In Part III of our green banking series, we examined how from coal to real estate to small business lending, environmental, social, and governance underwriting criteria are a critical tool for banks to reduce risk and enhance profitability for themselves and their business partners. This final installment of our green banking series looks at cost savings that are available to banks looking in the right places, cost savings that also reduce their environmental footprint.
While a bank’s biggest contribution to a more sustainable future is realized through its lending decisions, green programs focused on what takes place inside your company’s four walls can result in lucrative operational expense savings and energize corporate culture. Green operational programs is a large topic in its own right, here we highlight two significant operational sustainability initiatives for financial services providers:
Shrinking Greenhouse Gas Emissions Footprints
Greenhouse gas emissions, generally measured in kilograms of carbon dioxide equivalent or CO2e, are the most common metric for measuring an organization’s environmental footprint. Monitoring and reducing CO2e emissions is a proven means to cut operating expenses. Take Citi, which has staff dedicated to monitoring, managing, and reporting its global energy use and greenhouse gas emissions. The bank has already achieved a goal of reducing its GHG emissions 10% between 2005 and 2010 and has gone on to set a follow-on goal of reducing its footprint 25% by 2015.
These goals are accomplished through aggressive energy saving and green building efforts in Citi’s offices, branches, and IT infrastructure and have resulted in significant cost savings. Citi is saving over US $1 million per year in power and cooling just from server efficiency programs in North America alone. Savings from other green IT efforts, the bank’s 170 certified green buildings, employee energy training, and other initiatives are saving Citi many millions of dollars more.
These initiatives are not reserved only for the world’s largest banks. In 2010, Union Bank introduced an energy saving program entitled Powered by You which engaged its branch employees to save hundreds of thousands of dollars in energy costs. Similarly, Comerica leveraged a focus on reducing its emissions to develop a comprehensive branch energy auditing program which helped it to realize $800,000 in annual savings across its roughly 450 branches.
Banks consume tons upon tons of paper in the form of loan documents, forms, and statements. This consumption represents not only an operating cost, but also a significant environmental impact. Banks large and small are addressing this reducing paper use across their operations. The most common approach to reduce paper use is to encourage customers to switch to electronic statements and correspondence. In 2010, for example, Bank of America sent more than 285 million correspondences digitally and eliminated 1,361 metric tons of envelopes through the implementation of Deposit Image ATMs. Collectively, these initiatives averted the consumption of 6,724 tons of paper; this is the equivalent of saving 151,000 trees!
Print consolidation and rationalization can result in even greater savings. Many multi-branch businesses still rely on a local supply of printed material for purposes of turnaround time and local support. A careful review of print services often reveals document redundancies and overprinting which can be avoided through centralized print management and rationalization, saving 25-30% in print costs.
The above is by no means an exhaustive list of bank operational green initiatives. Other programs which shrink footprint and costs include cloud computing, videoconferencing, reduction of corporate travel, and employee energy saving competitions, among many others.
Business leaders have discovered that cost management and environmental management are increasingly convergent. Banks are starting to leverage this convergence to drive profitability.
Andrew Malk is the Founder and Managing Partner of Malk Sustainability Partners (MSP), a specialty management consultancy, which guides businesses in developing profitable corporate environmental sustainability programs. MSP has particular expertise in developing green banking strategies. This article was written in collaboration with MSP Partner Zach Goldman. If you have enjoyed this series, we invite you to download a complimentary Malk Sustainability Partners white paper outlining our case for green banking. It is available online here.