Sustainable banking:

 For the past several years there have been books and articles written about integrating the concept of sustainability into our financial systems, particularly banking.  There have been two main thrusts that banks have taken.

 One is to green their everyday operations by instituting recycling programs, energy efficiency, cutting waste, etc. and, at the same time, demonstrating social responsibility in the local community with charitable donations, improved human resources practices, and support for local cultural events. 

 The second strategy and one that has the power to influence business on a large scale, is to integrate sustainability into core business practices.  This kind of commitment is transparent in a bank’s mission statement, and product design and strategies.  Examples involve melding sustainability issues into a bank’s lending practices, such as providing access to capital for green businesses, or including environmental issues in lending and investing policies.

 Although banks have been slow to adapt sustainability in their practices, they’ve discovered that going green is good business.  It lessens their risk of environmental liability and because of this it has caused banks to create sustainability guidelines in their lending practices.

 An example of a bank that has embraced sustainability in a big way is Shore Bank Pacific in Washington State, whose motto is “Let’s change the world.”  They have developed a sophisticated, multilevel evaluation and monitoring of businesses and their level of sustainability. They call this “The Natural Step.” Level one is outlined on their website.  On a scale of zero to three, zero being no change, and three being the highest level of sustainability, they evaluate businesses in several areas.  First is on energy, resources, land, and water conservation. Second is on community issues, such as working conditions, community housing and other necessities, quality of life and education and a risk assessment of the economy.

 Let’s just look at that last one for a minute:  economic risk assessment.  Under zero are listed the following:  poor management skills, high turnover, wealth and leadership taken elsewhere, no new facilities, all imported goods and services, no desire to grow businesses and large franchised chain stores.  Contrast that with a sustainable model:  varied complementary management, multiple skills and review sources, businesses that review new ideas, goods and services purchased locally as much as possible, well equipped for business expansion, and grows local businesses and teaches entrepreneurship.

Shore Bank Pacific applies sustainability criteria to every customer, as you can see in the following statement from their website:

 “We judge ourselves on a ‘triple bottom line’ philosophy, and expect our customers to do the same.  We created and use a sustainability evaluation system to measure each borrower’s impact on the community, conservation and economy.  To that end, we provide consulting services relative to the individual activities of our customer, as well as provide other information that may be useful.”

Can you feel the difference in the kind of local community a bank using a sustainability model can create?

So what is this to do with us here in northern New York?

 I’m of the firm conviction that we can vote with our dollars, not only with our purchasing decisions, but also with our banking and investing decisions.  Banking with a local community bank or credit union keeps money in the local economy.  Lending decisions are made by people who live in our community and who understand the unique aspects of our local economy.  Leadership also comes from the local area, again from those who understand local conditions.  Community financial institutions tend to take a long-term view of the effect their financial decisions have on the local area.  Both community banks and credit unions are insured, banks by the FDIC, and credit unions by NCUA.

 So how is your bank or credit union doing? 

 Check your bank’s or credit union’s website.  If you don’t see any reference to sustainability, call and make an appointment with an officer of the bank or credit union to discuss these issues and to find out where they stand.  Let them know you support a sustainability effort on their part.  Put your money where your values are.

 Your turn:  What are you thoughts about sustainable banking?

References and inspirations:

www.eco-bank.com The website for Shore Pacific Bank.  It’s worthwhile reading their philosophy to gain a better understanding about sustainable banking.

www.cleanerproduction.com A collection of 400 articles on how to run a more sustainable business available on a single CD.

Sustainable Banking: The Greening of Finance by Marcel Jeucken, Leon Klinkers, Jan Japp Bouma, and Deloitte & Touche.

Next week:  “Food, Inc.”