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Four-Continent Social Consulting Group B.V. USA – Japan – France - Brazil/Colombia

Four-Continent Social Consulting Group B.V. USA – Japan – France - Brazil/Colombia. Simi Gambhir Katsuya Nakamura Thierry Zedda Renata Peregrino de Brito Antonio Patron. Where will we draw the line?. Triodos Bank. SUSTAINABLE BANKING. Overview. Banking Industry Overview

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Four-Continent Social Consulting Group B.V. USA – Japan – France - Brazil/Colombia

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  1. Four-Continent Social Consulting Group B.V.USA – Japan – France - Brazil/Colombia Simi Gambhir Katsuya Nakamura Thierry Zedda Renata Peregrino de Brito Antonio Patron

  2. Where will we draw the line?

  3. Triodos Bank SUSTAINABLE BANKING

  4. Overview • Banking Industry Overview • What is Triodos Bank? • Financial Analysis • Strategic Intent • Recommendations

  5. Banking Overview

  6. International Markets Imports Exports Government Taxes Investments Financial Markets Savings Investments Consumptions Households Companies Production How do banks function? Overview The Changing Environment of Banks. M.H.A. Jeucken, J. J. Bouma. GMI Theme Issue: Sustainable Banking, 1999.

  7. Banking Industry Sources of Income for a Bank Interest Earning Provision Earning • Works on behalf of and at the risk of its clients. • Securitization and investment banking • Work on its own behalf and risk. • Interest income received on loans minus the interest expense for borrowed funds

  8. Banking Industry 4 Main Functions of a Bank Money surpluses of one person are not the same as shortages of another Transform money by scale Creditors have short-term surpluses, while debtors have long-term needs Transform money by duration

  9. Banking Industry 4 Main Functions of a Bank Bank brings money from a creditor in Rio to a debtor in Rotterdam. Transform money by location Value the risks of various investments Risk Assessment

  10. What is Triodos Bank?

  11. Overview Triodos (tree-odos): from the Greek “tri hodos” meaning “three way approach” Social Ethical Financial

  12. Mission “The Triodos Bank aims to be a pioneering force in the world of sustainable banking … to contribute to a more decent, dignified and kinder society and a world that respects people, the environment and culture.”

  13. Objectives Provides funds for entities that add value to society, culture or the environment Funds Makes funding and investment decisions transparent to customers Information Funds are economically sound and positively impact the bottom line Profit

  14. Key Dates in History • Triodos Foundation established • Triodos Bank fully licensed in The Netherlands 1990 First ¨Green fund¨ offered and listed on the Amsterdam Stock Exchange (AEX) 1993 Belgian branch opened 1995 UK branch opened 1997 Triodos Green Fund on AEX • Solar Investment Fund introduced 2004 Spanish branch to be opened

  15. Products and Services Personal Savings Shares and Funds • Fairtrade Saver • Medical Foundation • Amnesty Saver • Organic Saver • Earth Saver • Just Housing • Dana Partnership • Cafédirect Share issue • Ethical Property Company • Golden Lane Housing

  16. Financial Analysis

  17. Vision Financial&Social Transparency Customer Characteristics Bank Depositors Borrowers Financial Return Maximization Triodos Depositors Borrowers

  18. Key Figures Deposits Loans (000s) (000s) 20%in average 20%in average Rapid growth Data source: Triodos Annual Report

  19. (ABN AMRO:90%) 3years Key Figures Ratio of Loans to Deposits (000s) % of Deposits Deposit Loan Saving-lending mismatch due to rapid growth and time lag Data source: Triodos Annual Report

  20. Triodos potential (90% util of deposit) ABN AMRO Bank Key Figures Pre-tax profits % of total assets Not only Financial, but Social Return Data source: Triodos Annual Report Social projects can be profitable

  21. Strategic Intent

  22. Sustainability & Strategy • The Sustainaility concept in Business: • Long term strategy in a profit maximization world • Being conscious of limited resources • In the Banking Industry: • Slow change • Reduces Risk for Lending • But also bring new opportunities

  23. Sustainability Typologies Four different attitudes commercial and investment banks have towards sustainability. Sustainable banking Offensive banking • Sustainability as a core strategy • Look for highest sustainable rate of return • Applicable to niche players Preventive banking Defensive banking The Changing Environment of Banks. M.H.A. Jeucken, J. J. Bouma. GMI Theme Issue: Sustainable Banking, 1999.

  24. Models of Sustainability Sustainability as new banking strategy Sustainability as value driver Public Administration Regulations Investors Bank Business Leaders Employees Business Policy Business Practise NGO´s O. Weber, R. Reiland and B. Weber, “Sustainability benchmarking of european banks and Financial Service organizations” 2002. ETH.

  25. Affinity Finance “…seeks to restore a sense of relationship between depositor and borrower which […] tends to be broken in normal banking practice.” (C.J. Cowton, 2002)

  26. Value, Cost and Speed Value • Investments go beyond the usual risk and return analysis • Specify more precisely the uses of funds Costumers Company Cost Speed • First mover advantage • Few business sectors • Low annual expenses (overhead) • Fee charges • Diversification: Insurance products Competitor

  27. Strategy Implementation • External: • The bank only invests in social and environmental harmless business, projects and sectors. • Annual Report • The Meerwaarde Fund • Internal: • ISO 14001 certification for environmental management • Gender equality regarding salaries

  28. SWOT analysis Strengths Weaknesses • Stakeholder approach • Transparency • Unified proposal • Niche orientation • Innovative products Opportunities Threats • Increasing demand • Alliances with other institutions • Financial Return • Fiscal “green scheme” • Acquisition threats

  29. Recommendations

  30. Recommendations Opportunity Problem Opportunity Alliances & Partnerships • Recommendation: • Valuable partner to other financial institution • Exchange: sustainability expertise & brand recognition • Access to new customers and markets.

  31. Recommendations Problem Problem Opportunity Sustainable Growth How to keep the same transparency level? • Recommendation: • “Keep small” • Change the current level of information

  32. Recommendations Problem Problem Opportunity Ratio of savings to lending. Are sustainable initiatives limited? • Recommendation: • Administrative speed to evaluate and reach new market • Risk taking attitude - less mature projects

  33. Recommendations Problem Problem Opportunity Customer Service • Recommendation: • Inclusion of payment services: debit & credit cards, and internet banking • Incorporate the banking facilities

  34. Us Market US$ 2.16trn European Market € $ 336bi Recommendations Opportunity Problem Problem Opportunity European Focus • Recommendation: • Local resistant to foreign bank • Do not ignore US market. 18.7%

  35. Conclusion • So…what can you do to support sustainability?

  36. THANK YOU

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