SUSTAINABILITY At the core of financial decision making
Q: To get straight to the point, is there a business case for sustainability in finances? In other words, do investors or clients even care about sustainability when it comes to finances?
“The question is more whether it’s a business case or a license to operate. We cannot NOT do it, but our clients’ willingness to pay for sustainable products and services is very low. For example, if we could not issue green bonds, we would lose out; but not many investors would pay more for such a green bond. So, most of our clients just expect sustainability to be an integral part of our business. Of course, as a financial institution, we also must obey the rules of the ECB (European Central Bank). And the ECB is taking a risk-focused approach. For example, in March 2021, the EU announced mandatory legislation on due diligence. This means companies – including banks – must do adequate due diligence to ensure they respect human rights and the environment in their daily processes. Of course, if something is off, this can lead to an increased credit risk. As such, the ECB demands from us that we integrate these aspects – human rights and environmental impact – in our client analysis, risk models and calculations. Sustainability is thus no longer an ‘external factor’, but rather at the very core of financial decision making.”
SOCIAL IMPACT Creating equal opportunities for underprivileged youth
Q: Social impact is a key pillar of ABN AMRO’s Sustainable Impact Fund, a EUR 425m fund which invests in start-ups and scale-ups with a positive impact on people or planet. This includes creating equal opportunities. Can you tell us more about that?
“We have a number of projects with underprivileged youth that tap into this topic of creating equal opportunities. We specifically focus on this group as we feel – given our resources – that working with underprivileged youngsters allows us to create positive, long-term impact. So, for example, we are moving our head office from the financial district in Amsterdam, de Zuid-As, to the outskirts of Amsterdam, in an underprivileged area of the city. That new head office is being renovated to become a meeting point for different cultures, from bankers to social-housing projects. The idea is that the building can be used during weekends for weekend schooling, or by the local youth center. It’s about making youth interact with a world they don’t know, to spark their imagination, dreams, and ambition. It will be a challenge, but the least we can do is try to make this a success.“
GENDER EQUALITY Empowering women in Finance
Q: Gender equality is one of the UN’s Sustainable Development Goals. More in particular, SDG 5 is about ‘Achieving gender equality and empowering all women and girls’. How does ABN AMRO Bank address this topic?
“A recent program we are running starts from the realization that women are structurally underserved by the financial industry. We are striving to service women better as investors, entrepreneurs, and consumers. Did you know, for example, that female entrepreneurs are 30% less likely to get a loan, in comparison to their male counterparts? Or that in the Netherlands, women are four times more likely to end up in a financially vulnerable state than men? Well, we use these insights to support women in becoming more financially resilient, and this from a young age onward.
Next to financial resilience, we also noticed that we used to service our clients in a male-oriented way. Think for example about investing. Traditionally we looked at investing as the goal, focusing on the technical side of investing and the financial return. Yet, we learned that for many women investing is a means, and not the goal. They invest because they want to reach a certain life objective; they want to retire early, make a trip, or create a fund for their kids to go to university. At the same time, they are also more critical on how the returns are realized: women are in general more interested in sustainable investing than men. We also see that they are often less interested in the act of investing itself. So now we try to take that perspective more into account, looking at people’s investment goals and how they can reach those goals, redesigning the client journey accordingly. It’s all about being aware of our biases, learn, and improve.”
In summary, sustainability has become an integral part of financial decision making, and thus rather a license to operate, according to Richard. ABN AMRO runs many exciting projects related to the topic of sustainability, such as working with underprivileged youngsters, and empowering women by better serving them as investors, entrepreneurs, and consumers. More on ABN AMRO Bank’s initiatives in our Conscious Consumption bookzine!
Hungry for more? Stay tuned as we will release more ‘Conscious Consumption’ interviews in the coming weeks!