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A future built on finance
Financial services as a sector has accepted additional responsibilities for the communities it serves, and indeed the planet as a whole. New ventures and major players agree that sustainability is the only viable plan
The financial services industry has gone to great lengths of late to inject a culture of shared responsibility and values into proceedings, and in banking – where a stable and sustained recovery is steadily taking hold (see Fig. 1) – extreme care has been taken to regain the trust of disillusioned parties.
Click to enlarge“The cumulative impact on the industry’s public reputation of compliance breaches, product mis-selling, computer failures, data leaks and benchmark rate manipulation is impossible to measure precisely, but it has been severe”, reads EY’s Global Banking Outlook. However, the steps taken in the time since the crisis have done much to overturn past wrongdoings, and succeeded in giving rise to a new breed of banking, unrecognisable from that of its pre-crisis complexion.
Sustainable banking – defined as any institution whose focus falls on the triple bottom line of environmental, social and corporate governance issues – has enjoyed yet another bumper year, and promises to commit further still to the task of driving sustainable growth. Racking up greater returns than some of the better-known, more traditional banks, the subsector has proven beyond all reasonable doubt that sustainability need not come at the expense of profitability.
Looking at the banking sector overall, the sheer scale of the transformation is unprecedented, and a greater number of mission-driven banks have risen to industry changes by taking on new responsibilities. No longer dictated by the single-minded pursuit of profits, sustainable banks are investing in both human and natural capital in a bid to bring positive and progressive change to the communities in which they operate.
In this year’s World Finance Banking Awards, we recognise the names that have done the most to foster inclusive growth and bring cultural and behavioural change to the financial services industry.
Sustainable real economy
Rather than focusing on the narrow task of turning a quick profit, sustainable banks are also occupied with serving the real economy and contributing to the drivers of growth, be they SMEs, individuals or big business. “A sustainable real economy requires enterprises that deliver economic resilience, environmental preservation and social empowerment to the communities in which they operate. These enterprises need not only direct investment capital but also access to financial services including lending, deposit and cash management products typically delivered by banking institutions”, according to a report by the Global Alliance for Banking on
Values (GABV).
Rather than focusing on the narrow task of turning a quick profit, sustainable banks are also occupied with serving the real economy and contributing to the drivers of growth, be they SMEs, individuals or big business. “A sustainable real economy requires enterprises that deliver economic resilience, environmental preservation and social empowerment to the communities in which they operate. These enterprises need not only direct investment capital but also access to financial services including lending, deposit and cash management products typically delivered by banking institutions”, according to a report by the Global Alliance for Banking on
Values (GABV).
Finding finance for underserved segments of society is a task that has fallen squarely in the lap of sustainable banking, and this commitment to inclusive growth has handed fresh opportunities to peripheral segments of the community. In emerging economies, where banking penetration is far short of its equivalent in the US and Western Europe, for example, banks are reaching out to consumers in less-than-ideal situations and bringing them into the formal system.
In the US, the FDIC National Survey of Unbanked and Underbanked Households shows that some 20 percent of the American population operate outside of the formal system. “In order for underserved consumers to choose financial services in the mainstream banking system, banks must offer products or services that those consumers perceive [will] meet their needs – and those consumers must be aware of the availability of those products or services”, according to the survey. The role of sustainable banks, therefore, is of inestimable importance in reaching underserved populations and in strengthening the relationship between consumers and banks. Essentially, the subsector’s ability to reach underserved segments of society feeds into a much broader ambition: to improve financial inclusion and reassure customers that the sector is a much-changed proposition from that of years past.
Integrated transparency
Aside from inclusion, another of the subsector’s core values is transparency, and the measures taken by sustainable banks recently to make clear their commitments to the economy, society and the environment are perhaps best summed up by a continued adoption of integrated reporting. By acknowledging the significance of natural capital, sustainable banks have made clear their commitment to corporate social responsibility at every stage of the value chain.
Aside from inclusion, another of the subsector’s core values is transparency, and the measures taken by sustainable banks recently to make clear their commitments to the economy, society and the environment are perhaps best summed up by a continued adoption of integrated reporting. By acknowledging the significance of natural capital, sustainable banks have made clear their commitment to corporate social responsibility at every stage of the value chain.
By providing stakeholders with a more complete assessment of value, sustainable banks have chosen to include details aside from mere finances in outlining their long-term credentials. Whereas traditional corporate reporting can often leave investors ill-informed about matters beyond the coming year, integrated reporting allows them to measure the impact of the business on the economy, society and the environment. “There is growing recognition that the range of issues and opportunities affecting long-term business value is much broader than can be reflected in a set of current year financial measures”, says a KPMG report on the topic. “Integrated reporting provides a basis to address this by re-focussing reporting around an organisation’s business model and operational priorities [see Figs. 2 and 3].”
