August 21, 2017
With the looming threat of climate change constantly in the background of everyday life, businesses and people alike are prioritizing sustainability more and more. It has become the responsibility of the business sector to continue to lead the way in developing renewable energy and other green infrastructure. Green banking is becoming the institutional solution for the growing need for responsible business practices within this industry, with some banks having gone as far as linking executives’ compensations to corporate climate-related goals. Today, banks are making efforts to improve the lives of those in the communities they serve by incorporating some of these green initiatives into everyday services and practices.
Since the dawn of the internet, communication with paper has become, more and more, a thing of the past. Thanks to the instantaneous nature of modern technology, banks are now able to offer their customers the choice to use their online banking options. The benefit of this advancement is far greater than just the paper saved; customers can remove the need to travel and spend on postage for mailing checks, saving both time, and money, that can be spent on more important things. Customers have received the option to pay bills online, apply for loans and mortgages, view account e-statements, and deposit funds via direct deposit or mobile deposit as needed. The environmental impact of going paperless is quite substantial as well. According to the World Resource Institute and the Environmental Protection Agency, for every 5% of American households that switch to paperless banking more than 450,000 trees are saved, which is roughly the equivalent of covering the island of Manhattan in dense forest.
Recently, banks have been directing an increasing portion of their loans and investments into green infrastructure projects. Green infrastructure is any physical instrument that improves the ecological framework of social, economic, and environmental health. Examples can range from solar panels, to urban forests, to hurricane-proofing houses and buildings. Typically, green infrastructure has high upfront costs that inhibit implementation, but banks have been increasingly willing to finance public and private ventures as their viability has been repeatedly proven. In addition to the civic bonus, consumers gain financial benefits of their own, in the forms of tax incentives, direct savings on energy costs, or increased property value. Some local banks have even started to lead by example, like Melrose Bank who recently installed a solar car-port and roof that will generate 52,000 Kilowatt-hours of electricity and reduce carbon emissions by 36 tons every year.
Banks aren’t the only ones trying to put money towards environmentally friendly initiatives. Hundreds of non-profits, municipalities, and even foreign governments, are interested in investing capital in green energy products and businesses. More and more, banks are taking the time to help their customers understand the unique benefits of green investing, through the help of their financial planning services. They will help you understand the diverse benefits of different forms of investing. For example, if you asked any financial advisor to purchase a “green” bond, they would likely describe to you the varying benefits of the most common types of green bonds: Property Assessed Clean Energy bonds, Clean Renewable Energy bonds, and Qualified Energy Conservation bonds. All of these have different means of providing financing to green energy projects. Banks can also advise on credit enhancement programs available from larger institutions such as the International Financing Corporation or the World Bank.
If you are interested in looking into the benefits of green banking yourself, your local bank should be your first stop. The goal of any good bank is to improve the lives of those in the communities they serve, and green banking is just one of many steps they are taking to show their commitment to the growth and enrichment of their customers.