CCR2 Post-Covid19
‘Green green shoots’
Can the financial industry adjust its analysis to improve the world’s environmental prospects?
Andrew Jackson Managing director, Swishfund andrew.jackson @
swishfund.co.uk
“Where have all the flowers gone?” asked Pete Seeger in 1955. During lockdown of 2020, the stark necessity of having a healthy and green local environment finally struck home for many citizens. Birdsong replaced the roar of aeroplanes.
City air smelled fresh and clear. Open spaces became treasured community hubs. The environment rose higher on cultural and political agendas. Now, the financial industry has a key role
in keeping it there. Mark Carney, the United Nations
Special Envoy for Climate Change and Finance, said at a virtual Investor Summit of the UN on 24 March 2020 that the financial community needs to continue “to develop the necessary frameworks to finance a smooth transition to a net-zero [carbon] economy”. In reference to Covid-19, he said: “If
we can come together to meet one of the biggest challenges in medical biology, so too can we come together to meet the biggest challenge in climate physics.” In December 2019, as Mr Carney’s new
role in the UN was announced, Santander committed to become carbon neutral in 2020. The bank had already cut its emissions
by 27% between 2011 and 2018. In April 2020, Bunq, the Dutch bank,
announced a new initiative to help its customers become carbon neutral. Under a new green subscription for
individuals and businesses, Bunq will plant a tree for every card payment that their customers make. It is a real differentiator when sellers and customers collaborate to achieve mutual goals unrelated to their core business.
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Metrics relating to environmental responsibility could be weighted and scored to create an Environmental Responsibility Credit Scorecard (ERCS). The scorecard could input into traditional credit scorecards and give environmentally responsible businesses a competitive edge
Commitments Between these two commitments, In February 2020, the Swishfund Group became carbon-neutral by offsetting 161 tonnes of carbon dioxide via the charity, Carbon Footprint. We also decided to offer discounts of
1.5% off the APR recommended by our model, to carbon neutral customers. Why 1.5%? Because scientists believe that climate change becomes irreversible when the global temperature goes up by 1.5 degree centigrade. For many of our SMEs, 1.5% off their
APR would cover their costs of becoming carbon neutral with Carbon Footprint! Phillip King, the Commissioner for Small
Business, said: “It is great to see fintech companies like Swishfund taking steps to help more businesses become environmentally responsible.” Swishfund’s discount promotion is not just a conscience-easing gimmick. We
www.CCRMagazine.com
believe that environmentally responsible businesses are more likely to be financially responsible. If you care about the environment, then
you care about your impact on the world. Responsible people (and businesses) carry the values of integrity, honesty and fairness. Businesses with these values are the ideal customers to lend to.
Measuring Environmental responsibility can be measured in more ways than just offsetting your carbon. Examples include using sustainable
materials or local produce; having paperless offices, eco-friendly cleaning products, motion-sensitive lighting, and recycling all waste; implementing low-carbon travel policies, providing a fleet of electronic vehicles and cycle-to-work schemes. The list goes on… For forward-thinking companies, any
reduction of waste, increase in energy efficiency or improvement in resource productivity is likely to save money, increase profitability, and build on a progressive and engaged company culture. In other words, environmental
responsibility can be a proxy for fiscal responsibility and business intelligence and, perhaps, this should be recognised by Underwriting teams, Risk teams and Credit Committees. Metrics relating to environmental
responsibility could be weighted and scored to create an Environmental Responsibility Credit Scorecard (ERCS). The scorecard could input into traditional credit scorecards and give environmentally responsible businesses a competitive edge.
October 2020
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