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Acumen: FIRST PERSON
BANKS RESPOND TO
DEMANDS
fROM ETHICAl
CONSuMERS
Financial services and sustainability might sound like an odd Management consultants Arthur D. Little (Adl.com) undertook a
pairing, but many banks have recently launched products and short review of sixteen retail banks across Europe to understand the
services driven by social and environmental issues. Justin relevance of these products and services. Five of the banks were
Keeble and Gerrit Seidel, from management consultants contacted directly and interviewed or asked to complete a short
Arthur D. Little, investigate. questionnaire, and the remaining banks were examined based on
information in the public domain. Although the focus of this research
O
ver the past twelve months, there have been many prolific
is on European retail banks, this paper also draws on examples from
announcements from the European banking sector relating
two prominent banks, one in South Africa (Nedbank) and the other in
to sustainability issues, particularly climate change. For
Australia (Westpac).
example, almost all of the large high street banks in the UK have
set ambitious targets to become carbon-neutral – which involves Nedbank was of particular interest since a recent study suggests
reducing carbon emissions to a minimum via direct operations and that 35 per cent of commercial banks in emerging markets cite
offsetting the remaining emissions by buying carbon credits. sustainability as a driver for new business.
Recent research by the UK Department for Environment, Food The review concluded that while many leading European banks’
and Rural Affairs suggests that 98 percent of the UK population revenues from products and services driven by sustainability are
is concerned about climate change, and consumer research by relatively small, several expect it to grow substantially, driven by the
Norwich Union suggests that 68 percent of Britons say being seen growing “ethical consumer” segment. Two different strategies amongst
as green is the new way of “keeping up with the Joneses”. retail banks can be observed: the development of niche products
or the development of a fully integrated approach. The dominant
A further testament to the growing interest in sustainability in banking
European players are aligned with the niche products strategy.
is the recently launched Financial Times Sustainable Banking Awards.
The awards are given to those banks integrating objectives that are By looking at each of these conclusions more closely Arthur D. Little
social, environmental and represent positive corporate governance. came to understand that almost all of the European banks profiled
more than 100 banks in more than 51 countries applied in 2007. have received some accolade for their sustainability performance in
recent years. All of the surveyed banks reinforced these accolades
A number of European banks have announced ambitious plans to
by claiming that sustainability is a strategic topic and option for their
introduce new products and services concerned with social and
company both today and in the future. Across the 16 companies
environmental issues. Banks are offering credit card holders discounts
examined, more than three quarters have now developed and
and lower-rate borrowing on green products and services. Norwich
marketed green products or products intended to deliver specific
and Peterborough is offering “green” loans on new and existing homes
social benefits, such as loans for environmentally beneficial use,
with “higher-than-average” standards of energy efficiency as well as
products with lower environmental footprint, and cause-related
on existing homes that buyers plan to make more environmentally
products, in which the bank pays a sum to a charity each time an
friendly.
account is opened or a credit card is used. Almost all the banks
interviewed expect revenues from these products to increase.
However, one interviewee noted that while he expects that growth
rates will be strong, in the long term these products will always be
a moderate contributor to revenues. A new study by Norwich Union
Acumen: FIRST
(part of Aviva plc) based on interviews with 1,580 full-time workers
PERSON
conducted last summer shows more than half (56 per cent) now
Justin Keeble and
consider unethical living as much of a social taboo as drinking and
Gerrit Seidel
driving. Yet the study also found that one in five says they have no
Arthur D. Little
idea how to live more ethically and only one in twenty realised that
investing in companies that support ethical causes would make a
difference.
ecoexecutive | 18
Acumen Business.indd 18 18/4/08 15:20:34
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