On the cutting edge of sustainable banking for almost 30 years, Triodos is also one of very few financial institutions to benefit from the crisis.
The crisis sweeping through financial markets has convinced the general public of the need for economic and financial reforms towards a more sustainable economy, thinks Triodos CEO Peter Blom: ‘Sustainable finance is no longer a niche market for tree-huggers. The time has come to act. Of course, it is not just up to the banks. We also need political and business leaders who understand that the financial crisis, the environmental crisis and the poverty crisis are connected.’
When Triodos was founded in 1980, sustainability was primarily associated with the environment. ‘The concept has evolved over the years,’ explains Blom. ‘Today, it encompasses corporate social responsibility, transparency, and a stakeholder approach in doing business. All these issues are interconnected. Genetic engineering may help solve hunger, but it also affects biodiversity and local agriculture. We developed models that translate these very complex issues into a few fundamental questions we can ask before deciding whether to invest in a certain project. That is what we call integrated sustainability.’
One of the many other ways in which Triodos encourages its partners to adopt sustainable business practices is through its Triodos Sustainable Trade Fund. Blom: ‘Fair trade finance is based upon individual transactions between sustainable producers and wholesalers. As a bank, you finance primarily the transaction, not the company. Usually, the producer receives credit once the produce, such as coffee, is shipped. Because of our long-standing, high-trust relationship with some of these producers, we can provide credit at an earlier stage in the production process. That means the farmers get paid sooner. It also means that it is easier for us to convince the farmers of the importance of sustainable production methods.’
When talking about Triodos, Blom sounds like a man on a mission. A mission, however, that extends beyond Triodos. In March 2009, Triodos co-founded the Global Alliance for Banking on Values. The alliance intends to build a positive alternative to a global financial system in crisis. Blom explains that even though the members of the alliance have widely different client bases, all were started with social and sustainable objectives in mind. Blom is convinced it is no coincidence that they were relatively unscathed by the crisis: ‘These banks never forgot where they came from. They stuck to their client base, kept their eyes on the real economy and social issues related to that, and remained true to their founding philosophies. So there was no incentive to invent financial products that nobody really wants, just to make some extra profit.’
Blom is concerned: ‘The herd instinct of some of my colleagues never ceases to amaze me. When will they start to understand that financial markets are not playgrounds? We need to stop focussing on the virtual economy and start changing the real economy. Sustainable finance can lead the way out of the crisis. It is not a matter of choice. We either have a sustainable future, or no future at all.’