Triodos Points Way to a Better Banking System
Three key indicators of Spring finally arrived this week – a slight rise in temperatures, the calendar has flicked over to March, and another round of bank results hit the front pages. The tired explanations for failure, or scandal, or crimes and the bonuses banks are paying out for achieving the same are enough to make me feel distinctly un-Spring-like.
Thankfully the sight of a man in a suit gritting his teeth while he tells me a £5bn loss merits £600m of bonuses does not upset me as much as it used to. Around the time of the financial crisis, and after years of hand-wringing and procrastination over their funding of tar sands projects, I transferred my custom from RBS to the Co-op for current account, and Triodos for savings.
The Co-op Bank is hopefully relatively familiar – principled, member-controlled and a massive supporter of the renewables sector. They also have a growing number of branches which makes them the practical choice in the UK for a more ethical current account.
Triodos is still something of a hidden gem. Founded in the 80s in the Netherlands, it is a bank that is equally committed to people, planet and profit. Triodos believes economic activity can and should have a positive impact on society, the environment and culture and all its fund management and lending activities are firmly committed to these goals.
So that must make their performance a bit weak and flimsy, I hear you say? Far from it. Triodos’ 2012 results this week may not have made headlines in the mainstream media, but while RBS made a £5bn loss, Triodos posted net profits up €22m (31%), balance sheet up to €5.3bn (23%) and increasing customers by 23% to reach nearly half a million. Through various funds, Triodos now has €8bn under management, all being used to deliver sustainable growth, not being gambled for a short term gain. I think it’s a remarkable organisation which, as a customer, I have no hesitation in recommending.
Interestingly however, Triodos is not alone in being ethical and successful. The Global Alliance for Banking on Values issued a report in 2012 showing that the performance of sustainable banks compares very favourably with that of the global superpowers. The key findings are as follows:
– Sustainable banks had a significantly greater proportion of balance sheet made up by customer deposits and loans
– Sustainable banks had relatively higher and better quality capital
– Sustainable banks had better returns on assets and equal returns on equity with lower volatility of returns
– Sustainable banks had significantly higher levels of growth
So the idea that successful banks need to be purely driven by a devotion to profit at the expense of ethics has been shown to be unsupported by the evidence. Ethical banks can be more useful and more stable as well as providing a comparable return on investments.
Perhaps most importantly when the cherry blossom season arrives, having your money invested in ethical, sustainable banks can help to keep a spring in your step. Wouldn’t it be nice to count your returns from supporting sustainable growth, rather than wondering whether your ISA helped a rate-fixing trader or mis-selling banker get onto the property ladder?