This is the transcript of Episode 2: Sustainable Banking of the How to Make a Difference podcast. Go to the episode page to listen to this episode and for the show notes. Furthermore, we encourage you to read our blog post about sustainable banking.
Florian Koss: If you think about: What can I do in my daily life? What food do I buy? What clothes do I buy? It’s a compared very small impact you can only have, but with your banking account you choose once, and never have to think about. It has a tremendous leverage. And that is worth thinking about.
Elisabeth Ignasiak: Hey everyone! We’re bringing you a really interesting topic today: Sustainable Banking. And if you’re wondering what does sustainability have to do with banking – as it turns out: quite a lot.
Chinmai Gupta: Yes, I had no idea that banking can have such a huge impact on my carbon footprint. I had not joined the dots. I hope all of you find some of the facts that we present in this interview as interesting and fascinating as I did. So without further ado, here’s the interview.
Interview with Florian Koss: 01:21
Elisabeth Ignasiak: I’m super excited to be talking to Florian Koss today. He is the lead of communication and marketing at the Triodos Bank.
Welcome! Why don’t we start with a short introduction of yourself and what do you do?
Florian Koss: Yeah, thanks. Nice to be here. My name is Florian Koss, and my job is mostly the external presentation of the Triodos Bank. So it’s marketing, it’s communications, it’s public affairs – all ways that our internal and external communication for the bank in Germany. Triodos Bank – although the name is Greek, for those who don’t know us – we are not a Greek bank, we are a Dutch direct bank, now existing for over 40 years. And it’s Europe’s, or maybe even the world’s leading sustainable bank. Yeah, and this is a very interesting job because I’m not a banker, and I came to the bank explicitly to bring an outside view from a non-banker, to explain what a sustainable bank is, and that there are big differences between a sustainable bank and a conventional bank.
Elisabeth Ignasiak: Let’s actually jump right into that! Our listeners are passionate about sustainability, however, I’m sure, not many of them are actually experts in how banking works. Can you give a short overview of how a normal bank works? How do they make money? How does this whole banking system work?
Florian Koss: Well, I can we talk about the classical, the traditional way of banking. That is what a normal sustainable bank, like Triodos Bank, is doing. The main job of a bank is to take money from their customers for savings, for current accounts, … So, the so called funds entrusted. We take the money and maintain it safely for the customers. So they have the access for payment solutions, they can transfer money, they can save money, and if they need it, they can get it back. That’s the one thing.
And in normal times, they also get a little interest rate on their money, they deposit with the bank. And the big job of a bank is the so-called transformation of risk. Because the bank takes this money, normally, and provides it as loans to other people or to companies. And the big topic is to manage the risk, because it’s not our money from the bank it’s the money from our customers. We use and spend it for investments, or loans and decide which projects should get the money, and what is being done there with this money. Can they pay it back? That’s the financial topic.
And the difference between a normal bank is, we also really look very closely on what are the projects that we finance and we support with them. Are they doing something good for people, planet and also profit? Or is it only about profit?
Elisabeth Ignasiak: So basically, the bank takes the money of normal people who have a bank account there or a savings account, this money gets loaned to other people who want to take up a loan, and the difference is, who do you give those loans to.
Florian Koss: Yeah. That’s very shortly and very simply explained what traditional banking is. That’s how banks evolved. Today you have other activities of banks like investment, trading, and stuff like this. The normal job of a bank is to be a service provider for society, and for the economic. They are taking care that money flows. So this is the one job: to make sure that the liquidity is there, so they can pay back the money to their customers. And on the other side provide loans and support private activities and economic activities, and therefore, being a big driver for economic growth.
Elisabeth Ignasiak: Okay. Can we dive a little bit into: What does a sustainable bank do differently from a normal bank?
Florian Koss: I think the biggest difference is what they do and what they don’t do. So for example, when I speak about Triodos Bank: We have a very clear vision and mission is about supporting companies that really do something for people, planet and profit. It’s about having those three points in a balance.
So if you take a look: What are the biggest branches and sectors we are active in? It’s for example renewable energies, energy and infrastructure, it’s about elderly care, it’s about education, schools, kindergarten and universities we finance, or sustainable properties. That’s the one thing. So we have high level of criteria we want to see.
