4. Results and analysis
4.3. Banks, present and future: An interview of Mrs. Andrea Palmer (Triodos)
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investment, it will always unconsciously appear much better than nothing. The second reason is market-oriented. Social, ethical and environmental projects are frequently associated with philanthropy in popular belief. Hence, not offering any interest rate can unconsciously strengthen this belief, whereas a positive interest rate may surprise and attract potential customers’ attention. Even if the annual rate of return is a good proxy of performance for most of the securities, because how symbolic the rate of returns provided by banks in their savings accounts are, this parameter is not of the largest significance for choosing a bank. Also as in our sample, some sustainable banks align themselves with systemic banks, they can be considered as better options from an investor perspective, thanks to all their side benefits.
4.3. Banks, present and future: An interview of Mrs. Andrea Palmer (Triodos)
After presenting sustainable and systemic banks’ performance from an external point of view, by studying their consolidated financial statements, it is complementary to obtain an internal angle about it. Hence, Triodos, the largest EU sustainable bank in total assets value, accepted to give an interview about the present and future of sustainable banks and more specifically of Triodos, obviously. All the following declarations are proper to Mrs. Palmer and the author’s opinions.
In this thesis, interest rates on savings accounts are a proxy of performance. This means the higher the interest rate, the better the performance is considered to be from an investor’s perspective. Triodos, which headquarters are based in the Netherlands, is one of the sustainable banks which offers the highest interest rates for its classic savings accounts (0.4% and 1.75%).
However, there was a discussion about lowering these rates down to 0% because most of the
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Dutch banks do not offer interests for their savings accounts. Indeed, as nowadays the rates are very low on the market, a positive rate will not make the customers much wealthier. There is no real difference between no interests and the actual interests provided by banks. But, it is a marketing tool to propose interest rates, because to customers, even if the returns they would get are very small, it still sounds better than nothing. In fact, it is more about psychology. Also, social, environmental-friendliness and ethics often click in people’s minds with philanthropy.
Thus, offering interest rates is a way to prove that sustainability is profitable.
Fortunately, this word association (sustainability and philanthropy) starts to disappear. An increasing number of individuals and companies begin to consider sustainable finance and sustainable investment as an opportunity to make money. In Triodos, there is no typical investor in terms of age and gender. Contrary to what could be expected, a large part of their customers is retired people. Nevertheless, some common points between the investors can be emphasized.
Most of them are quite wealthy and educated people, that had the chance to travel around the world and see by their own eyes, the changes that need to be implemented. This is why they show some enthusiasm towards sustainable activities and hence, sustainable banking.
Sustainable banking is a growing industry, but still represents only a niche in the global banking industry. Some actors like Triodos, implemented for almost four decades in this sector, can identify some threats and opportunities in this growth. Its goal is to change finance. Hence, the new regulations and the pressure about climate change are good news for Triodos, as the company tries to spread the word on this topic for a long time. However, the industry growth brings some new competitors. Thus, it is challenging on a marketing perspective to keep on differentiating and to keep its market share. Indeed, most of the potential customers do not have
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countries (arrival on the Italian market) and increasing their digital integration (brand new website).Systemic banks are aware of the sustainability boom in their industry too. It may become a threat to their activities as they are not really committed to sustainability but more about making money. As long as it will be profitable to invest in non-ethical activities, they will keep on doing it. However, as it can be noticed with the recent launch of sustainability booklets in several banks of our sample, like BNP Paribas, Société Générale, BPCE and others, the systemic banks want to capitalize on the sustainability opportunity. So, according to the interviewee, systemic banks will not disappear in the future, but the definition of the systemicbanking sector may change in the following years. Even if sustainability is more used as a marketing tool for systemic banks, they need to start from somewhere. Finally, this is positive for the sustainable banking branch as if even systemic banks get involved in more ethical activities, it proves that sustainability does not necessarily go only along with philanthropy.
In the future, Triodos hopes to develop its international branches, create more partnerships, strengthen its network and its position on the market and mostly keep being an actor in the ecological transition. Governments need to be the drivers of change because the financial sector is still one of the main pieces of resistance in the ecological transition. The implementation of taxes may be the key, as the banks will naturally abandon unprofitable activities. However, the remaining time to successfully implement the ecological transition is very short making Mrs.
Palmer quite pessimistic about the ability to deeply change the sustainable investment industry on time.
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In a first time, the following section aims to compare the results found to existing reports on older periods and periods that overlap this research time horizon. In a second time, it will pinpoint some limits of this thesis, mostly related to the results accuracy due to the sample size and the methodology used. In a third time, suggestions and recommendations to improve the quality of this work and go even more in-depth.
The topic of this research is sustainable and systemic banks performance in European Union from 2014 to 2018. This subsection will place into juxtaposition this thesis' results and the results found in the Fondazione Finanza Etica report and the GABV report. Hence, the comparisons will be done following the methodologies used in the two reports which are identical. The first comparison will be done with European banks (not only European Union banks). The loans to assets ratio and the equity to total assets ratio will be compared considering 2016, the last year of the study to identify the differences between Europe and the European Union. Then, still with these two ratios, the last year of this study, the evolution between 2011 and 2018 will be observed. Obviously, as some differences will be diagnosed between Europe and European Union banks, the evolution between 2011 and 2018 will not be fully accurate.
Furthermore, other ratios’ (growth ratios, ROAA and ROAE) the five-year average (2014 to 2018) will be compared to the EBI report’s five-year average (2011 to 2016) to highlight the impact of years 2017 and 2018. The second comparison will be done between European Union bank and worldwide banks (including the banks in European Union). As for the first comparison, the loans to assets ratio and the equity to assets ratio will be compared considering 2017, the last year of the study to discuss the disparities between the European Union’s results and the world’s results. Then, the same path will also be used for analyzing the evolution between 2012