Premier Wealth Management based in Birmingham, UK

Sustainable Finance and the Future of ‘Green Banking’

The world of banking has changed a lot in the past 10-15 years, and the list of what consumers expect from their banks grows ever longer.

Latest on the list is sustainability, with 61% of UK banking customers saying that they wanted their banking provider to “do more to create a positive, social and environmental impact” according to Deloitte.

This goes beyond paperless statements and digital cards. Scrutiny over the environmental impact of banks has led to a UN statement on 21st April announcing 43 banks from 23 countries who are partnering together to form the Net-Zero Banking Alliance, a global organisation committing to reaching net-zero emissions by 2050 or sooner.

Increased momentum in the sustainable banking movement is changing traditional banking methods and the way that individuals think about investments.

Goldman Sachs has jumpstarted a ‘sustainable finance’ campaign with a $800 million sustainability bond that will promote financing for ‘clean energy, sustainable transport, sustainable food and agriculture, waste and materials, ecosystem services,” among other things.

New, ‘Green Deposit’ programs allow customers to choose how and where their deposits are invested in ESG (Environmental, Social and Governance) projects, opportunities include waste management, renewable energy or sustainable food.

Another opportunity that has come out of the ‘Green Banking’ movement are Green Bonds.

Green bonds are a type of fixed-income security whose proceeds are put towards financing climate and environmental projects.

Example projects include:

  • Clean transportation
  • Sustainable agriculture
  • Energy efficiency
  • Renewable energy
  • Green technology
  • Clean water  

 

Green Bonds are offered by three main sources:

  1. Governments
  2. Supranational’s like the World Bank
  3. Corporations

 

The popularity of investing in these Green Bonds is continuing to grow with the total insurance speculated to have been $1 trillion in 2020!

To see the growing popularity of Green Banking from both consumers and providers is reassuring for the future of the planet. As the recent G7 summit has shown, government commitment towards net-zero initiatives promises new opportunities in the world of sustainable investing and continued growth in the environmental sector. 

Though this potential for growth is interesting all investments carry some risk. Before making any decisions, please speak with a member of the Temple Row team. The value of units can fall as well as rise, and you may not get back all of your original investment.


*Is Eco-friendly ‘Green Banking’ Sustainable? Garret Reich, The Financial Brand .

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