Green is profitable
14
info exchange
WHAT'S NfwS Issue 11 November 1996
Rabobank's purchase of a 5 percent stake in Triodos, the Zeist-
based bank devoted to investing in projects which advance
the goal of environmentally-green development, is part of a
broader 'sustainable banking' strategy that is evolving at the
highest leveis of the Rabobank organization.
Always mindful of the
pragmatic realities of
banking competition,
chairman Herman
Wijffels nevertheless
appears convinced that,
over the long-term, the
Rabobank organization
can profit by a shift
towards sustainability. A
sea-change in attitudes
and expectations is slowly
gathering pace, in his
view, and any bank that
thinks ahead and
assembles experience and J
expertise early in the cycle
of change will do well Bart Jan Krouwel
once that wave eventually
crests. In a recent speech, he noted that
economie growth is gradually starting to be
seen as less of a goal in itself, and rather
more as something that ought to be 'directed
at sustainable, ecologically responsible
development with emphasis on the
qualitative aspects of our lives such as a
clean environment.'
SUSTAINABLE DEVELOPMENT
The bank's close involvement with an
environmentally vulnerable sector of the
economy - namely agribusiness - only partly
explains this point of view. Cooperative
organizations 'exist to ensure service and
sustainable continuity for and with our
members, clients and the communities in
which they live.' What's more, he added,
'words must be turned into actions if we are
to achieve the sustainable development
which is crucial for the future.' The
acquisition of a small stake in Triodos -
which Wijffels characterized in his introd-
uction to its most recent financial prospectus
as an outstanding example of how social
engagement and financial soundness can be
combined to form a solid basis for growth -
is one of several new initiatives.
PRACTICAL INVESTMENT
Practically speaking, the deal will build on
the fast-growing Triodos Bank's previously
negotiated access to
Rahohank's international
payments services: it will
offer Rabobank valuable
insights in how sustainable
development policies can be
made to work in a practical
way. This dovetails with its
own intent to promote
environmentally responsible
and sustainable investment
in the farming and food
production industries over
the next decade and a half.
The bank will increasingly
monitor its credit allocation
procedures so that
sustainability is a factor
which must be taken into
account both domestically and throughout
the worldwide agribusiness activities.
CLEAN PLANS
To further this aim, Bart Jan Krouwel, one
of the founders of the Triodos bank, has
joined Rabobank to take charge of a newly-
formed Strategie Sustainable Development
arm. Krouwel's task is to proactively develop
new banking markets based on the
sustainable growth principle. A number of
initiatives have been planned including:
RABOBANK -
WEER GROENER
Aandacht voor milieu
aspecten wordt steeds
belangrijker. Ook wij als bank nemen onze
verantwoordelijkheid. Het Groenfonds en
onze 5% deelname in de Triodos Bank
onderstrepen dit.Tevens ondersteunen wij
initiatieven op het gebied van bioplastics,
schonere dieselbrandstof, wind- en zonne-
energie en bio-dynamische producten.
Er is zelfs een strategie groep gevormd die
zich bezig houdt met duurzame ontwikke
lingen onder leiding van voormalig Triodos
directeur Bart Jan Krouwel.
Deze groep gaat pro-actief nieuwe markten
ontwikkelen.
The use of agricultural products in new,
biodegradable forms (such as bioplastic);
The use of biomass to produce such
products as clean-burning diesel fuel;
Extracting electrical power from waves,
wind and the sun, and;
The promotion of biodynamic farming.
VICIOUS CIRCLE
The latter initiative provides an instructive
example of the difficulties facing those
seeking to promote sustainable development.
'In the Netherlands, these products are
expensive and so people tend to buy
supermarket produce that has been grown in
energy-intensive hothouse conditions. But
prices cannot be brought down until the size
of the market can be increased. It's a chicken
and egg problem.' To break the vicious
circle, Krouwel, who describes himself as 'a
pioneer', has initiated talks with the leading
supermarket chains aimed at establishing the
necessary preconditions under which they
would agree to stock biodynamically grown
produce. There are signs that these initiatives
are already having a positive effect.
GREEN DEMAND
Like most Dutch banks, Rabo was surprised
by the popularity of its so-called 'Green
Fund', an investment vehicle aimed at
customers who are seeking to invest their
resources in an environmentally responsible
way.
Although the Green Fund attracted
investments of some NLG 440 million, it
initially found a shortage of officially-
designated green projects in which to invest.
(The law requires that 70 percent of the
funds' assets be placed in such projects and
outlines penalties if this target is not reached
within two years.) If Krouwels's efforts bear
fruit, then such a shortage of green projects
will be a thing of the past. The Green Fund
will also be helped by regulatory changes
now under consideration. These may make
it possible to invest for the first time in
projects in three selected developing nations:
Costa Rica, Benin, and Bhutan. On this
basis, says Krouwel, 'I think the Green Fund
will reach its 70 percent investment target in
a very short time.'
RESPONSIBILITY
There is sometimes a tendency to discount
green banking as being incompatible with
the realities of competition. But if the more
forward-looking strategists are right, then
these realities are already starting to change.
Meanwhile, some early initiatives, like the
attempt to use less paper and recycle plastic
coffee cups may seem relatively minor on
their own. Taken together, however, Wijffels
believes they stimulate 'the mindset essential
for a responsible use of our natural
resources.'
