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One responsible banking system to rule them all



The parliamentary commission on banking standards’ latest report is a bit like reading the first part of The Lord of the Rings. There is incredibly dramatic and beautiful language, and the commission says there’s a long way to go on the quest. I can’t wait for the sequel.

What is clear is that the commission has identified – even if it hasn’t come up with ideas on how to solve them – some of the systemic things going on in banking. It looks at how this needs to be followed up and how this needs to be seen as the start of a process, and not the full stop at the end of the last five years. This is really the start of a new continuous process, and that’s very important. The government must now respond in the right way.

There are a few things that I noted specifically. There’s a lot about individuals within banks being punished. The commission said it wasn’t just one or two bad apples, although it didn’t quite get into the entire mechanics of the disease in the orchard. It talks about punishing bankers for banks that fail – but what about being able to take measures before a bank fails? Regulators should be investigating things like unsustainable lending and high-carbon investments – things that are likely to be limits in the future. But that’s a point for the sequel.

Click here to read The Guide to Sustainable Banking 2012

The second point is around leverage ratios and capital ratios. Both are quite hard for the general public to get to grips with, but leverage ratio is like the buffer of capital. The commission talks about it being depoliticised, but what it really means is that needs to be levelled up in order to a) promote stability and b) have a level playing field.

We think there should be strong capital buffers; we think that other banks should be forced to level up by regulators so they are more stable; and critically, we think that financial education is not just about understanding products and best-buy tables. Consumers should be able to walk into a bank and not just ask about the interest rate, but ask about the leverage ratio. It’s about simplifying it and making it more transparent.

Asking local authorities to look beyond credit ratings to the real stability of banks is an excellent measure. That will start to open up the market, especially for local authorities. It should apply to charities and civil society organisations as well – where you want to be able to act in line with values, but there’s this slightly artificial barrier through credit ratings.

Some of the evidence highlighted by the commission shows an awareness of the wider system. It’s not just a few loose cannons acting independently; it’s part of an overall system. In the main summary, the commission says it’s not just going to leave it to institutional shareholders because all they care about is returns for their clients. That was quite scathing.

Until you have an alignment between the sources of capital who really believe that banks should be more than just returns, then those kind of cultural factors will still be reinforced. It’s great that the commission has outlined it, but there needs to be a real review in terms of how those measures are then picked up to stop the same kind of culture developing. The individuals are just a product of other things that live in the system.

There is a really good part in the report about non-executive directors being given this additional weighting to put financial stability above shareholder value. That’s quite radical.

I thought there was a deep irony in the commission’s correct assertion that at the moment, institutional shareholders just act in the pure shareholder value/profit maximisation paradigm. At what point should they also be investigated in terms of their responsibilities? They’re as much part of the system as the non-executive directors and others involved in the governance of banks.

At Triodos Bank and at other values-based banks in the Global Alliance for Banking on Values, it’s much more of a stakeholder model where the people who invest in our capital are in the most part individuals or institutions who are taking a more balanced approach. I thought it was very good in the section on diversity that the commission has recognised that a diverse banking system means different types of banks, not just more of the same types of banks.

There are areas that the commission has outlined for implementation that can be done now. The real challenge for the Treasury, the government and future governments, is really being able to keep the foot on the accelerator pedal in terms of working out how to respond to these deeper system issues which the commission has very ably and articulately put in its report. It made reference to the fact that we’ve been here before.

There have been, through the history of banking and banking crashes and regulation, times where people said, “It’s all different now; it’s all under control.” The commission has recognised that that isn’t good enough, and the key thing that we’d be looking for the chancellor, the Treasury and all of those across the policymaking agenda, is to see how they tackle the systemic issues.

There’s a real opportunity with looking at alternative banking models, like values-based banking. Triodos operates a model where we have a different set of motivations and people come to work for us to do something meaningful in the world, rather than for pure financial reasons. That could be part of the solution of a more systemic nature.

