The right strategy might look different for each institution, offering far more flexibility and strategic options than initially apparent. 

Navigating the complexities of Environmental, Social, and Governance (ESG) strategies presents both challenges and opportunities for banks. With regulatory deadlines looming and the potential for significant revenue, the pressure to integrate robust ESG data solutions is intense. The strategic decision of whether to buy, build, or combine both approaches for ESG technology becomes crucial for banks. This article explores the intricacies of ESG technology choices in the banking sector, offering insights into leveraging these decisions for sustainable growth and compliance. 

Sustainable is not always simple

Despite the significant business potential within the ESG sector, banks find themselves grappling with the challenge of effectively scaling their ESG initiatives. This struggle primarily stems from the high complexity and cost of ESG data. This is coupled with the fragmented nature of data sources and systems. Furthermore, the regulatory landscape is rapidly evolving, demanding constant adaptation, yet the market offers limited robust ESG data solutions. This complexity is exacerbated by manual processes and scattered, incomplete data sets, making it difficult for banks to establish a solid ESG data and technology foundation. 
Redefining the ESG landscape within financial institutions needs a strategic evolution from perceiving it as merely a cost center to leveraging it as a vital profit center. This shift is underpinned by adopting advanced technology solutions that replace traditional, manual efforts and Excel-based processes with an integrated, automated ESG tech foundation. This solution can not only streamline reporting but also propel institutions to the forefront of sustainable finance.  

ESG transformation roadmap 

Employing a structured approach akin to Maslow’s hierarchy, the ESG journey begins with ensuring compliance and effective risk management through ‘Data & Regulation’. It then progresses to ‘ESG Strategy/Portfolio Management’, aiming for net-zero emissions. And it ultimately advances to ‘Business Opportunities’, integrating ESG into core operations to drive profitability.  

To enable the transition from cost to profit centers, banks must rely on ESG technology that not only fits seamlessly into their current operations but also is adaptable to future changes.

This adherence to our motto, ‘do it once, but do it right,’ is crucial in choosing solutions that offer long-term viability over quick fixes.

The solutions that can support the full scope of ESG transformation and enable organizations to identify and capitalize on data-driven opportunities for sustainable growth have a few key characteristics. Firstly, they need flexibility to move with the market and continuous enhancements with regulatory and technology updates. Secondly, the solution needs to be integrated into the bank’s existing infrastructure to ensure IT security.  

Buy or build?

The strategic decision between buying third-party solutions and building in-house platforms is pivotal. Each option presents distinct benefits and challenges that can significantly influence an institution’s ESG trajectory. By aligning with our guiding motto to ‘do it once, but do it right,’ organizations can ensure they are selecting the most sustainable and effective solutions from the start, thus avoiding costly reiterations. This examination lays the groundwork for our recommendations, by aligning with either the ‘Taker’, ‘Shaper’ or ‘Maker’ models, organizations can effectively navigate the complexities of ESG reporting and strategy, leveraging the insights and technology that best fit their unique needs and goals. 

Buying Third-Party Solutions  


  • Regulatory Alignment: Third-party solutions often come pre-aligned with existing regulations, reducing the compliance burden on organizations. 
  • Rapid Deployment: The allure of third-party solutions lies in their swift implementation. Organizations can quickly gain access to new technology, accelerating their ESG initiatives. 
  • Cost Efficiency: Choosing third-party platforms usually offers lower upfront costs, leading to a lower Total Cost of Ownership (TCO). This approach provides predictable expenses and long-term cost savings, streamlining budgeting and reducing maintenance burdens. 
  • Technological Advancements: Without the need for in-house development, organizations can still tap into the latest technological innovations, staying ahead in the ESG arena. 
  • Scalability: Designed by seasoned vendors, these solutions easily grow with your organization, eliminating the need for constant platform reinvestment. 
  • Reliable Support: Vendors offer ongoing support and updates, ensuring that the ESG management system evolves alongside technological and regulatory changes.


  • Customization Limits: While adaptable, third-party solutions may not meet every niche requirement or fit into unique organizational processes seamlessly. 
  • Vendor Dependence: Relying on vendors for critical updates and support might limit an organization’s flexibility in the long term. 
  • Integration Efforts: Marrying third-party platforms with existing systems can be a complex venture, demanding additional resources. 
  • Regulations are still in flux: With regulations still being finalized such as banking-specific guidance instead of cross-sector guidance, a software purchase might feel premature. 

Building In-House Platforms  


  • Tailored Customization: Building internally offers unmatched customization. Solutions can be meticulously designed to align with specific organizational needs and strategies. 
  • Complete Control: Organizations enjoy full authority over the development, deployment, and evolution of their platforms, allowing for agile responses to shifts in strategy or the market. 
  • Seamless Integration: In-house platforms can be crafted to integrate flawlessly with current systems, ensuring operational harmony. 