And on the other side we have a long list of negative criteria, where we say, this is not sustainable. So these are sectors or branches, we do not work with. So for example fossil energies, nuclear power, weapons and arms,… We say if a company is active there, it is completely excluded. Or, sometimes with big companies it’s really difficult, so you have thresholds. Then you can save up to 5, max 10% of the turnover, might be related to such or such activities, but that’s it. But that’s very low thresholds. And there is already the big difference to conventional banks. They do normally finance almost everything if the financial aspects are working.
And the other big difference between a sustainable bank like Triodos and conventional banks is, we don’t only promise to do so, we also show it. So, transparency is the big difference. We do publish on our website, every loan we give. So, everyone, and especially our customers can see on their website, where do my money work, right now. Which projects my bank has financed. So they see the farm, they see the elderly care home, they see the school.
And on top, we also calculate how big the impact is of our customers. For example, on average, every customer has helped to provide 3.4 households with green energy.
Elisabeth Ignasiak: So to summarize, you’re saying, on the one hand, you’re avoiding negative investments, like into fossil fuels, which normal banks would do because they care only about the financial returns. So you exclude a number of projects. And then you select on the other side projects that are very positive for society and the environment and you measure the impact and you provide transparency to your customers on what their impact is. What that an okay summary?
Florian Koss: That was the perfect summary. Yeah.
Elisabeth Ignasiak: Great. Can we… Can we dive into that impact side a little bit? You already mentioned one number that I found really interesting: So you said one customer is responsible for four families having renewable energy. Do I have that number, right?
Florian Koss: So if you,… if you want to say very simple: On an average, every customer, by being customer of the Triodos bank and giving money on their saving accounts or current accounts, they help us indirectly to provide green energy to 3.4 households. For example education: it’s round about one education offer per customer. So someone who has a chance to go to a university to a school or something similar. Or we have around 43,000 elderly people living in elderly care homes. So that’s round about 22 days of care, per customer that are being provided.
Elisabeth Ignasiak: Would I also be able to say, I’ve reduced my carbon footprint by having a bank account with you?
Florian Koss: That is a very interesting point to speak about.The one thing is the positive impact you have. So what are you contributing to. And you also have to think about the negative footprint, because every activity has an ecological footprint. It’s about energy (so in the end, CO2), it’s about water, it’s about waste, or similar. But it’s still very difficult to calculate such negative impact.
Triodos was one of the founding members of an organization called PCAF in the Netherlands, and the aim was to start calculating the climate footprint of banks and investments. A bank normally has a very small CO2 footprint. It’s a building, it’s a few people working there, you have light, you have heating, you have some paper for printing. So normally, a bank – as a normal office enterprise – has not such a big footprint like a big industrial company for example.
Elisabeth Ignasiak: Sure. Yeah.
Florian Koss: But the leverage is enormous, because by financing industries for example, or fossil fuels. By providing the money, you can calculate how much the influence is; what CO2 emissions they had.
Elisabeth Ignasiak: Interesting.
Florian Koss: We had a calculation of the German Verbraucherzentrale,…
Elisabeth Ignasiak: For our non German listeners: The Verbraucherzentrale is the Federation of German consumer centers. These are independent, mainly publicly funded non profit organizations that inform advise and support consumers in matters of private consumption.
Florian Koss: … they calculated the CO2 footprint of some funds. What happens if you change 1000 Euro from the worst fund to the best fund?
Elisabeth Ignasiak: Okay.
Florian Koss: And the result was, it’s about 740 kilograms of CO2. This is the same as driving 4600 kilometers by car. Once from North Cape to Neapel, crossing hole through Europe. This is the same amount of CO2, you save by just once, thinking about: Where do I put 1000 Euros of money. If you have 10 000 Euros: it’s 10 times. If you have 100 000: it’s 100 times. And if you are a bank and invest 100 millions: You can see how big the leverage is.
But what I really liked at that story: the best fund was, of course, one of ours. It was a Triodos fund. I really liked the story. But this shows how big the effect can be, if I as a customer, think about sustainable investing, and also sustainable banking.
The problem is, we – because we are the first ones who calculate it and who transparently published our CO2 footprint, also of our loans – we have no benchmarks. This is something more and more banks are working on that and we will see that in the next latest two years, more banks will publish their CO2 numbers. And then we can share a difference. So if you change from another bank to us, that would mean for example, so and so much CO2.
