If you are running a business in 2018 and you don’t yet have
a Corporate Responsibility Program / Sustainability Program, then you are probably leading
your business to a slow death.
The top five banks in the United States have publicly committed
over $645 billion in financing to companies and technologies that are clean,
green, environmentally and socially responsible, low-carbon and
sustainable. That is the new barometer
for low risk. These banks not only have invested in
expanding their own programs but are narrowing their investment outlay to
borrowers who match up with the core characteristics of ESG (Environmental, Social and Governance)
data. Not only that but these loans are
the lowest priced available as part of their incentives.
What does this mean for you?
It will become more and more difficult to get low-rate loans if at all
as this trend continues. The result is
if you need cash, and as a business owner, there are always times when you will
need cash, you may not be able to get it if you don’t show that you are working
toward sustainability.
Bank Sustainability
Financing:
Here are what the top five banks are doing:
- JPMorgan Chase has allocated $200 billion in “clean financing”. They will finance client projects and companies to facilitate new energy, transportation, waste management, water treatment and technology innovations.
- Since 2007, Bank of America has provided more than $70 billion in financing for low-carbon and sustainable business activities. As part of their second commitment established in 2012, and increased in 2015, they will provide $125 billion in capital, along with significant intellectual capital, to develop solutions to climate change and other environmental challenges.
- Wells Fargo continues ton invest in supporting a lower-carbon economy. Since 2012, they have invested and financed more than $70 billion in renewable energy, clean technology, “greener” buildings, sustainable agriculture, and other environmentally sustainable businesses. They seek to finance and support businesses that are developing solutions to mitigate the impacts of climate change and leading the way to a more sustainable future.
- Citigroup has been helping their clients contribute to climate and environmental solutions for more than 10 years. In just three-and-a-half years, they have financed and facilitated $53.3 billion in environmental finance transactions, meeting more than half of the $100 Billion Environmental Finance Goal they set in 2014 to lend, invest and facilitate $100 billion over a 10-year period. That builds on their previous $50 Billion Climate Initiative, which they achieved over the prior seven years.
- Goldman Sachs is targeting $150 billion to finance and invest in companies that promote clean technology and renewable energy, and they are committed to helping to develop market-based solutions to environmental challenges.
Maybe you work with a smaller local bank in your community
and don’t think you will need to be concerned about this. Be aware that smaller community banks are beginning
to offer similar programs to serve their local businesses and community. Green Bank in Houston has invested $275
million in assets and is building a clientele of environmentally minded
companies and individuals. One Earth
Bank was formed in Austin to have a sole focus on sustainability.
Alpine Bank in Colorado offers consumer and business loan
programs to help their customers make energy and resource improvements. They will take ½ percent off their loan
interest rate for purchases of fuel-efficient vehicles with a minimum of 40 MPG
and rate-discounted loans for fuel-efficient business vehicles.
Sustainability
Investment Funds:
Not only are banks issuing money to environmentally
conscious businesses, but they are directing their clients to invest in sustainability funds. In fact, ESG (Environmental, Social
and Governance) practices is now accepted as the mainstream approach to
investing. Sustainalytics and
MorningStar are the global leaders in researching ESG companies to provide data,
ratings and information for investors of top sustainable mutual funds. Barron
recently selected 203 U.S. large company, actively managed funds with the most
sustainable portfolios and ranked them by one-year returns. Of the 203 funds studied, 37% beat the S&P’s
500 index 18.6% return.
Private investors and venture capital firms see these funds and firms as offering the highest returns and will continue to seek like-minded entities in which to invest.
Are You Ready to Act?
As you can see the financial world is focused on things that
matter environmentally, socially and how companies govern themselves. This is not a trend but a new reality. When companies fully invest in sustainability
they become transparent and a much lower risk to investors, lenders, employees
and all stakeholders.
The good news is that if you have been considering looking
into doing environmental upgrades to your facility you can find low-interest
money with which to do it. That access to cash combined with applying any
state and federal rebates can accelerate your return and get you on the path to
establishing yourself as an environmentally and socially conscious business.
The bad news is if you don’t take the steps toward
sustainability, your business won’t last.
Does this concern you enough to get started now? Has anyone had a recent experience while pursuing capital where you were asked about your sustainability initiatives?
Sources:
https://www.jpmorganchase.com/corporate/Corporate-Responsibility/environment.htm
https://about.bankofamerica.com/en-us/what-guides-us/environmental-sustainability.html
https://about.bankofamerica.com/en-us/what-guides-us/environmental-sustainability.html#fbid=YveXG9WU-0t.
https://www.wellsfargo.com/about/corporate-responsibility/environment/
http://www.citigroup.com/citi/sustainability/
http://www.citigroup.com/citi/sustainability/data/Sustainable-Growth-at-Citi.pdf?ieNocache=176
http://www.goldmansachs.com/our-thinking/new-energy-landscape/low-carbon-economy/index.html
http://www.goldmansachs.com/citizenship/environmental-stewardship/
https://www.environmentalleader.com/2008/01/green-bank-to-open-in-austin/
https://www.alpinebank.com/personal/personal-loans/green-lending.html
https://www.barrons.com/articles/the-top-performing-sustainable-funds-1507350787
http://online.wsj.com/public/resources/documents/TopSustainableMutualFunds.pdf
No comments:
Post a Comment