This is the first of two articles in which we will deal with so-called “Green Banking”.
Raising awareness of environmental and climate change issues - as well as for the evolving climate crisis - we believe it is not just “hype”, a trend that will pass. It is an issue or set of issues that will continue to be of concern. Especially since the planning of business strategy, the design of business processes and ultimately the actions of the business/organization will take into account those provisions that will ultimately help them with the climate issue.
This rule could not exclude banks, which have the necessary financial capacity to make investments in this area, but are also expected by the general public to take the lead in defending the environment, so to speak. Hence the term “green banking”.
This is a general concept, but it specializes in two major categories: what the bank does for its customers concerning "green" issues and how it organizes itself concerning its internal operations. For the purpose of Part 1 of this article, we will deal with the dimension of the products that the bank offers to its customers while in a next issue of our Newsletter in Part 2, we will examine various best practices related to its internal operation.
Banks, that have the financial capacity to invest, are expected by the general public to take the lead on environmental issues
Banks are starting to offer "green" products of all kinds. These are treated in a way that offer customers tangible benefits. However, there is also the opposite view that says that the increased - possibly - cost of a "green" product should (?) be passed on to some extent to the end customer. So the question immediately arises: are customers willing to shoulder some of this cost, feeling or enjoying as a reward that they are doing "their duty" for the relief of the planet?
Going beyond the above question, we list some green products that are already offered or will be offered in the future:
Green car loans (electric, hybrid, etc.). Here, lower interest rates or lower fees for other charges may be offered for such a loan, as opposed to a conventional car loan.
Green bonds or mutual funds. They relate to companies that either deal with ecology and climate change issues or have a proven track record of good performance or investment in similar issues in their internal operations.
Green housing or home improvement loans, for sustainable or energy self-sufficient homes. Here somehow criteria must be set to check the financed house and of course these must be cross checked during the life of the loan.
Business loans (e.g. credit lines) that offer preferential terms to companies that have a proven track record of sustainable development and environmental best practices.
Green credit cards (even the card's manufacturing material is advertised as being environmentally friendly).
E-ON provides ready applications but also customizable with a high degree to serve the above banking products, reflecting the peculiarities of their "green" dimension. See more here for our E-ON EPI suite. But where the specific parameters of green products need to be closely linked and monitored, we propose our application risk management E-ON RIBIA, appropriately configured to monitor dimensions that standard banking products are not designed to support, such as for example criteria of ESG.