We had the calculation – but that’s eight years old – from the Netherlands. There was an NGO and they calculated that changing from a big Dutch bank to Triodos would have the same effect of 200 kilograms of CO2 per 1000 euros, you have on your savings account.
Elisabeth Ignasiak: So, basically, you say, since you’re the first one to measure and make your footprint transparent, it’s difficult to compare. However, the little things we know about it, shows that every 1000 Euro, you have in a sustainable fund or in a sustainable bank account can have a huge impact in terms of CO2 footprint compared to a normal bank.
Florian Koss: Yeah. The difference between investing 1000 Euro in a sustainable fund or putting it to a sustainable bank can be hundreds of kilograms of CO2, per year.
If you think about: What can I do in my daily life? What food do I buy? What clothes do I buy? It’s a compared very small impact you can only have, but with your banking account you choose once, and never have to think about. It has a tremendous leverage. And that is worth thinking about.
Elisabeth Ignasiak: So, our listeners will know how much money they have in their bank accounts, and so that means they have a reasonably easy equation for every 1000 euro, it’s several 100 kilograms of CO2 that can be prevented from being emitted by changing your bank account. Every year.
Florian Koss: Every year. Yeah.
Elisabeth Ignasiak: Cool!
Florian Koss: Not to speak about other projects your normal bank might finance. Controversial projects are mining, the mountaintop removing, for example, weapons industries… There are lots of very interesting NGOs like Facing Finance. They do very interesting surveys and studies about what controversial projects and sectors are being financed by which banks, and also by German banks.
Elisabeth Ignasiak: Okay.
Florian Koss: And another point is: what do the companies our funds invest in… How do they contribute to the SDGs? So to the UN Sustainable Development Goals. And compare that to benchmarks. There’s big indices like the MSCI world, that’s an international index that includes global big companies, and you have a so called ESG version of that. So a sustainable version of that index. And if you compare it to the normal index: The companies included in there negatively contribute about 30% to the SDGs. So when you… If you take one of those ETFs or those funds that invest in the MSCI, you negatively contribute to the SDGs. You do harm to the world and to the environment. And if you take your money and want to invest it in such an MSCI ESG, so the sustainable version, you are plus minus zero. So it’s just leveling, your impact you have. And if you see the Triodos fund: This has net 70% positive impact to the SDGs. So you see the big difference in what real sustainable fund can do. What you can do with your money, on the positive way.
Elisabeth Ignasiak: So we’re looking at the MSCI world, which is a stock market index containing big companies throughout the world, and what you’re saying is that investing in these companies actively harms the planet. And even if you think you’re doing everything right by investing in companies from the MSCI SDG, the sustainable version, you’re still only come out neutral. And in contrast, if you invest in a Triodos fund you have a net positive impact on the planet.
Florian Koss: To be honest, you also have to think about the negative footprint. If you see the negative footprint of the Triodos funds compared to those benchmarks, you see 70% less CO2, you see 45% less waste, and about 50 to 55% less water consumption of those companies compared to the classical indices. And then you see: still have a negative footprint, but that is very small. And now we started in July this year: If you want to reduce your negative footprint to zero – we offered the first climate neutral depot here in Germany. So if you buy our funds or some third party funds we offer on our website that are also very sustainable, we compensate the little bit rest of CO2 you have on the funds: We compensate for you. So your investment is 100% climate neutral. You can do good in the world, and hopefully have a good financial return on that.
Elisabeth Ignasiak: Okay, interesting! Since we’re already talking about investment and green funds: I’ve seen a lot of advertisements around green products, green funds from other banks. So, is that something I can trust? I mean we hear a lot about greenwashing these days. Can you put that into perspective, a little bit?
Florian Koss: Yeah. You have meanwhile a real trend. Friday’s for future, climate change is more present in the public debates, people are more aware about climate change and start asking more for sustainable products. |And the financial industry says: yeah, perfect. We have something for you. But the problem is that meanwhile we have so many funds or products on the market that call themselves sustainable, because they do a little bit selection, but the question is: How do we define sustainability? Sometimes you have so awkward things like best in class, for example. So they take a look: We only take the best 50% of that sector. So you have the 50% best oil producing companies, the 50% best nuclear power plants, you have the 50% best weapons companies. That is not sustainable in our eyes. So, you have to take a real close look. And that’s why transparency is so important. And how can you, as a normal retail customer, if you’re not an expert in it… how can you really see if a product is sustainable or not?
