Commercial Banking: Unlock Value through Sustainability

Operational Management and Responsible Lending Decisions Drive Value Creation

As underwriters of the global economy, the financial services sector is particularly exposed to evolving environmental risks and opportunities. By managing their own footprints, capturing new lending opportunities, and understanding evolving risks, commercial banks can capture considerable value from focusing on sustainability. Giants in the sector from Citibank to Bank of America have moved aggressively on this issue set, with many mid-market and small banks following close behind.

While the direct environmental footprint of banks is smaller than some sectors, visionary and responsible banks can contribute to environmental and social sustainability through their lending products and policies. This issue is particularly important now when the sector is focused on enhancing its brand perception with regulators and the communities in which they operate.

Why Focus on Sustainability?

Sustainability is an important element of corporate strategy affecting competitiveness, risk management, revenue growth, and cost structure. Leading firms like Union Bank are integrating sustainability across their operations while specialty banks like Triodos Bank lend exclusively to sustainable businesses.

Through our work with leading banks in the U.S. and abroad, the MSP team has developed unique expertise in constructing corporate sustainability programs for financial services providers. We are well equipped to lead financial institutions in building environmental strategies that provide long-lasting benefits with direct, positive impacts to the bottom line.

For example, MSP leveraged environmental sustainability in their work with Union Bank and other financial institutions to:

• Realize Operational Cost Savings

  Attractive cost saving opportunities can be found across your bank’s operations. Facilities energy optimization, computer power management systems, and paper rationalization are among many initiatives which can be implemented within offices and branches to reduce operating expenses while increasing productivity.

  Citi realized $3.8 million in energy cost savings and reduced its CO₂ emissions by 20,000 metric tons in 2011 by simply implementing a PC power management program. The software remotely managed and maintained employees’ computers.

• Capture Opportunities in Growing Markets

  As global energy demand is rising and the use of fossil fuels as a primary source of energy is raising health and environmental concerns, local governments and international leaders are introducing regulations to cap the carbon emissions of companies worldwide and encourage investments in renewable energy sources.

  McKinsey Global Institute found that in order to meet those requirements, there is a need to invest $260 - $370 billion a year over the next two decades in renewable sources of energy among other carbon reducing projects.

  Major financial institutions are capitalizing on these opportunities by investing heavily in cleantech. For example, Bank of America is investing $50 billion in green technologies over the coming decade while regional banks, like PNC, have created discounted lending programs for businesses that adapt sustainability initiatives.

• Enhance Brand Identity

  The need for banks to be seen as responsible stewards of the communities in which they operate has increased significantly in recent years.  Realizing the importance of the social license to operate, banks large and small have increased branding and community engagement efforts.

  This is why JPMorgan Chase claims to be integrating corporate responsibility into ‘every facet of our business’ while MSP client Union Bank invested $13 million into Solara Apartments, a 56-unit housing complex that uses solar panels to generate 100% of its electricity.

To learn more about these and other benefits of focusing on sustainability in banking, we encourage you to download our white paper: The Bottom Line of Green Banking.

How MSP Can Help

With extensive experience collaborating with financial services firms, MSP can help you realize operational cost savings, identify a wide range of opportunities in expanding markets, and enhance your brand identity. Specifically, we can help with:

• Leadership Capability Development: Equip your investment professionals with knowledge of evolving resource and environmental business drivers and how to profit from them
• Operational Efficiency Review: Analyze your facilities portfolio, identify eco-efficiency cost saving opportunities, and prioritize projects with highest returns
• Operational Efficiency Execution: Implement opportunities identified in Operational Efficiency Review with skilled project management to execute on initiatives ranging from facilities retro-commissioning to energy optimization of IT networks
• Environmental Lending Strategies: Develop a clear plan to capture attractive environmental markets ranging from funding  clean energy infrastructure to investing in businesses which integrate sustainability into their corporate strategy
• Communications and Disclosure Strategy: Communicate sustainability accomplishments to investors, clients, government, and local communities through stakeholder engagement and citizenship reporting