Sustainability is one of the most-used buzzwords in business right now. But what does it really mean? It is more than just being green. It means paying attention to the triple bottom lines of people, planet and profit. Sustainability proponents believe that all businesses can serve people’s needs without wrecking the planet for future generations and still make a healthy profit.
Is there really consumer demand for sustainable banking though? Although no specific studies give numbers on consumer demand for sustainable banking in particular, there are plenty of polls that show increasing concern about a range of environmental and social issues. Many banks are moving forward in developing sustainable banking products and practices. The main drivers of this activity, according to a report from the International Finance Corporation, include reputation, branding and investor demand.
Another report on best practices in sustainable finance highlighted the unique efforts of 11 different financial institutions from around the world, four of which are in the United States. One example is North Carolina’s Self-Help Credit Union that sets a leading example by creating economic opportunities for low-income families, minorities, women and immigrants through discounted mortgages and targeted lending to community non-profits, human service agencies, small businesses and sustainability-related projects.
Another is Wainwright Bank and Trust in Massachusetts, who pioneered discounted mortgage rates for installing energy-saving technologies in homes and created the Financial Empowerment program to educate inner city kids about how money works and the need to save.
These reports confirm that not only is sustainability here to stay, but it is becoming essential for all types of businesses. Financial institutions that want to stay ahead of the curve have many options for integrating sustainability into their practices and products.
The possibilities for product offerings include green car loans (better interest rates for better fuel efficiency), energy efficiency mortgages (interest rate reductions for meeting environmental criteria), sustainability venture capital (investments for socially and environmentally responsible start-ups), eco-savings accounts (deposits specifically earmarked for sustainability investments) and green credit cards.
Sustainable credit cards typically offer donations to non-profit organizations working to promote sustainability based on a percentage of each purchase, balance transfer or cash advance. In the 1990s, MBNA (Bank of America) set up one of the first environmental-focused affinity cards with the Sierra Club. Within a couple of years 45,000 members were generating upwards of $400,000 in extra revenue for the group. With rising concern over climate change, other cards are specifically tied to carbon-offset companies, such as Bank of America teaming up with Brighter Planet and NativeEnergy on a Visa offset card and the GE Money Earth Rewards Platinum MasterCard.
The cards themselves, made of non-biodegradable PVC plastic, also have real environmental impacts. In 2008, there were nearly two billion credit and debit cards in circulation. That’s a lot of plastic, not to mention the impacts of the paper they are mailed with and the energy used in transporting them to consumers. Only one alternative exists right now, a biodegradable card from Discover.
For many companies, sustainability practices already exist in some areas. For example, paperless statements are not only a way to save money on paper and stamps, but are a great way to decrease the amount of waste in the world. See what your institution is already doing and use that as the launch point for future sustainability initiatives.