IS YOUR BANK HIP ENOUGH FOR YOU?

While BusinessWeek’s Oct. 29 online extra on “green banking” called out how Big Banks are setting goals for investments in “green” energy, retail banking customers have limited choices of HIP products - unless you live in Europe.

Does your bank improve the lives of customers, employees and society overall? How can you as a customer and investor encourage your bank to be more HIP? Read on, then call your bank to demand HIP ways to manage your money - and the Bank’s.

HIP Investor studied 28 well-known, branded banks across the US, Europe, and Southeast Asia to determine their HIP factor. We sought to identify trends in the banking industry focused on:

(1) What innovative PRODUCTS benefit society as well as shareholders?

(2) How are banks implementing PRACTICES that benefit the health of their customers, benefit the environment, and boost wealth and equality?

(3) Does the focus on solving human problems first result in PROFITS for shareholders ?

The examples we have found are not philanthropy, but go to the core mission - deliver both net positive human impact for customers and increased profit for investors. These examples prove that you can create and maximize both Human Impact + Profit simultaneously.
HIP PRODUCTS IN BANKING
Here are some of the most HIP products on the banking market today, though mainly in Europe - products that transform typical products and services to create lasting and sustainable impact. What does your bank have to offer and is it having a positive impact on the world’s Health, Wealth, Earth and Equality?

Barclays Breathe credit card enables the cardholder to receive a discount when they use the card at any number of eco-friendly vendors and receive a discount (such as at a cycle shop or purchasing insulation for your home). Furthermore, 50% of its net profits go to Pure, the Clean Planet Trust to fund government-approved environmental projects, some of which are in Brazil, the UK and China. HIP IMPACT: Earth and vendor Wealth

Virgin Money has a progressive mix of financial products - including pensions for those that aren’t even employed - allowing virtually everyone potentially future financial security. They also have introduced a unique product called cancer cover, which provides coverage to those unlucky enough to be diagnosed with cancer. Benefits include paying out a lump sum on diagnosis as well as paying out on diagnosis of early, intermediate and advanced cancer - even if you go on to make a full recovery.
HIP IMPACT: Health, Wealth & Equality

ING started to offer its customers the opportunity to offset the environmental damage their car would produce throughout its life span in 2006. ING calculates the “amount of CO2 that will be emitted during the lease contract and will buy CO2 credits for its clients.” An additional facet to this initiative, ING employees who chose to take out a car lease with ING could only lease energy efficient cars.
HIP IMPACT: Earth

HIP PRACTICES IN BANKING
What goes beyond a cool product and actually launches a HIP Practice? Here are some of the leading examples around the world of Practices that go above and beyond to be HIP.

Citi has developed the Sustainable Development Investments group to make private equity investments in renewable energy, sustainable forestry, waste management, water management, clean technology, energy efficiency, and carbon credit markets. The SDI group has a hefty $2 billion capital commitment for the next ten years. Furthermore, Citi was one of the original institutions that pioneered the Equator Principles. Through their efforts in moving project-finance capital towards more sustainable projects, which now cover 80% of that international capital market. HIP IMPACT: Health, Wealth, Earth and Equality (all four!)

In late 2006, UBS launched the first index for emissions allowances trading. This allows the companies that were able to reduce their emissions in a cost effective manner go on to sell their unused permits to other companies that may need them - thus insuring emissions reduction for all.Credit Suisse requires evidence from its suppliers that they are taking “a progressive approach to environmental issues” - and have developed an informal questionnaire for service providers to show that they maintain high ecological performance and social standards. HIP IMPACT: Earth

Furthermore, there are institutions that were created solely on the principles of sustainability much like Triodos Bank, which has been lending exclusively to organizations that enhance the lives of people or the environment. Triodos’ mission is to enable individuals and businesses to use their money more wisely in ways that benefit society and the environment. HIP IMPACT: Earth and Wealth

Banca Ethica’s roots are grounded in sustainable banking. The bank initially started as a non-profit collection of institutions whose goal was to raise funds and invest them socially oriented projects. In the early 1990s due to policy change, this group reevaluated their operations and after several years of work formed Italy’s first ethical-focused finance institution. HIP IMPACT: Wealth and Equality

The Co-operative Bank chose to adopt an ethics policy wherein it considered which ethics to incorporate. They chose to ask their customers what values they hold dear and they remain the only bank on UK’s High Street (”Main Street” in the USA) that gives their customers a say in how their money is invested. HIP IMPACT: Wealth and Equality

The New Resource Bank was formed in 2005 by a group of entrepreneurs, community leaders and financial executives who wanted to create a groundbreaking partnership. This bank is committed to serving the needs of green entrepreneurs and sustainable businesses. They also dedicate themselves to the community and to helping members within it become more aware of pressing issues on questions of sustainability. HIP IMPACT: Health, Wealth, Earth and Equality (all 4!)

BUSINESS RESULTS OF DOING GOOD: HIP PROFITS
In the end, what does all this actually mean to a business or a shareholder? A recent study by the investment bank Goldman Sachs found that companies that lead in environmental, social and governance (ESG) performance have outperformed the MSCI World index by 25% in 22 months and 72% of the companies recommended have outperformed their peers over the same period.

A study by Germany’s Oekom Research, an independent sustainability rating agency, correlates sustainability with financial performance. The study examined 602 companies in the Morgan Stanley Capital International (MSCI) World Index. Using their Oekom scores on social and environmental performance, they found that the best-in-class portfolio outperformed sustainability stragglers by 23.4% and the best-in-class portfolio outperformed the entire MSCI World Index by 3.8%.

CONCLUSION: CHOOSING A HIP BANK
BENEFITS SOCIETY AND SHAREHOLDERS

The financial sector’s is slowly waking up in its sustainability efforts - most banks today are doing a little bit of something while a few are truly leading the sector. Overall there is a definite shift in awareness of the world’s problems and many financial organizations are working towards finding ways to alleviate those problems through Products, Practices and their Portfolio investing - as well as more traditional community participation, employee volunteerism and other initiatives.

More than ever, individual citizens are showing an interest in the actions of the companies we engage with - as consumers, investors, employees and more. The actions companies make are carefully scrutinized and it is more imperative than ever for them to behave in the best interests not only of their bottom line but also of the bigger picture. And, you, as the stakeholder, have the power to ask the right questions and make HIP decisions - which bank will you use?

Next time you choose a bank, ask yourself three questions:
1• What PRODUCTS are they offering that help society?
2• What PRACTICES are they doing to improve their business? and
3• How are they quantifying their impact and how it drives PROFIT?

WHAT DO YOU THINK?
Why are Euro banks more HIP? Why are US financial services not as HIP?

What else can retail banks do to improve the Health, Wealth, Earth and Equality of society, while still creating Profit?

How will you choose your next bank - will you switch based on how HIP your bank is?

This research was performed by Dina Beigelman, and guided by Jessica Skylar.