James Vaccaro is head of market and corporate development at Triodos Bank.

Further reading:

‘Shocking and widespread malpractice’ should land bankers in jail, says commission

Big five’s banking monopoly at risk, with 2.4m closing accounts in 2012

Sustainable banks more ‘robust and resilient’ than high street institutions

Small is beautiful: why alternative banks need to step up to the mark

The Guide to Sustainable Banking 2012


How Going Green Can Save A Company Money



going green can save company money
Shutterstock Licensed Photot - By GOLFX

What is going green?

Going green means to live life in a way that is environmentally friendly for an entire population. It is the conservation of energy, water, and air. Going green means using products and resources that will not contaminate or pollute the air. It means being educated and well informed about the surroundings, and how to best protect them. It means recycling products that may not be biodegradable. Companies, as well as people, that adhere to going green can help to ensure a safer life for humanity.

The first step in going green

There are actually no step by step instructions for going green. The only requirement needed is making the decision to become environmentally conscious. It takes a caring attitude, and a willingness to make the change. It has been found that companies have improved their profit margins by going green. They have saved money on many of the frivolous things they they thought were a necessity. Besides saving money, companies are operating more efficiently than before going green. Companies have become aware of their ecological responsibility by pursuing the knowledge needed to make decisions that would change lifestyles and help sustain the earth’s natural resources for present and future generations.

Making needed changes within the company

After making the decision to go green, there are several things that can be changed in the workplace. A good place to start would be conserving energy used by electrical appliances. First, turning off the computer will save over the long run. Just letting it sleep still uses energy overnight. Turn off all other appliances like coffee maker, or anything that plugs in. Pull the socket from the outlet to stop unnecessary energy loss. Appliances continue to use electricity although they are switched off, and not unplugged. Get in the habit of turning off the lights whenever you leave a room. Change to fluorescent light bulbs, and lighting throughout the building. Have any leaks sealed on the premises to avoid the escape of heat or air.

Reducing the common paper waste

paper waste

Shutterstock Licensed Photo – By Yury Zap

Modern technologies and state of the art equipment, and tools have almost eliminated the use of paper in the office. Instead of sending out newsletters, brochures, written memos and reminders, you can now do all of these and more by technology while saving on the use of paper. Send out digital documents and emails to communicate with staff and other employees. By using this virtual bookkeeping technique, you will save a bundle on paper. When it is necessary to use paper for printing purposes or other services, choose the already recycled paper. It is smartly labeled and easy to find in any office supply store. It is called the Post Consumer Waste paper, or PCW paper. This will show that your company is dedicated to the preservation of natural resources. By using PCW paper, everyone helps to save the trees which provides and emits many important nutrients into the atmosphere.

Make money by spreading the word

Companies realize that consumers like to buy, or invest in whatever the latest trend may be. They also cater to companies that are doing great things for the quality of life of all people. People want to know that the companies that they cater to are doing their part for the environment and ecology. By going green, you can tell consumers of your experiences with helping them and communities be eco-friendly. This is a sound public relations technique to bring revenue to your brand. Boost the impact that your company makes on the environment. Go green, save and make money while essentially preserving what is normally taken for granted. The benefits of having a green company are enormous for consumers as well as the companies that engage in the process.

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5 Easy Things You Can Do to Make Your Home More Sustainable




sustainable homes
Shutterstock Licensed Photot - By Diyana Dimitrova

Increasing your home’s energy efficiency is one of the smartest moves you can make as a homeowner. It will lower your bills, increase the resale value of your property, and help minimize our planet’s fast-approaching climate crisis. While major home retrofits can seem daunting, there are plenty of quick and cost-effective ways to start reducing your carbon footprint today. Here are five easy projects to make your home more sustainable.

1. Weather stripping

If you’re looking to make your home more energy efficient, an energy audit is a highly recommended first step. This will reveal where your home is lacking in regards to sustainability suggests the best plan of attack.