  • Substantial Investment: The initial outlay of resources, time, and talent for in-house development is significant, presenting a steep entry barrier. 
  • Maintenance Responsibility: The onus of ongoing platform maintenance and updates falls entirely on the organization, requiring a sustained commitment. 
  • Demanding Resource Allocation: A dedicated development team is a must, potentially diverting focus and resources from other key initiatives. 
  • Obsolescence Risk: The fast-paced nature of technology and regulation means in-house solutions may quickly become outdated. This necessitates continuous investment to remain relevant.

Introducing the Taker, Shaper, Maker Model

Making buy vs. build decisions needs individual assessments.  Typically, use cases adhering to established frameworks and regulatory demands encourage purchasing solutions. While more strategic and distinct needs necessitate tailored in-house development. In ESG for banking, we identified 20+ use cases ranging from regulatory reporting (generally accepted frameworks) to establishing green supply chain finance programs (individual). However, the view may not be so black and white. Companies can also choose to shape their own ESG solution by combining third-party frameworks and their own technology. 

This is what we call the Taker, Shaper, Maker approach.

Considering the rapidly evolving ESG landscape, most institutions prefer to adopt the “Taker” and/or “Shaper” models. This strategy allows institutions to benefit from third-party solutions for their speed and efficiency and embraces the flexibility and innovation potential inherent in the “Shaper” model. 

The Taker-model  

The Taker-model is ideal for organizations that aim to quickly align with ESG regulatory requirements without the extensive costs and time associated with custom-built solutions. This model suits institutions working with restrictive budgets or those that already have some ESG solutions in place and are looking to supplement these tools to meet specific regulatory needs. By adopting off-the-shelf ESG technology solutions, banks can efficiently transition from manual, Excel-based processes to more sophisticated systems that offer better data visualization and audit trails, thus ticking the regulatory compliance box effectively and affordably.

The Taker model offers efficiency and cost-effectiveness. However it may present drawbacks such as less flexibility to adapt to unique organizational needs and potential concerns regarding data security. This is because reliance on third-party solutions can sometimes limit control over sensitive ESG information. 

The Shaper model  

 Adopting the ‘Shaper’ model, our SAP Fioneer ESG KPI Solution lays a robust foundation for ESG data management. This model excels in customization and co-innovation, closely aligning with our clients’ unique sustainability goals. This partnership-driven model facilitates a hands-on approach to developing ESG solutions that are not only tailored to an organization’s specific needs but also integrated with global sustainability best practices. 

Shaper in practice 

Using this methodology, we have successfully guided numerous clients through their sustainability journeys. For instance, we have enabled banks to enhance their ESG reporting by not only focusing on the seven asset classes recommended by the Partnership for Carbon Accounting Financials (PCAF) but also by venturing into new sectors. This includes supporting a mid-size German bank with its shipping portfolio and assisting a global agricultural bank in refining their reporting and steering their portfolio strategy. These banks have leveraged self-calculated emission factors and addressed the intricacies of structured finance within their portfolios. This comprehensive approach highlights our dedication to assisting clients in navigating the complexities of ESG reporting. Thus, we ensure they remain at the forefront of a dynamic regulatory landscape and contribute significantly to global sustainability objectives.  

The Maker-model 

In the realm of ESG technology for banks, the ‘Maker’ model is reserved for highly specialized scenarios where unique, strategic business needs cannot be met through existing solutions. This model involves creating bespoke platforms. These platforms, while offering unparalleled customization and alignment with specific organizational goals, comes with substantial challenges. These include significant investments in time, expertise, and financial resources. Building from the ground up is a substantial commitment that should be undertaken only when the proprietary advantages clearly outweigh the considerable costs. And when other models like ‘Taker’ and ‘Shaper’ cannot adequately address the needs. In most cases, leveraging and customizing existing technologies through the ‘Shaper’ model will provide the strategic agility needed without the prohibitive costs of the ‘Maker’ model.

Final Thoughts 

Reflecting on the lessons from digital transformation in the banking sector, one thing is clear. Navigating ESG data management requires careful strategic planning and collaboration. As organizations evaluate their goals, resources, and the broader sustainability landscape, they must make informed decisions to ‘do it once but do it right.’ This ensures that the role they choose — Taker, Shaper, or Maker — leads to durable and scalable solutions that align with their long-term objectives. 

While the decision may seem binary — buy or build — the Shaper approach demonstrates that combining elements of both strategies can lead to rapid implementation, enhanced flexibility, and significant growth through ESG. This is where agile solutions, like SAP Fioneer’s ESG KPI Engine, can supercharge ESG efforts – addressing today’s obstacles and proactively opening future opportunities.

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