"Profit is not an objective in itself"
Paradigm shift in Banking; a radical departure for conventional financial institutions
Stay close to the real economy; hold a direct relation to what you invest in
Triodos Bank, a sustainable bank founded in 1980, illustrates what’s possible. It taps into this body of interest by consciously choosing to stay close to the real economy. As a result the bank, which has now offices in the Netherlands, the UK, Belgium, Spain and Germany, is not involved in the sub-prime mortgage crisis and is continuing to grow at similar levels despite the financial crisis. The bank invests its saver’s deposits directly in sustainable companies and stays in direct contact with the entrepreneurs who run them. The bank chooses not to invest in loan packages when the individual loans have been granted by another bank - an approach that also promotes sustainability.
Profit is not an objective in itself
In essence, Triodos Bank aims to maximise sustainability, embracing the need to be profitable but only as a means to a sustainable end. Profit is a yardstick. It shows an organisation is working efficiently, but says nothing about the content of what its doing. We, on the other hand, start with the content of an activity and focus on its sustainability. The first thing we consider is ‘How can this contribute to sustainability?’. Then, as bankers, we ask ourselves ‘Is it viable?’. If our professional judgement is correct, profit should follow almost automatically.
Reappraise the role of money and its place in the economy
This approach represents a radical departure for conventional financial institutions. It means re-appraising the role of our money and its place in the economy. And it goes further, because thinking like this means looking internally to assess what’s truly valuable. There are a number of positive trends emerging in this respect. There’s growing awareness that we only have one earth to live on, and need to work together to secure our long term future on it. If we don’t, we will fail to solve our sustainability problems. Positive solutions also require authenticity - not in a vague, introspective way, but in a meaningful sense that’s linked directly to our actions. In practise, Triodos Bank helps to transform abstract ideas into grounded activity. The Triodos Bank portfolio consists of tangible commodities such as food, real estate and energy. We aim to work in a way that will still be going strong in a hundred years’ time.
Views have changed on what used to be criticised as old-fashioned
Triodos Bank is living proof that people do have the power to make change happen. The Bank’s oversubscribed depository receipt issue in 2009 – an opportunity to invest in Triodos Bank much as a share issue would for a conventional bank - was the largest in our history. The issue also made it clear that people appreciate a structure which protects an organisation against hostile takeover bids. For a long time it was criticised as old-fashioned, and unsuitable for a modern, transparent bank. But views have changed. The slogan ‘not for sale’, which we used to promote our depository receipt campaign, resonated with large numbers of people. It was a clear statement that for us, the bank is not some tradable entity. Our values, our identity, our co-workers and our objectives are not for sale.
Back to the roots of banking
For us, the starting point is a long-term relationship with our borrowers - and that’s not for sale either. As a bank, we are responsible for the money we lend. If there is a problem, we solve it together. In essence, a bank is an organisation that brings two groups of people together. People who have money to spare and people who need it; a bank then adds its knowledge and expertise to this mix. If you move away from that basic principle, and into a more abstract world, you lose sight of what is imaginary and what is real.