Ask a bank how confident it is in the emissions data behind its SME loan book, and the
honest answer is usually “not very.” Most of that data still comes from surveys —
chased, half-completed, and quietly out of date within a year.
According to the Bank of England’s Climate Biennial Exploratory Scenario, participating
banks reported significant gaps when assessing climate risk across their corporate and
SME lending books, forcing them to rely on proxies and assumptions rather than
primary data. That was several years ago. For most banks, little has changed.
The problem isn’t a lack of effort. It’s that survey-based data collection was never built
for this job.
The Participation Problem
SME sustainability reporting is fragmented, not absent — but surveys assume
engagement most SME customers don’t have time for.
• Response rates on voluntary ESG surveys are typically low, and follow-up
chasing consumes relationship manager time better spent elsewhere
• The SMEs most likely to respond are often the ones already furthest along on
transition data — skewing the picture banks receive
• Even completed surveys go stale fast, since annual or ad hoc collection can’t
keep pace with a live loan book
The result is a financed emissions and transition risk picture built on partial, self-
selected, and quickly outdated inputs — not the kind of foundation regulators,
investors, or internal risk committees expect banks to be working from.
Inconsistency Compounds the Problem
Even where SMEs do respond, the data rarely arrives in a comparable format. One
company answers in tonnes of CO2, another in percentage reductions, another skips
the question altogether.
Under PCAF (Partnership for Carbon Accounting Financials) methodology, banks need
consistent, comparable inputs to calculate financed emissions credibly across a
portfolio. Survey data, gathered piecemeal and inconsistently, makes that comparison
difficult before the analysis has even started.
Carbon accounting tools built for large, listed companies assume willing, capable
participants filling in standardised disclosures. SME lending books don’t work that way,
and forcing the same model onto them produces the same gaps year after year.
The Case for Automated Data Collection
Instead of waiting on SMEs to volunteer transition data, banks can build it from what
already exists — public disclosures, policy documents, certifications and websites —
structured into a consistent, comparable format from day one.
This shifts the burden away from the SME customer entirely. No chasing, no survey
fatigue, no skewed sample of only the most engaged respondents. The picture updates
as public information changes, rather than sitting still for a year between forms.
What This Means for Banking Teams
Sustainability and coverage teams don’t need more surveys sent out — they need a
reliable, standing picture of transition risk across the portfolio that doesn’t depend on
customer goodwill to stay current.
Talk to Our Team
This is the gap the Climate Action platform, developed and deployed by NatWest and
National Australia Bank, was built to close. Built on FourTwoThree’s technology and
TDH’s underlying sustainability intelligence, it replaces survey dependency with
structured, standardised transition data for SME and corporate lending books. Talk to
our team to see how it works for your portfolio.
