ESG and the future of banking: Laboral Kutxa
As environmental, social, and governance (ESG) factors continue to reshape the financial sector, Laboral Kutxa stands out with a cooperative model grounded in long-term, community-centered values. Javier Alli Vierge, Coordinator of Sustainability and Quality, explains how the Basque credit union balances social impact with financial performance, navigates the evolving ESG data landscape, and supports a just transition for clients—all while staying true to its cooperative roots
As environmental, social, and governance (ESG) factors continue to reshape the financial sector, Laboral Kutxa stands out with a cooperative model grounded in long-term, community-centered values. Javier Alli Vierge, Coordinator of Sustainability and Quality, explains how the Basque credit union balances social impact with financial performance, navigates the evolving ESG data landscape, and supports a just transition for clients—all while staying true to its cooperative roots.
Can you provide an overview of your institution and share the key ways ESG is integrated into your long-term strategy?
Laboral Kutxa was founded by cooperatives in Mondragón in 1959 and has always operated as a credit union with a strong social purpose. Our mission is to foster prosperous, equitable, and sustainable communities, while continuing to grow our supportive, cooperative, and co-responsible culture.
How do you balance ESG goals with financial performance while ensuring your initiatives drive real impact beyond just meeting compliance?
We joined the Global Alliance for Banking on Values (GABV) because we are committed to managing our credit union based on the triple bottom line: people, planet, and profit. While there is always room for improvement, pure financial performance has never been our sole focus.
Our entire Steering Committee also serves on the Sustainability Committee, reflecting how deeply ESG principles are embedded in our governance. As a cooperative, we dedicate 25% of our profits to high-impact initiatives within our community, such as supporting other cooperatives, the University of Mondragón, and NGOs.
How is your bank evolving in terms of using ESG data to guide decision-making, particularly in areas like lending, risk management, and investments?
As most of our business is currently mortgage-related, we’ve begun prioritizing properties with strong energy performance—offering better rates and tailored products to incentivize these choices. At the same time, we support the transition of less efficient properties by promoting energy refurbishment projects. When we develop real estate ourselves, we place strong emphasis on energy efficiency.
For business and corporate clients, we’ve set clear limits on the risk we’re willing to take on in sensitive sectors. However, rather than simply avoiding these sectors, we actively explore opportunities that can deliver positive environmental outcomes. Our approach is to stay close to our clients and understand their business models deeply. Increasingly, larger companies are approaching us to sign sustainability-linked products—often driven by pressure from their own stakeholders.
In an era of heightened scrutiny, how do you ensure your bank’s ESG initiatives are creating tangible, lasting impact rather than merely fulfilling compliance requirements?
Our ESG initiatives are not driven by regulatory requirements—they reflect who we are. We remain committed to doing our best to reduce our carbon footprint, promote a circular economy, support renewable energy and energy efficiency. Topics like education, research and development, healthcare, gender equality, and social impact have always been central to our mission.
We don’t claim to be environmental experts, but we are deeply rooted in our community and guided by a long-term vision. At Laboral Kutxa, current employees are the transitional owners of the institution. Our goal is to leave behind a stronger Laboral Kutxa, a healthier planet, and a more equitable society for future generations.
How are emerging technologies like AI and fintech impacting the ESG role as such—particularly in areas like data management, portfolio decarbonization, customer evaluation, and reporting?
AI and fintech are rapidly advancing in areas such as data analytics, treasury, investment management, payments, and business development. However, their direct impact on our ESG work has been limited so far. Given that our portfolio already has a relatively low carbon footprint and that we are a smaller institution, these technologies have not yet played a significant role.
That said, we are actively learning and exploring how we can apply innovations from other areas of the bank to strengthen our ESG efforts. As a cooperative bank, continuous improvement and shared learning are central to how we operate.
How is your institution approaching transition finance—particularly when supporting carbon-intensive sectors on their path to decarbonization? What frameworks or tools guide your decision-making in these cases?
As I mentioned, our portfolio is relatively low in carbon compared to peers or larger banks. Supporting housing rehabilitation is one of the most obvious actions for us. In the business and corporate space, promoting renewable energy projects and reducing reliance on fossil fuels is a key focus. That said, each sector—and even each client—has its own context, needs, regulations, taxonomies, and market dynamics. That’s why we work with them on a case-by-case basis. Having a clear ESG strategy and a decarbonization plan is always a good starting point.
Looking ahead to 2030, what major trends or regulatory shifts do you anticipate will influence ESG practices in banking, and how is Laboral Kutxa preparing for them?
CSRD and broader regulatory streamlining are gradually taking hold, particularly across the Eurozone. However, ESG is increasingly intertwined with geopolitics, which could lead to new tariff tensions, more frequent extreme climate events, and even climate-related migration.
At Laboral Kutxa, we will continue to monitor environmental and climate risks closely, striving to understand and mitigate them while staying committed to serving our clients and communities. Ideally, the EU should align its regulatory frameworks and coordinate with other global economic powers to help minimize the broader social impact of climate change.
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