Sustainable Banking

Discussion

Peter Blom:

"Sustainable banking has been developing for decades, but it has accelerated rapidly as the financial crisis has taken hold. Why? What makes these apparently unconventional financial institutions more crisis-resistant than their mainstream contemporaries? And can they offer a viable alternative, plotting a path for the future which other banks can follow?

Sustainable banking is becoming a significant force in the world’s financial markets. The ten best known sustainable banks in the developed world have assets of around $30 billion, not including the much wider-reaching, more mainstream institutions like the co-operative banks. These commercially solid, growing banks focus on financing environmental projects, social entrepreneurship and community businesses. Even though they operate in emerging markets, microfinance banks have realized extraordinary growth rates in both volume and profit. The total assets of all microfinance providers are estimated at $50 billion; they serve 150 million people in the developing world.

As the sustainable banking industry has flourished, so have some of the key institutions driving it. Triodos Bank is one. Founded in the Netherlands in 1980, today it has offices in five European countries. Over two decades, the bank has built assets under management of almost $5 billion and grown by 25 per cent per year, delivering a consistent profit. It has almost 10,000 sustainable businesses and projects in its loan book and close to 200,000 customers. Investors, customers and commentators alike are increasingly familiar with this kind of solid growth. Perhaps more surprising, these organizations have been propelled forward by the credit crunch and the turbulence that followed it.

That Triodos has been able to side-step the worst impact of the crisis and prosper despite it, is not a matter of luck. As the core of its banking, Triodos finances sustainable businesses delivering clear social, environmental or cultural benefits. As such, it is directly connected to the real economy, only financing businesses and projects which provide services and products that people need. In essence, Triodos offers basic banking. A decent profit, a strong capital base (15 per cent Bank for International Settlements (BIS)-ratio) and a stable funding base from savers’ deposits are integral parts of our business approach. And we think this straightforward model is the way banking should be." (http://www.ekklesia.co.uk/node/9337)