When you imagine the environmental impacts which business must address, it’s likely that you picture a tall smokestack on a power plant or the cutting of primary forests. You probably don’t picture a bank. Banks do not manufacture goods or generate power; they have simple supply chains and comparatively simple facilities to operate. As a service sector business, it might seem that banks are already green and that an environmental program is simply about offering customers e-statements and putting a ‘Hybrids Only’ parking space in front of branches. In fact, environmental sustainability for banks is a core business issue, one which can affect facilities management, lending products and decisions, underwriting criteria, government relations, and brand management. Most importantly, implementing a sustainability strategy has been proven to increase profitability. In fact, financial services companies which integrate sustainability across their operations outperform their peers by 17-25% in terms of market capitalization[1].
So what are these banks doing to green their business? Let’s examine a few key initiatives through the MSP Environmental Strategy lens, which organizes efforts into those focused on efficiency, innovation, and adaptation.
Efficiency
Branch Retro-Commissioning: Comerica realizes approximately $800,000 in annual savings through a comprehensive branch energy efficiency initiative which is part of a carbon footprint reduction effort. PC Power Management: HSBC deployed PC energy management software across its operations, and is saving over $1 million annually.
InnovationLending Commitment: Citibank has committed to invest $50 billion in projects that are intended to reduce greenhouse gas emissions. Investments range from cleaner energy to green buildings and offer attractive returns. Most of the largest banks in the US have made similar lending commitments. Consumer Products: Bank of America offers an array of consumer-facing green banking products, such as green affinity credit cards which apply points toward environmental projects such as ecosystem conservation and restoration.
AdaptationUnderwriting Criteria: A stricter regulatory landscape dictates that environmental considerations need to be closely considered in underwriting criteria. Banks like Chase and PNC have adapted by creating environmental and social risk management guidelines. Sustainability Reporting: All of the banks above, plus many more, are communicating their sustainability accomplishments to key stakeholders each year through recognized reporting protocols. Such communication is increasingly important to prospective employees, regulators and investors.
Banks around the world, from global giants to community credit unions, are integrating environmental values across their operations. They are demonstrating their commitment to their community, showing what they stand for, saving money, and managing risk. Adopting strong environmental strategies is a core area of innovation and value creation in banking, Advising banks on how to do so is one of MSP’s core services, as we have served several eminent banks in this way. We invite you to contact us to discuss how an environmental strategy could create value for your bank.
[1] Green Winners: The Performance of Sustainability-Focused Companies during the Financial Crisis. AT Kearny. 2009