless.
A company’s exposure can shift materially in months. A manufacturer who looked relatively low-risk eighteen months ago may now face rising compliance costs under UK and EU carbon pricing rules. A retail borrower may be operating in premises with serious flood exposure only recently identified in updated Environment Agency mapping. None of that shows up in an onboarding form.
Regulators are asking questions banks can’t yet answer
The FCA’s SDR requirements and the continued march of CSRD across Europe mean banks face growing obligations to demonstrate they understand the transition and climate risk embedded in their lending portfolios — not just for large corporates, but across their entire SME book.
The problem is that SMEs don’t publish structured risk or resilience data. They’re not required to. They don’t have sustainability teams. And the information banks hold on them is, as a result, inconsistent, non-comparable, and quickly stale. Almost all of the transition and climate risk in a typical SME-focused bank’s portfolio sits in a Data Gap.
Closing the Data Gap
This is exactly what the Climate Action Platform, developed and deployed by NatWest and National Australia Bank, is designed to do. Rather than asking SME customers to report data cold, the platform gives them something valuable first: the tools to help understand and collect sustainability data with ease, which can then be used for lending processes.
The result is engagement that actually works. SMEs participate because there’s something in it for them. And when they do, the bank receives emissions and sustainability data, including financed emissions, that is structured, comparable, and ready for regulatory reporting.
Banks that solve the Data Gap by giving SMEs a reason to share data rather than demanding it will be better positioned for regulatory scrutiny, transition finance eligibility, and long-term customer retention. Static onboarding data only got us this far. It won’t get us much further.
The Disruption House works with banks to close the SME Data Gap. To find out more about the Climate Action Platform, get in touch.
