|
Green banking comes down to a simple concept: Let financial practices reflect core values of healthy, sustainable and forward-looking economic progress. That might mean the values of the institution or the customers or, most often, both. But from environmentally friendly buildings to investments that support research and sustainable development, an increasing number of community banks are exploring firsthand how to help those values take root and thrive in the marketplace.
They’re finding the green market to be a strong niche – and a profitable one.
Home Savings Bank in Madison, Wis., for example, lets customers see and feel the effects of green building – the $130 million-asset bank has one of the first certified environmentally friendly branches in the nation. But the branch is only the beginning of the bank’s green program.
Home Savings’ Greener Choices Checking program uses recycled paper for checks and electronic services to save petroleum (fewer car trips to the branch). Its mortgage program rewards customers with lower rates for home construction or remodeling projects that feature energy-saving options. And the bank’s investment advisors have become well versed in investment choices that foster environmentally sustainable economic growth.
“Once you adopt a commitment to doing business in a green way, you begin to look at everything you do to make sure it’s consistent with that,” says Home Savings Bank President Jim Bradley. “It’s similar to the way an organization would look at its brand. Everything you do should enforce your brand. And so with [green banking] you look at all your work processes, and then it begins to be a bit customer-driven.”
The Time Is Now
For Home Savings Bank the environment is not a new concern. Thirty years ago, spurred by the national energy crisis, the bank built the first solar-powered branch in the state. Yet Bradley says the possibility of environmental projects is greater today than in previous years. “It’s been a part of who we are for a long period of time,” he says. “But there is sort of a growing awareness of the importance of all of us working together in some way to protect the environment.”
Then there are the less idealistic considerations. The bank invests heavily in the local community, and buying locally is another environmental precept for the bank. “We realize that if anything happened to the environmental quality of the place [where] we do business, that could be very challenging,” Bradley says. “So we felt that it made sense to help in any way we could to enhance the environmental quality in the market we serve.”
With rising energy prices a growing concern, the efficiency of environmentally friendly practices makes good business sense, says Jan Miller, president of Wainwright Bank and Trust Co. in Boston. “Financial payback has been a stumbling block, but as oil prices increase, that payback becomes shorter,” he says.
Wainwright Bank, which has $820 million in assets, links social and environmental responsibility with sound business practices. With two green branches that opened in 2005, the bank bills itself as a socially responsible institution and provides financing for projects – like Earthwatch Institute and the Trust for Public Land – that work to improve the environment.
Wainwright Bank’s social agenda has always grown organically, says Miller, starting when the bank provided a loan to the Trust for Public Land in the mid-1990s. Two nonprofits also approached the bank with the idea of green loans several years ago, which led to a green home equity line with preferred rates for remodeling projects.
The bank sees an expanding interest in sustainability these days as the market continues to drive the bank’s offerings. The green imprint is spreading. Wainwright’s newest green branch will open next year as part of a 114-condo complex, which follows sustainable practices. Customers buying a hybrid car can now receive a discounted auto rate. Plus the city of Boston has launched an effort to convert a portion of the city’s taxicab fleet to hybrid cars – and the bank will offer lower rates for loans on those hybrids.
A Unique Platform
On the cutting edge of design and practice, community banks are doubling as teachers. Expected to receive Wisconsin’s first Leadership in Energy and Environmental Design certification from the Green Building Council, the Home Savings solar branch serves as a hands-on showcase for the concrete (literally) results of green practices. Abundant natural lights cut down on the need for artificial lighting at the $2 million branch. Ten times the required amount of fresh air is circulated. From concrete flooring to desks made from sunflower seed husks, every detail can spark ideas.
“Because we’re a retail business, we can have people come in and realize it’s not that difficult to do these things and that you can have a higher quality experience being in [green buildings],” Bradley says. “These are things they could do in their own homes or businesses.”
Wainwright Bank’s branches have the same draw. “Our customers go into our green branches and say, ‘Honey, look at this floor – maybe we should consider this,” says Steve Young, the bank’s senior vice president of consumer banking. “We see the branches partially as an education element.”
Not everyone comes in looking to be environmentally conscious. Customers looking for traditional banking can find that too. But they’re also likely to find options that make sense financially and for energy cost efficiency. Reaching those customers is every bit as important as reaching those who’ve sought out a green bank.
“In the greener choice checking, we see both the green aspects and the convenience aspects,” Bradley says. “We realize not everyone comes in with an understanding of sustainable practices. But they like the convenience of it.”
For Peter Liu, founder of New Resource Bank in San Francisco, an environmental business strategy came down to demand from the business community. The California public employees retirement system had opted for investing in green businesses, and the idea of more private equity in green ventures struck a chord with the business community. Launched in 2006, the bank gives discounted loans to sustainable business like alternative energy, organic farms and green construction. When a builder chooses green, the bank offers a lower interest rate.
The bank, which as $50 million in assets, doesn’t solely focus on green investments, of course – Liu defines the approach as “differentiated solutions.” “There’s a focus on serving green ventures and ‘take the green to the community banking customer,’” he says. “Differentiated offerings mean that when people come to us for a lending program, we always give them offers that will be traditional as well as with green leadership.”
The Payoffs
Payoffs aren’t all touchy-feely. The Home Savings solar branch will use nearly 40 percent less energy than a comparable building of its size and nearly 50 percent less natural gas. The equipment at the new branch costs only 2 percent more than non-energy efficient models.
Wainwright Bank’s two green branches, which are seeking their environmental certifications, involve energy-efficient lighting, reduced-water usage and recycled material. The bank’s first green branch involved a sharp learning curve for the bank, architect and contractor as they worked out details. The bank estimates the initial cost was approximately 13 percent higher than a standard branch, and that the bank would start saving money after 10 years. The second branch was built for less money, and payback is expected to be faster.
And a green initiative gives a bank a strong story and inevitably factors into branding. “When the two branches opened, we got a lot of traffic and a lot of press coverage,” Miller says. “This is a logical extension of the social responsibility theme, and there’s a certain expectation by our customers – if we didn’t use recycled paper that would be an issue. The fact that we do is expected.”
“If we provide customers with the same or better service as our competitors, they will get an additional benefit because their money goes to support services and products consistent with their values,” Liu says.
Employees benefit as well. “It’s a great place for people to come to visit, but also for employees to come to work,” Bradley says. “We think it’s important that in a competitive work environment people understand that the organization they work for values them and is providing them with an opportunity to do something that makes a larger impact on the community and the world.”
Big Picture
Banks offer an important piece of the puzzle to the community looking to tread lightly on the environment. Community Car in Madison provides cars by the hour with the idea that the rentals promote car sharing, biking, walking and a general decrease in traffic. Of the service’s 11 vehicles (eight of which are hybrids), seven were purchased with Home Savings loans. Amanda White, executive director, has a personal green-checking account and bought a house with a Home Savings mortgage.
“It’s just another part of life you can green,” White says of green banking. “And with marketing about saving money and the environment, it’s sending that message that you can do both.”
Plus banks add to the big picture. New Resource is helping to fund residential sun panels from SunPower Corp. It’s a symbiotic relationship – the company helps market New Resource’s loans, and the bank helps sell panels to builders looking to go green.
“We are very pleased to have found a partner to support customers’ green goals,” says Julie Blunden, a vice president at SunPower. “A SunPower solar panel offers a warranty of 25 years, but home equity lines of credit are often offered for 10 years or less.” New Resource Bank put together a portfolio to match the warranty and lower a client’s monthly cost.
And a financial institution backing green practices sends a message: “People recognize that having a bank do this lends credibility,” Bradley says.
^ back to top ^
|