Click to enlargeBy reframing banking as a service first and not merely a profit-making machine, sustainable firms have been able to instruct an industry-wide paradigm shift and demonstrate to stakeholders that banking is a much-changed proposition. “Strengthening the diversity of the banking ecosystem through the growth of banks with business models based on the principles of sustainable banking should provide shared value not only to society but also to the banks and their investors choosing that model”, according to GABV.
Developing sustainability
Another important aspect worthy of recognition is a sharpened focus on the issue of social and environmental wellbeing in emerging economies. Most notable since the turn of the 21st century, mature economies have strived to introduce a greater measure of sustainability to the banking sector, and while the same can be said for the developing world, it’s only in recent years that policymakers have taken strides towards this end.
Another important aspect worthy of recognition is a sharpened focus on the issue of social and environmental wellbeing in emerging economies. Most notable since the turn of the 21st century, mature economies have strived to introduce a greater measure of sustainability to the banking sector, and while the same can be said for the developing world, it’s only in recent years that policymakers have taken strides towards this end.
Nigeria, Brazil, China, Indonesia and Mongolia are just a few of the countries to have recently introduced protocols of some description to set banking on the path to sustainable prosperity. Recognising that the sector is partially responsible for the continued success of the population in question, guidance on this front has proven valuable in reaching underserved segments of society and in improving social and economic wellbeing generally. For a collection of the most impressive such institutions working today, see the winners of this year’s Sustainable Banking Awards on the following pages.
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albaniaBank of AlbaniaEstablished in 1913, Albania’s central bank is committed to achieving price stability and maintaining a stable banking system in the country. Headquartered in Tirana, the bank has various initiatives in place to improve economic and financial education, which will enable the population to make sound decisions while also allowing it to achieve its own targets.
algeriaHSBCFor HSBC, sustainability means building a business for the long term and, in doing so, balancing economic, social and environmental considerations. The issue of sustainability is not an add-on but a key strategic priority for the bank, and one that is as much a part of its reputation as its impressive financial performance.
argentina Standard CharteredOne of the most recognised banking institutions globally has an outstanding reputation in Argentina and throughout South America. The firm has also been making a solid impact on the local communities in which it operates, and it stands out in the Argentine market. Standard Chartered is a great believer in looking after clients and customers.
australiaANZOne of Australia’s most impressive and largest banking organisations makes a point of managing risks and business outlets responsibly, attempting to take on a key role in social development. The firm’s impressive outlook on corporate sustainability runs throughout the company, with CEO Mike Smith reinforcing the message across every layer of ANZ.
austriaBank AustriaUnder the influence of owners UniCredit, Bank Austria has created a determined and focused role in sustainable development. As such the firm fuses community development with a progressive business outlook based on a template for success. The firm has also developed a sustainability framework that has been heralded the world over.
boliviaBanco BISAAs the largest bank in Bolivia, Banco BISA is a major contributor to the economy as well as a driver of sustainable growth. Sustainability is a core value for the institution, particularly as each employee is charged with a mission to act responsibly and in strict compliance with banking regulations, ethics and transparency.
brazilCaixa Econômica FederalOne of the largest government-owned banking and financial service providers in Latin America, Caixa continues to grow and influence the sector. The bank considers sustainability a pivotal part of its practice, with research into how corporations can drive toward long-term responsible growth, and prospects for further development in the field.
canada RBCCommitted to corporate social responsibility projects on multiple fronts, RBC has cemented a strong reputation as a major contributor not just to the banking sector but also to the communities in which it operates. RBC is among Canada’s best corporate citizens and its biggest projects centre on community, sustainability and diversity.
chileBanco de Crédito e InversionesFounded in 1937, Banco de Crédito e Inversiones is a bank that truly contributes to Chile’s development through projects in diverse economic, social and environmental areas. It also stands out due to its close relationship with stakeholders, for generating shared value and for implementing a sustainable business model.
chinaICBCA diversified and transparent banking institution, ICBC has strived to raise the standards of the Chinese financial services sector. With interests in a plethora of markets, today ICBC offers a wide range of investment products and services to commit to any risk profile. As a result, the bank is celebrated globally.
croatia TriodosWith a mission to only invest in organisations that benefit people and the environment, Triodos prides itself on connecting savers with investors that want to change the world. In addition to being a sustainable service provider that leads public debate on various issues, Triodos offers competitive prices and a professional service.
