In practice, for Triodos Bank, this approach means if we are active in a country we want to be deeply connected with our core sectors within the real economy there. We are a European bank with growing branches operating in, and collaborating across, five different countries and cultures. The sustainable foundations for our work benefit from this diversity. It is evident both in the different geographical country offices – in The Netherlands, Belgium, the UK, Spain and Germany – and in the different sectors we work in within these markets. And, at the end of 2012, Triodos Bank further strengthened its diversity by setting up a representative office in France.
All offices are responsible for raising capital in their country, as we have done once again in 2012. This capital is crucial because it allows us to lend more to sustainable enterprises pioneering a greener, fairer economy. We also aim to raise enough deposits to meet our lending needs in those countries because there is a need for a transformational process to a more sustainable economy in every country where we work.
Building closely connected and self-sustaining country offices means we can check that our model is sustainable, relevant and works in each location. The countries in which we operate faced various challenges during the year. And our branches collectively, and individually, coped well with them. Triodos Bank’s connection to the real economy and deep, direct relationships with its customers, has lead to growth of more than 20% in the balance sheet, raising more than EUR 96 million in new capital and attracting almost 82,000 new customers during the year. Since the banking crisis began in 2008, Triodos Bank has more than doubled in size.
These numbers are just one part of the Triodos Bank story for customers who see a robust, transparent, bank with a straight-forward savings and loans business at its core. As a result these stakeholders – whether depositors, borrowers or investors – are confident that we will manage their finances effectively.
They see us establish meaningful relationships in the sustainable sectors where we operate. From a bank perspective, we know the enterprises we lend to and invest in personally, allowing us to manage risk effectively. This approach, and the geographical and sectoral diversity it is built on, has enabled Triodos Bank to develop a robust and resilient model.
A robust business case
There is empirical evidence that this approach works not just for Triodos Bank but for values-based banks around the world. During the year, the Global Alliance for Banking on Values (GABV) – a growing network of 21 sustainable banks – co-founded by Triodos Bank in 2009, published research comparing the performance of sustainable banks and the biggest banks in the world from 2002 to 2011. The study is deliberately not limited to the years since the crisis in 2008, and includes the period of heady results in high-street banking before it.
Against almost every key financial measure, the sustainable banks outperformed the world’s best-known banking names, proportionally lending more, growing more, and with stronger capital positions. The research showed, for example, that sustainable banks allocate much more of their balance sheet to lending, relative to the big banks.
The ratio of loans to assets in sustainable banks (72%) was almost double that of the big banks (41%) over the period studied.
A new ecology of banks
This is important, because it challenges traditional notions that big is always better, particularly when viewed through the narrow lens of profit maximisation. It also demonstrates that there is a need for more diversity in the banking sector, and argues forcefully that it is simply not true that the only way to survive is to be big. If we want a financial future that avoids the shortcomings of the past, and more importantly helps co-create a fairer, more environmentally sound, sustainable and prosperous economy, we need a banking system that’s comprised of a rich ecology of banks, of different sizes, geographic proximity and sector specialisation.
Banks like Triodos, and others, add to this diversity; as in nature, where biodiversity produces greater resilience, so with the economy. Smaller banks have a vital role providing this balance, nurturing a diverse banking environment that’s suited to the demands of the future.