Some form of weather stripping is nearly always advised because it is so easy and inexpensive yet can yield such transformative results. The audit will provide information about air leaks which you can couple with your own knowledge of your home’s ventilation needs to develop a strategic plan.

Make sure you choose the appropriate type of weather stripping for each location in your home. Areas that receive a lot of wear and tear, like popular doorways, are best served by slightly more expensive vinyl or metal options. Immobile cracks or infrequently opened windows can be treated with inexpensive foams or caulking. Depending on the age and quality of your home, the resulting energy savings can be as much as 20 percent.

2. Programmable thermostats

Programmable thermostats

Shutterstock Licensed Photo – By Olivier Le Moal

Programmable thermostats have tremendous potential to save money and minimize unnecessary energy usage. About 45 percent of a home’s energy is earmarked for heating and cooling needs with a large fraction of that wasted on unoccupied spaces. Programmable thermostats can automatically lower the heat overnight or shut off the air conditioning when you go to work.

Every degree Fahrenheit you lower the thermostat equates to 1 percent less energy use, which amounts to considerable savings over the course of a year. When used correctly, programmable thermostats reduce heating and cooling bills by 10 to 30 percent. Of course, the same result can be achieved by manually adjusting your thermostats to coincide with your activities, just make sure you remember to do it!

3. Low-flow water hardware

With the current focus on carbon emissions and climate change, we typically equate environmental stability to lower energy use, but fresh water shortage is an equal threat. Installing low-flow hardware for toilets and showers, particularly in drought prone areas, is an inexpensive and easy way to cut water consumption by 50 percent and save as much as $145 per year.

Older toilets use up to 6 gallons of water per flush, the equivalent of an astounding 20.1 gallons per person each day. This makes them the biggest consumer of indoor water. New low-flow toilets are standardized at 1.6 gallons per flush and can save more than 20,000 gallons a year in a 4-member household.

Similarly, low-flow shower heads can decrease water consumption by 40 percent or more while also lowering water heating bills and reducing CO2 emissions. Unlike early versions, new low-flow models are equipped with excellent pressure technology so your shower will be no less satisfying.

4. Energy efficient light bulbs

An average household dedicates about 5 percent of its energy use to lighting, but this value is dropping thanks to new lighting technology. Incandescent bulbs are quickly becoming a thing of the past. These inefficient light sources give off 90 percent of their energy as heat which is not only impractical from a lighting standpoint, but also raises energy bills even further during hot weather.

New LED and compact fluorescent options are far more efficient and longer lasting. Though the upfront costs are higher, the long term environmental and financial benefits are well worth it. Energy efficient light bulbs use as much as 80 percent less energy than traditional incandescent and last 3 to 25 times longer producing savings of about $6 per year per bulb.

5. Installing solar panels

Adding solar panels may not be the easiest, or least expensive, sustainability upgrade for your home, but it will certainly have the greatest impact on both your energy bills and your environmental footprint. Installing solar panels can run about $15,000 – $20,000 upfront, though a number of government incentives are bringing these numbers down. Alternatively, panels can also be leased for a much lower initial investment.

Once operational, a solar system saves about $600 per year over the course of its 25 to 30-year lifespan, and this figure will grow as energy prices rise. Solar installations require little to no maintenance and increase the value of your home.

From an environmental standpoint, the average five-kilowatt residential system can reduce household CO2 emissions by 15,000 pounds every year. Using your solar system to power an electric vehicle is the ultimate sustainable solution serving to reduce total CO2 emissions by as much as 70%!

These days, being environmentally responsible is the hallmark of a good global citizen and it need not require major sacrifices in regards to your lifestyle or your wallet. In fact, increasing your home’s sustainability is apt to make your residence more livable and save you money in the long run. The five projects listed here are just a few of the easy ways to reduce both your environmental footprint and your energy bills. So, give one or more of them a try; with a small budget and a little know-how, there is no reason you can’t start today.

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