Wednesday, 21 August 2013
Banking on the future
"Triodos is a global pioneer of sustainable banking. Our mission is to make money work for positive social, environmental and cultural change.
"More specifically, we are in business to help create a society that protects and promotes the quality of life of all its members; to enable individuals, organisations and businesses to use their money in ways that benefit people and the environment and promote sustainable development; and to provide our customers with innovative financial products and high quality service."
All that sounds very noble. But what does it mean?
Now is not a good time to be a banker. "We may have the liberty to do certain things, but are they morally correct," said Neil Hewitt. "So welcome to sustainable banking." This is about being conscious of the environmental and social impact money, transparency, linking savers and investors, focussing on the needs of future generations as well as our own.
Triodos lends deposits on for social benefit. It originated 30 years ago in the Netherlands, out of a banking crisis. The bank now has over 700 co-workers (as they are called), having grown significantly. It has been in the UK for 17 years, and five in Scotland. It took over Mercury Provident in Brighton, moving to Bristol (not London).
The aim of the organisation is to help people, both individually and collectively, to become much more aware of how money is generated and used.
The projects Triodos supports have to environmentally and socially beneficial, but also financially sustainable: that the business is there not only for today, but for tomorrow.
"Transparency is our leading way of ensuring that depositors, our customers, know where the money goes," Neil declared. All the information about the projects is published. There is no hidden funding of armaments or other negative industries.
Excellence and credibility is necessary to solidify people's relationship with the bank, because they are not just buying into values but also entrusting their resources. The management of a business that seeks to be on the leading edge has to be entrepreneurial, but also informed: about what political and funding changes are driving things like healthcare, for example.
This means that policies and products can be effective, but also support innovators in the fields where investment is going on.
Changes in the Charities Act have had a positive impact on deposit range, matching the need for a financial return with other aims.
Organic farming and ethical trading businesses (Cafe Direct, River Cottage, etc.) are an important part of what Triodos supports in the agricultural and commercial field.
Hydro, solar and other renewable energy resources are elements of the environment team's engagement, supporting industry and jobs.
The social and cultural team's work varies across housing associations, to health, faith groups, charities and more.
There is a longstanding relationship with the Camp Hill community movement, in Scotland (it started in Aberdeen after the war) and Ireland. That includes green waste and recycling in Edinburgh, as well as small holding elsewhere. "Our money is being used in a very constructive way."
When faith groups are supported, it is because of community involvement (youth, elderly people, food banks), not as a way of endorsing a particular belief system. There should not be obstacles put in the way of service.
Quakers especially, but also evangelical Christians, Buddhists and a Sikh group are among the partners.
Growth in lending, now at £580 million, has extended by 16% in the last year or so. Bad debts, meanwhile, have dwindled and are not a problem - 0.16% of the entire loan book.
But there is an awareness that the financial crisis and cuts are hitting individuals, charities, service providers and others. So Triodos seeks to work closely with them to move forward and address the issues.
So there is no 'big black book', but a determination to manage risk responsibly.
People, planet and profit are the triple 'bottom line'. Triodos declares: "Our approach is based on the fundamental belief that economic activity can and should have a positive impact on society, the environment and culture. We value people, planet and profit - and take all three into account in everything we do.
"We call this sustainable banking. And it explains why we invest only in, or lend only to, organisations that contribute to a more sustainable society."
Triodos does not have a counter service, but in Scotland uses RBS as a high street facility for its savings accounts. At present, it doesn't have a current account, but is investigating that possibility.
Questions started off with the assessment of risk, given the difficulty of predicting the return from social enterprises. How does a different lending model operate? By being mobile, intelligent and engaged.
There are no collaterialised securities, inter-bank loans etc. All is done through lending on deposit. Loans and interest are commercially priced. "We are not the cheapest, and we can't be just on price... it's the whole package."
Is liquidity a worry? "No, we're ahead of the game.." A transparent model is commercially successful, as people flee from failing 'orthodox' model.
[Note: Just Festival does not endorse particular financial products and services]
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