When Solange Rouschop, CEO and Joachim Aelvoet, Country Director Products and Services of ABN AMRO Private Banking Belgium, agreed to join us for The Banking Scene Afterwork and suggested to talk about “Accelerating the sustainable shift”, I got excited.

Too often, sustainable banking discussions do not go any further than the percentage of assets that a bank holds that comply with a “random” set of rules and guidelines.

To me, that is not sustainable banking.

By having the word “accelerating” in the title, I knew that this discussion would be broader and different from the pure asset discussions.

“The yardstick for every bank should be the real impact that they’re making, the change in the real economy that they’re actually creating by doing what they do, and by making things ESG-proof” is how Solange set the tone for the rest of the session.

It triggered me to learn more!

Sustainable investments

The focus on sustainability isn’t new to ABN AMRO. Did you know, for example, that ABN AMRO created a joint venture with Triodos Bank back in 2004?

Solange: “Together with them, we were the originators of Sustainalytics, a well-known ESG research company at this point in time. By 2013, we had around 4 billion sustainable assets within ABN AMRO private banking. We are now at around 32 billion, whit the ambition to grow to 46 billion by 2024.”

In relative terms, ABN AMRO put themselves the ambition to ensure that 30% of all assets contribute to sustainability measures.

Sustainable investments started back in 2004 with a negative screening of companies, Joachim explained. This evolved to a best-in-class screening. “Now, we are moving towards positive screening, where we look for companies that have a positive impact on a number of important themes, think about water, environment, climate efficiency”, he explained.

This means that investors can now select specific companies that contribute to a greener future instead of leaving out those that explicitly negatively impact the environment. The required due diligence of companies, the more extensive reporting, comes with new challenges for the bank, like finding the correct data and the right granularity of data to evaluate these companies properly.

The bigger picture behind sustainable banking

An ABN AMRO sponsored research by the University of Maastricht showed that the majority of people might not be actively asking the bank to invest sustainably, but once you start discussing with these people, they are intrigued to know more. This is what we call a passive interest.

Solange estimates that today 60%-70% of people have an interest in more sustainable investments. With baby boomers who transfer their assets to their children, who have different expectations, this percentage is expected to rise. These people feel emotionally attached to themes that matter to them and the future of our planet is high on that list.

On top of these emotional aspects, there is also the immediate financial impact. ESG is part of life nowadays, and companies that don’t invest in an ESG strategy will see that immediately in their value today, but even more tomorrow.

“From a risk perspective, it’s in our bank’s interest, in every bank’s interest, to invest in a greener future because it indirectly impacts the quality of the assets you have on your balance sheet”, Solange explained, and the same is valid for consumers.

Take the example of Shell in The Netherlands that is condemned by a court case to accelerate its transition to more green energy. Solange: “We should all realize that the key driver is not just about banks and their clients, and the products that they’re providing. There’s a whole society behind this and a real Earth.”

Don’t we risk a new form of exclusion once the issuance of a loan for projects is linked to their contribution to a greener future or mortgages that do not comply with strict energy efficiency? Joachim understood the remark but countered this by saying that we will create much more exclusion if we keep living as we do today, considering the exponential growth in the population and the related energy requirements. It would simply be impossible to keep the current living standards if we don’t adapt.

Work in partnerships and accelerate your impact

“Strengthen the means of implementation and revitalize the global partnership for sustainable development” is goal 17 of the sustainable development goals. For more impact, that is also what ABN AMRO Private Banking Belgium is doing.

One of these partnerships is with Ashoka, a worldwide network that encourages, stimulates and upscales social entrepreneurs. Solange explained that they started an impact program with them, where they closely collaborated with 10 social entrepreneurs in the field of climate change and circularity.

Solange: “We’ve been through a six-month journey where we have supported them, coached them with resources from the bank, staff members from the bank. The program was together with Accenture, which also brought in staff members. Finally, the period closed with a pitch from each team and the winner was Carbon+Alt+Delete. This startup developed a toolkit and software for smaller companies to measure and reduce their carbon footprint.”

Bringing different stakeholders together to tackle the challenge of sustainability accelerates the development of new solutions.

At Vlerick, ABN AMRO Private Banking funded a three-year program to better understand ESG data for SMEs on the Belgian territory. Joachim: “Together, we are trying to find innovative methods using artificial intelligence to mine and interpret the data. And now we are starting to get the first results so we can begin our analysis.”

Beyond using the data for credit decisions, the bank sees opportunities in helping entrepreneurs adjust their business to a more sustainable model. That is where partnerships like Carbon+Alt+Delete bring value, explained Joachim, “we are creating some kind of consultancy service for our SME customers to see how can we help and bring them further in this journey.”

Collaborations with Oxford University and Banking for Impact are more examples of how ABN AMRO looks for external inspiration on how to do better today and in the future, both by training their workforces as well as researching how to grow their impact on the future.

Conclusion

My biggest learning from this session is that developing a better future is a joint project that requires the involvement of many stakeholders to make a true impact. By working with startups, consultancy firms, universities and even other banks, ABN AMRO is genuinely accelerating the sustainable shift.

On September 9, we will continue the debate on sustainability and ESG in a session with Chris Skinner, author and commentator at The Financer, when we will discuss: Automation for Good: Automation as an enabler for ESG and Sustainability in Banks. Make sure you register for this special session!