By Mavric Webbstock, business banking regional manager, Triodos Bank UK
A narrated version of this blog is available at the bottom of the page
After a year in which many parts of the world have seen record temperatures, we’ve had a stark reminder of the duty we all have to address our environmental impact.
We know that charities are approaching this challenge in various ways, but a critical part of the picture that can be easily overlooked is where to source your finance. Just as more and more consumers are taking sustainability into account when choosing where to buy goods and services, there’s been a growing realisation that where people invest their money – and where they source financial support – can also make a big difference.
However, a lack of clear guidance and regulation on what constitutes sustainable finance can make it difficult to know where to start.
Transparency is key
Hopefully a growing backlash against ‘greenwashing’ tactics will lead to tighter regulations and clearer guidance, but for now the best means of assessing whether a source of finance is genuinely sustainable is to look at a bank’s lending and investing portfolio as a whole – and whether sustainability forms part of their underlying principles.
Look for examples of how they implement these principles and whether they’re transparent about where they lend money and what they finance. How easy is it to find out what kind of organisations they support? What are their environmental policies and targets?
Some useful signposts
The Global Alliance for Banking on Values is a network of independent banks using finance to deliver sustainable economic, social and environmental development and can be a helpful resource when seeking a bank that prioritises environmental responsibility.
You’re likely to be familiar with the term B Corp, especially now that many household names have achieved B Corporation status, and this is a growing force in the services and financial sectors too. Certified B Corps do business in a particular way – instead of operating purely to generate profit, they prioritise working for social and environmental good.
Ultimately, the B Corp movement aims to drive a shift towards an economy that’s better for workers, communities and the environment and looking for the B Corp logo can be a useful signpost when searching for a financial partner.
At a more granular level, you can measure the climate impact of specific loans and investments via the Partnership for Carbon Accounting Financials (PCAF). And when looking into net zero claims, the Science-Based Targets initiative (SBTi) is a globally recognised methodology.
Finding a balance
There are, of course, many factors at play when approaching finance, including realistic terms that help you achieve your goals, especially in light of ongoing economic pressures. But sharing core values often leads to a more innovative approach to finance and banks that prioritise environmental and social ideals are more experienced at balancing an organisation’s financial needs with its wider impact.
As the climate crisis becomes higher on the agenda, looking for partners that are responsible and transparent about how they work, who they support – and the extent to which environmental and social impact underpins their own practices – can go a long way to helping you on your own journey to reaching your sustainability goals.