- Green Minute
- Green Campuses
- Green Media
- Contact Us
Bloomberg Markets recently published their inaugural list of the world’s 20 Greenest Banks. So who do they pick to be the poster child for eco-conscious banking? Drum roll please…. it’s Banco Santander, the Spanish financial services giant.
U.S.-based banks had a decent showing with Goldman Sachs and Citigroup coming in at the #2 and #5 spots, respectively. In a list dominated by European institutions (14 of 20 are Euro-based), JP Morgan and State Street were the only other U.S. banks to make the top 20.
Before we examine the green credentials of the banks at the top of the list, let’s take a closer look at how Bloomberg arrived at their rankings.
Unlike Fortune Magazine’s list of the 10 most socially responsible companies in the world, Bloomberg was very clear about their scoring metrics. They started by only looking at banks with a minimum market capitalization of $10 billion (excluding smaller regional and community banks). They also eliminated those banks with insufficient published information about their environmental practices. This left a total of 188 banks in 49 different countries up for consideration.
Next, they examined each bank’s environmental track-record, taking into account both efforts to reduce carbon emissions in business activities as well as capital investments in clean energy projects. They considered CSR reports issued by the various banks, public filings and conducted phone interviews to verify the data.
From there, they ranked each bank in two categories: “making clean energy investments” (MCCI) and “reducing environmental impact” (REI). MCCI considered the bank’s investments in clean energy projects from 2004-2010, in terms of total deal count, dollars invested, and the megawatt capacity ofeach project. This category accounted for 70% of the bank’s score.
For REI, Bloomberg considered each bank’s effort to reduce emissions, promote energy efficiency and cut water consumption. They also incorporated a three-year momentum approach, putting the greatest weight on most recent data, thus rewarding those banks that had the most measurable multi-year carbon footprint and consumption declines. This category accounted for 30% of the bank’s score.
So, with that in mind, let’s take a closer look at the top 5 picks:
1. Banco Santander. This Spanish bank ranked 2nd in the MCCI category and 11th in the REI category. Santander has been very active in arranging financing for renewable energy projects worldwide. According to Bloomberg, their power project and acquisition finance division has closed 40 deals this year, 90% of which involved clean energy projects.
2. Goldman Sachs. Goldman ranked 1st in MCCI and 36th in REI. As is clear by the discrepancy in these two numbers, Goldman is ranked #2 based primarily on their investment banking prowess. Last year, they co-managed IPOS for both Enel Green Power SPA, the Rome based renewable energy power producer and Tesla, the electric car manufacturer.
3. Unicredit. This Italian bank ranked 3rd in MCCI and 30th in REI. According to Bloomberg, in 2010 Unicredit arranged $1.4 billion in loans for wind farms, solar plants and waste-to-energy generators.
4. Credit Suisse. This Swiss bank ranked 5th in MCCI and 20th in REI. Credit Suisse was also part of the banking group that underwrote the TeslaIPO. Since 2007, Credit Suisse has been involved in over 70 renewable energy deals with an aggregate value in excess of $30 billion.
5. Citigroup. Citi is ranked 6th in MCCI and 13th in REI. Citi played a key role in the financing of two of the largest wind power projects in UShistory: $1.43 billion for the Shephers Flat wind park in Oregon (the world’s largest) and $1.2 billion for Alta Wind Energy Center in California.
The remaining 15 banks on the top 20 list can be seen here.
So does this mean a socially responsible investor should move his or her money to one of these banks? Not necessarily. While these banks have been instrumental in the financing of renewable energy projects, there are other aspects of their businesses which, as many of us already know, aren’t terribly socially responsible.
So while it’s encouraging to see the big players in the banking world active in the clear energy market, it doesn’t mean they are the right fit for thetypical SRI investor. Community banks and credit unions, while excluded from this list, are still a great choice for those investors who are looking to avoid the too-big-to-fail crowd.
Image credit: Sophia zts
Author: Louis Berger