Elisabeth Ignasiak: And how can I see that?
Florian Koss: The first thing I could just suggest to everyone is: Take a close look into the product. What companies are really included in a fund, for example. And are they then really sustainable, for example. But not all funds really publish all companies they invest in. It’s mostly only the top 10, for example. What I can suggest is taking a look for third party; for authentic and trustworthy stakeholders, like in Germany, you have the Verbraucherzentrale. They have a very nice website called geld-bewegt.de. They have a good overview of sustainable banks and sustainable funds. And what I can really recommend is labels, like the FNG. The FNG is the association of the sustainable asset managers. And they have created a label, you can apply for. And if you get this label, it shows that you have a minimum set of sustainable management strategies for your fund. And you can earn one, two, or even three stars on top. And if you have a FNG label with three stars, then you have really very high sustainable standards on your fund.
Elisabeth Ignasiak: And where does the Triodos bank rank in these lables?
Florian Koss: Yeah, we are very proud that we, since the start of this label, since five or six years now, we always had the highest level of three stars for all of our funds. So we are really top after that criteria.
Elisabeth Ignasiak: And where would other green funds range? Can you make a rule of thumb that if you’re with a certain bank, they always have this label, or does it really depend on the particular fund?
Florian Koss: It’s very dependent on the fund. So for us, Triodos, we are really proud that we have all our funds the highest fng labeled, because we have a very high level we set to ourselves, but if you take a look at big companies, like Union Investment that do all the funds for all the Volksbanken in Germany, or Deka Investments, they do all the funds for all the Sparkassen in Germany, that’s real big investment houses. They have, I don’t know, hundreds of funds, and they only have one or two green flagship funds, for example, they then push to such a label, but not all of the funds are really sustainable.
Elisabeth Ignasiak: So to summarize, that means, if I as a consumer I want to make sure my fund is sustainable, it’s best to look for third party certifications and labels like the FNG label. And I will put a link into the show notes. I have one more question with regards to investing. Obviously people put their money in a fund expecting some financial return. How to sustainable investments compare with other investments in the market?
Florian Koss: You have lots of studies. It’s still a big prejudice that I do good, or I do earn money, but I can’t have both. That is wrong. If you see financial results of sustainable funds, you have lots of scientific studies that show that sustainable funds are at minimum, as profitable, if not even more, than conventional funds. Because sustainable managed companies have a long term perspective, less risk, less volatility in their development of their value.
If you really want to fulfill the Paris Climate Agreement, 85% of today known resources of oil, gas, have to stay there, where they are. So, can imagine what that means to stock values of big companies like BP, Shell and others, for example, but also indirectly for carbon intensive or energy intensive companies. For them it’s going to be – the next five to ten years – a real big and challenging transformation to go on a pathway to a low carbon way of working.
Elisabeth Ignasiak: Interesting. I wanna switch gears a little bit and tease you with my next question, a little bit. So, obviously all of this sounds great and maybe for the listeners I should give a little disclaimer that I am one of the customers at Triodos Bank. It’s a great bank, you do positive things, we know the impact is very positive compared to other banks… What’s the catch?
Florian Koss: Good question. We’re a direct bank. So, we have no branches all over Germany. So you can only see us online. And I think that’s one of the downsides. We are not around the corner.
Elisabeth Ignasiak: Just for our listeners can you explain what a direct bank is?
Florian Koss: Yeah. We offer all our products and services by our website or by our app. And you can, for example, with our current account have with… if you take the credit card on top, you have all over the world, for free, access to cash at every ATM. So, this is no problem. But we don’t have any branches somewhere. So we’re only situated in Frankfurt, and you can visit us there, but we have no branches in other cities in Germany.
Elisabeth Ignasiak: So what does it mean if I’m a customer and I want to talk to someone? What do I do?
Florian Koss: Yeah, if you’re not situated in Frankfurt, it’s the easiest way to call us. We have the customer service care teams situated in Frankfurt – you can speak with us. Or, of course, sending us an email, or directly, making… using services within the online banking app, or the online banking we have on the website.