franceCrédit AgricoleThe French bank Crédit Agricole has a long-stated commitment to supporting the various regions in which it operates in a sustainable manner, and its commitment to sustainable development can best be seen in a number of initiatives, and, in realising its goals, the bank includes ESG criteria in its main financing criteria.
hungaryCIB BankSeparating the social, economic and natural environments in order to understand and target sustainability goals, CIB Bank prides itself on determining business strategies based on these three different facets – and the way they interact. As such, shareholder expectations are fulfilled and a dynamic approach to corporate relations is pursued.
india EldisWith sustainability as its main strategic focus, Eldis has a list of ongoing ventures that seems far more than just a public relations statement. From agriculture and energy to urban transport and climate change, the bank uses all its influence to attempt to reshape India. From this departure point, the bank solidly promotes these various interests.
indonesiaANZWith branches spread across eleven of Indonesia’s major cities, ANZ offers a broad range of services for both corporate customers and individuals. In 2013, ANZ received an AAA credit rating from Fitch Ratings, confirming the standard of excellence and consistency that the banking group has upheld since its establishment in Indonesia in 1973.
irelandUlster BankWith renewed vigour following the financial crisis, Ulster Bank has set about a long-term strategy, keeping sustainability as key. The bank has identified the community in which it operates as the driving force behind a lucrative future, and considers the interests of stakeholders when moving on larger business decisions.
israel Bank J SafraWith a three-pronged approach, J Safra Sarasin balances commercial, social and ecological responsibilities to ensure a dedicated and growing sustainable approach to output. The bank has a long term, global reputation for strong commitments to the environments in which it operates. Operations in Israel are no different.
italyUniCreditSustainability is a core part of UniCredit’s success, and by building an economically, socially and environmentally responsible business, the bank hopes to facilitate sustainable development in the region. To underline this continued commitment to both responsibility and sustainability, UniCredit released its first integrated report last year to much acclaim.
japanSumimoto Mitsui BankingAs a Japanese corporation with global operations, Sumitomo Mitsui is a leader in terms of addressing social and environmental issues. The bank is also renowned for the value it places on CSR and sustainability in all aspects of the business, consistently striving to create a rewarding environment for staff and value for stakeholders.
jordanArab BankJordan’s premier banking outlet has long encouraged the highest standard of community relations, growth mechanisms and stakeholder engagement. The bank has a diverse set of values that encourage internal communications, transparency and a strong commitment to developing the region. Through industrious empowerment, this has been a success.
kenyaGulf African BankWith a vision to realise sustainable business growth and become the leading provider of Sharia compliant financial services in the region, Gulf African Bank is underpinned by a sound organisational structure and improved financial performance. The bank also aims to attract the brightest talents in Islamic banking the world over.
kuwait Doha BankDoha Bank has been one of the largest and most progressive banks in the State of Qatar since it launched in 1978. Today, it is widely regarded as a champion of sustainable investment practices in the whole Middle East, helping to raise standards across the banking industry. It has a particularly strong presence in Kuwait.
lebanonBankmedHaving become a key player in Lebanon’s banking community, Bankmed has grown across the Middle East, expanding its business ventures over a multitude of platforms. Headquartered in Beirut and present in six countries, Bankmed offers a wide range of services and innovative products that meet the evolving needs of its diverse client base.
luxembourgSFREPursuing long-term goals – sustainability, finance, real economics – SFRE is a global firm based in Luxembourg. It has various private stakeholders, and is developing projects and financial initiatives worldwide. The firm supports work in a variety of communities, pushing the boundaries of institutional practices with an abundance of interests.
mexico InfonavitA pioneer in the Mexican banking market, Infonavit has led the way in developing sustainable investment practices in the country since it was launched in 1972. The company has in recent years been helping to transform the infrastructure and real estate markets into more sustainable industries - and its client numbers are rising as a result.
mongoliaXacBankHaving built a number of micro-financing initiatives creating sustainable and long-term value, XacBank has defined the corporate social responsibility landscape in Mongolia and the wider region. The bank aims to grow further in a responsible and transparent manner, impressing stakeholders by establishing an environment of trust and effective leadership.
moroccoBMCE BankMorocco’s leading financial institution continues to outperform the market while pursuing sustainable development. BMCE Bank’s many stakeholders are more than pleased with the bank’s sustainability mechanisms over the past few years, and 2015 is no different. The bank has firmly set out its governance initiatives and pursued a solid sustainability drive.
