Sustainable banking: changing mindsets

The global financial crisis has helped sustainable banks to promote their model to politicians, regulators and other banks and a group of them are currently here talking to Australia’s regulators.

Peter Blom, chairman of the 25-member Global Alliance for Banking on Values (GABV) and chief executive officer of the Netherlands-based Triodos Bank, the world’s leading sustainable bank, is in Australia this week for GABV’s annual meeting which is being hosted by bankmecu in Melbourne.

During the week, GABV had a series of meetings with regulators and financial sector representatives to introduce GABV and the concept of social and sustainable banking to Australia’s financial sector, government, regulators and not-for-profit organisations.

The week started with an informal lunch with the board of GABV and representatives from the regulators.

“There was a free exchange of what is going on, how banking is changing and the regulatory context,” said Blom, in the final of a series of three articles around GABV’s annual meeting.

One of the changes discussed is the growing importance of culture and behaviour. Blom shared with Australia’s regulators how their counterparts in the Netherlands had hired a team of psychologists, recognising that regulation isn’t just about rules but the quality of the discussions that regulators have with banks.

Changing mindset


GABV’s members have no tick-the-boxes mentality around sustainability. Their starting point is do they add value and this shapes their approach to assessing loan applications. For example, when considering a Cambodian fisherman’s request for a loan, the bank told the customer that fishing with nets that didn’t allow small fish to escape wasn’t a smart approach.

“There isn’t one solution but learning from each other in practical ways,” said Blom.

Other banks are beginning to take notice. In the past when mainstream banks thought about environmental and social issues, it was in the context of marketing and reputation. Increasingly though they’re thinking about the risk to their business that arises from banking companies that are adding to the world’s big problems like climate change, food shortages and pollution.

It used to be a defensive approach, namely that if a bank failed to think about the environmental impact, it was seen as being partly responsible. Now however banks are assessing loans in the light of if they don’t think about those social and environmental consequences, they’re exposing their business to additional risks. “That is a major step forward,” said Blom.

The sustainable banks are a diverse group with GABV’s members from emerging economies having particular expertise in areas like social entrepreneur finance and improving financial inclusion through microfinance.

European banks’ strength lies in sustainability with products such as discount rate mortgages for housing that is assessed to be sustainable. In fact the strong demand for things like renewable energy, recyclable products and recycling services makes this area one of the few growth opportunities that European banks have, according to Blom.

Categories
Banking
Tags:
Global Alliance for Banking on Values, GABV, Triodos Bank, sustainable, bankmecu, environment, social issues
Author:
Marion Williams, mwilliams@financialpublications.com.au
Article Posted:
March 07, 2014

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