Elisabeth Ignasiak: Okay. And just, again, knowing, as a customer I’ve never had a problem reaching anyone in your hotline, so I can confirm that… that it works. Being a customer, I also know that I have to pay for the bank account. So, I know, obviously, many other banks offer bank accounts for free and credit cards. Sometimes they even give you money if you open a bank account with them. So, why… Why do I have to pay for my bank account? Why can other banks offer this for free?
Florian Koss: To answer your question: they can’t. They still try to do it, but if they are honest they can’t offer it for free. The point is, differently to a savings account, a current account is a very expensive thing for a bank to do. There are lots of legislative and mandatory regulatory topics and tasks that are combined with a current account. It’s lots of costs a bank has, especially for providing cash. And we never offered a current account for free. Because this is for us a sustainable way of working, and a transparent and honest way of working.
If you just offer a current account for free, then you have to sell him some other products where you earn money with. So you try to sell him investment funds, insurance, or some other products, where you as a bank can earn money with it. The problem is, meanwhile, because of the low interest we have since the financial crisis, what you can earn with loans is so dramatically sunk that almost all other banks, in the last few years, started to also take money for the current account, even big direct banks like ING meanwhile take money for the current account. And the interesting thing is that some banks that offered it for free for a long time now even take more, suddenly, than we do.
Elisabeth Ignasiak: What amount are we talking about, roughly?
Florian Koss: Right now, with Triodos, a current account costs you € 5,50 per month. That’s for the current account.
Elisabeth Ignasiak: Okay.
Florian Koss: And there is all included. Except for example, you want to have your status by mail – that costs you extra. And then you can decide if you want to have your debit card, or your credit card, or both on top. And they cost then €15 and the current account… the credit card €39 per year, on top. And for… with the credit card for example, you have what I spoke about, that you can get cash, all over the world for free. And the best thing is, we have been the first bank in Germany, that offered a credit card, not being made out of fossil fuels. So it’s bio plastic from corn.
Elisabeth Ignasiak: Ah, I actually didn’t know that! That’s really cool.
Florian Koss: So you don’t have oil in your pocket.
Elisabeth Ignasiak: Cool. What countries does the Triodos Bank operate in? I mean, you already said that it’s a Dutch bank. Do you operate in other countries as well?
Florian Koss: Yeah. Triodos Bank is active in their home country in the Netherlands. Then we have branches in Belgium, Spain, UK and in Germany. And they’re a little bit different in all countries, due to historical reasons, due to local regulatory reasons. So, we don’t have any current accounts, for example in Belgium. In Belgium it’s mostly saving accounts, and loans, we provide there.
Elisabeth Ignasiak: Interesting. I hope that by now, all our listeners are enthusiastic about joining your bank. Can you walk them through: I’m now converted. I want to change my bank account. What do I need to do?
Florian Koss: If you are interested in becoming a Triodos customer just go to the website, choose your product – your saving account or your current account, or an investment account – and then you do a complete online onboarding. There are some questions that you are being asked. And like with every other bank also we have to check your identity, but that also can be done by video, or go to your postal office. So you can onboard within 15 minutes, then it takes one or two days to send you some… some material and further informations. And then you are already a customer.
Elisabeth Ignasiak: Okay, so now, in times of Corona, what I’m hearing is: I can stay at home, open my bank, account verify my identity, all sitting in my home office – risk free…
Florian Koss: Yeah. And the best thing is, we offer for free, for our new customers, so called transfer service. So, this is with a FinTech, we offer that service. They take a look at your current account, what payments have you made over the last 13 months, and then they create a long list of letters to all those companies and inform 80% to 90% automatically, if you want to, about your new current account.
Elisabeth Ignasiak: Okay, that’s… that’s really interesting.
Florian Koss: If you want to. If you want to inform them by yourself, of course. But that’s an offer we do.
Elisabeth Ignasiak: So that’s gonna be really attractive for everyone who’s super busy and doesn’t want to have the hassle. Yeah. Cool. So one last question: I know that, at least in Germany, there’s a number of ethical banks. How do they differ amongst each other?
Florian Koss: Yeah. In Germany we have, different to other countries like Netherlands or Spain – there we are the only sustainable bank – in Germany are several ones. Well, if you see, for example at GLS bank, they are quite similar. They have the same mission that they say: We want to do good with the money. And we want to support good projects and companies, and do not support those who harm the environment or society and people. They also have very similar products. There are small differences, like you have to pay membership fee – let’s put it like that. But if you want to go to a real sustainable bank, they are a good offer.
