Questionnaires are only useful if the bank already knows what it is looking for and why. Without a prior materiality framework, they produce volume rather than insight. The institution collects policies, targets, emissions figures, certifications, governance statements and other data points, but lacks a robust basis for determining which of these are actually relevant for prudential assessment.

That creates three problems.

The first is irrelevance. Banks ask for information that sounds useful in general ESG discourse but has weak connection to credit risk in the specific context of the debtor. This adds friction for the client and clutter for the bank.

The second is inconsistency. Different sectors and activities have different sustainability risk materiality. If the same or similar questionnaires are used too broadly, the bank either misses important sector-specific risk drivers or over-collects low-value information from debtors for whom the issue is not material.

The third is false confidence. Once a bank has built an information collection process, it can appear to be making progress. But data collection is not the same as risk assessment. A well-organised spreadsheet of borrower responses does not mean the bank has understood sustainability risk.

The correct sequence is the reverse.

The bank should first determine which sustainability risk topics are financially material for each relevant segment of the portfolio. That requires a structured framework covering sector exposure, business activity, supply-chain profile and relevant transmission channels into financial risk. Only when this logic exists does it make sense to ask borrowers targeted questions.

At that point, the quality of the questionnaire changes completely.

Instead of long generic requests, the bank can ask precise questions tied to specific risk hypotheses. Instead of gathering broad ESG information, it can focus on what is relevant for risk assessment. Instead of treating all debtors similarly, it can differentiate based on actual risk materiality.

That improves several things at once. It reduces noise. It lowers burden on clients. It improves comparability. And it gives the credit function information that can actually be used in the sustainability risk assessment.

That is a much higher standard than most questionnaires currently meet.

Banks that continue to start with questionnaires are likely to spend significant time and budget collecting information that cannot support a credible sustainability risk research process. Banks that begin with materiality and risk assessment logic will ask fewer questions, but better ones.

The difference is not administrative efficiency alone. It is the difference between information gathering and real assessment capability.

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