The Upside of the Downturn: How Sustainable Banking Can Deliver a Better Future

Abstract

ly as the current financial crisis has unfolded. Why? What makes these apparently unconventional financial institutions more crisis-resistant than their mainstream contemporaries? And can they offer a viable alternative, plotting a path for the future that other banks can follow? Sustainable banking is becoming a significant force in the world’s financial markets. The ten best-known sustainable banks in the developed world have assets of around $30 billion, not including the much wider-reaching, more mainstream institutions like cooperative banks. These commercially solid, growing banks focus on financing environmental projects, social entrepreneurship, and community businesses. Even though they operate in emerging markets, microfinance banks have realized extraordinary growth rates in both volume and profit. The total assets of all microfinance providers are estimated at $50 billion; they serve 150 million people in the developing world. As the sustainable banking industry has flourished, so have some of the key institutions driving it. Triodos Bank is one. Founded in the Netherlands in 1980, today it has offices in five European countries. Over more than two decades, the bank has built assets under management of almost $5 billion and grown by 25 percent per year, delivering a consistent profit. It has almost 10,000 sustainable businesses and projects in its loan book and close to 200,000 customers. Investors, customers, and commentators alike are increasingly familiar with this kind of solid growth. Perhaps more surprisingly, these organizations have been propelled forward by the credit crunch and the turbulence that followed it.