Then we have the EthikBank. That is a subsidiary of Volksbank in Eisenberg, I think. So it’s a little sustainable spin-off. I heard, they also have good offers.
And then we have the UmweltBank. There’s one difference: They also do not offer a current account. And UmweltBank is more focused on giving loans, and savings, and investment products. And very strongly on an environmental focus.
Elisabeth Ignasiak: Okay.
Florian Koss: But all of them are really good. But you have to be a little careful with… there are some new like startups, they also jump on this sustainability topic and trend. We have one like Tomorrow. There we are very careful, meanwhile. They started to provide, and to make aware about sustainable banking. What we really liked and say: Well, everyone who is creating awareness for the topic we really welcome. But you have to know that they are not a real bank, they work together with a normal bank in the back. So they start and the ambition is to become a sustainable bank somewhere. But meanwhile, they are only an app provider. So you have no control and no transparency, where your money is really working for. And this is a difference.
Elisabeth Ignasiak: Okay, thanks. Thanks for that overview. Well, to finish off: If people want to find out more about the Triodos Bank, or why their bank accounts matter, where can they find out more?
Florian Koss: I hope the first way to go is the website, triodos.de. If you want to learn more about sustainable banking, in general, I can recommend geld-bewegt.de. That’s a website from the Verbraucherzentrale Bremen. They had a very nice project where they took a deep look into what is sustainable banking and what is sustainable investing. That is also a real nice external authentic and trustworthiness overview about the market, and what has been offered there.
Elisabeth Ignasiak: Cool. Thank you. Thank you so much for your time and for being my guest today. Yeah.
Florian Koss: Yeah, thanks. Really appreciate it to be here.
Elisabeth Ignasiak: So Chinmai, obviously, you weren’t part of the interview, because it happened before we started working together. Was there something that surprised you when you listened to our conversation?
Chinmai Gupta: Yeah. To be honest, I’d never thought about how important transparency is in the banking system.
Elisabeth Ignasiak: Yeah.
Chinmai Gupta: It’s really shocking how little we know about our banks, and our investments, and where our money goes. Especially considering how huge their influence is, and how much power they hold.
Elisabeth Ignasiak: Yeah, that’s true.
Chinmai Gupta: I don’t want to be financing the weapons industry with my investments, but am I doing so without my knowing?
Elisabeth Ignasiak: Yeah.
Chinmai Gupta: What about yourself? What stood out for you?
Elisabeth Ignasiak: For me, what really stuck out was that number: 200 kg of CO2 per €1000 per year, that you can save, if you change your bank account. And, I mean, let’s say you have €10 000 on your savings account, right? Then that’s already two tons. And considering the average footprint of let’s say a German, that’s 20% just poof, gone, if you switch. Like, I think that’s incredible!
Chinmai Gupta: Yes, fascinating isn’t it.
Elisabeth Ignasiak: Yeah. By the way, talking about switching: Chinmai, what’s the status with your bank account?
Chinmai Gupta: You’d be happy to know that I’m in the process of switching my bank account.
Elisabeth Ignasiak: Very cool.
Chinmai Gupta: Yes. And since everything is online, it’s very, very little effort. I would also urge all of our listeners to tell their friends and family about sustainable banking, if you can.Send them this episode, so they can learn about the facts.
Elisabeth Ignasiak: Definitely!
Chinmai Gupta: And most people around me have been completely amazed when I’ve told them about sustainable banking and what a huge impact it can have on their carbon footprint. It’s not something people have consciously thought about. So, do please spread the message.
Elisabeth Ignasiak: Yeah. And if you’re thinking about switching, check out our blog post on sustainable banking (the link is in the show notes). We’ve listed a lot of resources, not just for Germany, but for a lot of other countries. So pick your favorite sustainable bank and switch. And if you do switch, please let us know! We would love to hear from you.
Chinmai Gupta: Thank you all for listening, and see you all next time. Bye-bye.
Elisabeth Ignasiak: Bye-bye.
Chinmai Gupta: See you. Bye-bye.
Elisabeth Ignasiak: See you next time. Do we wanna say bye-bye one more time? Just kidding…