new zealandBNZFamous for its philanthropy and sponsorship of various charities in New Zealand, BNZ offers invaluable support for family services, medical research for sick children and kiwi conservation, as well as all five New Zealand Super Rugby franchises. This social spirit is also evident in BNZ’s banking services, particularly through its online community platform.
nigeria Access BankSustainability underpins the strategy at Access Bank, while ethics and robust corporate governance form the baseline of its activities. Understanding basic social challenges in Nigeria, Access Bank participates in various community development initiatives, adding value to the areas it is located in and providing individuals with the tools they need to succeed.
paraguayCitiSince it was established in 1958, Citi has been committed to the social, cultural and economic development of Paraguay. As well as funding landmark infrastructures in the country, the bank also provides financial literacy programmes and has its own cultural centre where it promotes the development of the arts.
polandINGChampioned by clients, employees, the local community and the Warsaw Stock Exchange in the form of the Respect Index, (having featured there since 2009), ING Poland has developed a CSR strategy that keeps the bank in check and creates environmental objectives that allow the company to flourish in the local market.
portugal Santander TottaSantander’s sustainability strategy is widely considered among the best in the world. The bank looks to its communities and invests in projects that can help deliver sustainable development, with a customer driven business model that shines through in its progress as one of the world’s biggest banks. In Portugal, this is particularly prominent.
qatarDoha BankA leading financial services firm in Qatar, Doha Bank is known for its tech innovations, offering banking services to retail, private and corporate clients through an array of channels. Particularly focused on SMEs, the group is dedicated to fostering growth in Qatar by providing all-round support to entrepreneurs, in addition to its wholesale business.
russiaSberbankPlacing corporate social responsibility at the top of its agenda, as one of Russia’s most well-known banks, Sberbank celebrates stakeholder value. Established in 1841, the bank aims to move forward with stable growth inside Russia and develops in a number of markets and sectors. It serves customers across the country.
saudi arabiaSaudi Hollandi BankSaudi Hollandi Bank is the longest-established provider of financial products and services to Saudi Arabia’s leading companies – large and small – and is building a strong reputation in the retail market. Over the past 88 years, the bank has maintained a consistently strong capital base while incorporating a broader social engagement.
slovakiaUniCreditUnicredit Bank claims that sustainability is “more than an essential part of our business – it is our business”. The bank has taken pains to incorporate sustainability in its decision-making process, and its commitment to these issues is key to building relationships with stakeholders and creating value over time.
south africa NedbankThe Nedbank Group takes sustainability extremely seriously – from responsible lending to green funding and a plethora of other sustainability initiatives.The bank fully supports client drives while pushing its own. Nedbank has also taken a special interest in renewable energy, considering landfill gases, and solar, hydro and wind energies as paramount.
south koreaINGTaking a deterministic approach to sustainable banking practices in the local market, ING in South Korea has a sustainable lending team that looks out for the most deserving and long-term projects. The bank sets about this with a range of goals and performance metrics that allow it to analyse the very best in sustainable practice.
spainTriodosWith a commitment to addressing the world’s social and environmental afflictions, Triodos Bank focuses on everything from financing organic farming businesses to tackling inequality. The bank sets an example for others in Spain with its innovative education projects and funding activities that help those at risk of social exclusion in the country’s labour force.
switzerlandVontobelWith a dedicated sustainability committee, Vontobel has set the standard not only in Swiss corporate governance, but also in sustainability management. The firm has a sustainability strategy that is under constant review, and which utilises internal structures to push environmental and climate initiatives. Vontobel’s many banking products reflect this.
turkeySekerbankSustainable banking has long played into the commercial direction of Sekerbank. Since the mid-1950s the bank has built its business around social development and foundational accomplishments. As the standard-bearer in Turkey, the bank pushes boundaries and lifts platforms to bring about social development from within the banking industry.
UKTriodosBased in the Netherlands, but with branches in Belgium, Germany, Spain and the UK, Triodos Bank is one of the most innovative ethical banks in the market. Founded in 1980, the bank has helped grow the sustainable investment space over the last 35 years. It has established itself as a major player in the UK market.
uruguaySantanderSantander in Uruguay is a pillar of the community and a force for positive change in the country’s development. It is involved in numerous social initiatives, such as organising blood donation days and helping children in poverty. Santander also sponsors children’s orchestras and a paper collection programme to help low income schools, among other charities.
vietnam AgribankAgribank is making a strong effort to lead Vietnam’s ongoing economic development by playing a dominant role in the agricultural sector and the rural financial market. With a heavy focus on investing in the field, the bank provides substantial support to the industry, from large companies right down to individual farmers.