How going green can help the planet and your bank

Community banks have long distinguished themselves by striving to connect with the local areas in which they operate. But in the interests of thinking globally and acting locally, many are choosing a more ecologically friendly path.

In the past few years, consumers have become more aware than ever of environmental issues and the views of businesses on those issues. Younger customers, in particular, show a distinct preference for companies that share their concern for environmentally positive or sustainable initiatives, products and services.

Millennials are particularly concerned for the planet’s well-being and currently make up the largest portion of the workforce. And, importantly, 74% of millennials say they’d be more likely to buy from brands that support causes they care about, according to Nielsen. And members of Gen Z are as, or even more, likely to take the same action.

While the ability to address “green” issues is sometimes seen as the domain of conglomerates and megabanks with deep pockets and big environmental impacts, consumer expectations are rippling out to businesses of all sizes and industries. Indeed, some community banks are already cultivating their own environmental strategies.

“There are many ways community banks can support the environment both in their backyards and beyond,” says Huntley Garriott, president of $8 billion-asset Live Oak Bank in Wilmington, N.C. “[While Live Oak Bank is] just getting started on formal reporting, we have shared environmental efforts in quarterly earnings reports, annual shareholder reports and stories with local media.”

The community bank has also promoted customer stories and lending metrics, and led employee sustainability campaigns to push forward environmental initiatives.

Building an eco-friendly community bank

To connect with eco-savvy retail and business customers, community banks must not only talk the talk of environmental progressiveness, but also walk the walk.

“Banks should start by measuring—and managing—their own carbon footprint,” says Naeem Siddiqi, senior advisor for risk research and quantitative solutions at SAS, a business analytics software and services provider based in Cary, N.C.

Siddiqi suggests that community banks look into adding solar panels to their facilities to boost energy efficiency. Some states offer rebate programs, and solar panels tend to pay for themselves in the long term. Siddiqi also suggests that banks consider using green energy providers that offset the energy a customer uses by putting the same amount in pollution-free, renewable energy into the electrical grid.

Shel Horowitz, a green marketing strategist and self-titled “transformpreneur” based in Hadley, Mass., believes it isn’t just internal efforts that are important, but also marketing and advertising to customers and other partners. He says community banks must “make it very clear that they favor green, locally owned and controlled businesses, [and] form partnerships with local vendors and utility companies that can help their clients [make their own businesses greener].”

These greener efforts may include, for example, bulk purchasing that promotes waste reduction, LED lighting or solar energy infrastructure. “[Banks] must create greater awareness of how businesses can be a problem solver [on green issues],” Horowitz says, “and how this commitment can create profit centers for their clients and other businesses.”

How Live Oak Bank goes green

Live Oak Bank has a broad, cross-sectional commitment to the environment across customers and lending verticals, says Huntley Garriott, president of the Wilmington, N.C.-based community bank. It markets renewable energy financing and “the innovative work our customers are doing in the space, such as a waste-to-energy project in North Carolina,” he adds. The bank’s energy and infrastructure lending team also promotes the clean energy projects it’s involved in across the country.

Within the bank’s headquarters in Wilmington, Live Oak Bank constructs its buildings to meet or exceed LEED, or Leadership in Energy and Environmental Design, standards. The community bank meets these green certification requirements by including LED lighting, tinted windows, energy-efficient HVAC units, water stations and recycling programs throughout its offices.

“Our [Wilmington] campus includes solar panels across building rooftops to offset emissions, 200 native trees that have been planted and 27 acres of preserved historic pine tree forest,” Garriott says. Live Oak Bank is also adding a philanthropic level to its environmental offering by encouraging its employees to donate to local sustainability-focused nonprofits.

“We are expanding efforts to broaden the diversity of our board to expand dialogue at all levels,” he adds. “Having buy-in from all levels of leadership is key to ensuring the longevity and success of sustainable initiatives.”

Moving away from paper

One easy eco-friendly strategy that many community banks are already promoting is asking customers to go paperless by moving to electronic statements. Accelerated by the COVID-19 pandemic, this move toward digital is affecting other processes, from closing on a home to signing for a loan.

“Going paperless holds huge benefits for both banks and their customers, including not using trees and paper mills to produce clean white paper,” says Jimmie Paradee, product manager for Paducah, Ky.-based CSI Business Solutions Group. These efforts lead to less chemical runoff going back into the ecosystem and fewer greenhouse gases generated from the many planes and vehicles needed to ship paper statements to customers’ mailboxes, he adds.

Indeed, Griffin McGahey, president of HC3, a customer solutions provider in Irondale, Ala., points out that many financial institutions are “driving paperless initiatives across the whole institution.”

Case in point: A 2008 PayItGreen Alliance survey vetted by the Environmental Protection Agency (EPA) found that an American household could save 6.6 pounds of paper, 63 gallons of water and 4.5 gallons of fuel per year simply by choosing to receive paperless statements and bills. In 2020, National Westminster Bank in the U.K. went completely paperless, saving an estimated 450 million sheets of paper and 100 million envelopes annually.

Scott Flowers, the managing director for retail and small business for Dallas-based Endurance Advisory Partners, says community banks should use electronic signature vehicles like DocuSign while paying “specific attention to regulatory required wet signatures.”

Aside from the cost-benefit of moving more document-intensive transactions to be paperless, Paradee points out another cost savings: postage. “Customers pay as much, or more, for postage than they do the actual statements,” he says. “Banks spend tens of thousands, sometimes hundreds of thousands of dollars, in monthly postage fees. The quicker they can get their customers switched over to electronic statements, the quicker it will affect their bottom line.”

“Eco-friendly choices may be more expensive today, but they will help preserve our planet in the long run.”

—Naeem Siddiqi, SAS

Shouting about it

Community banks can win points with customers—and potential customers—by marketing their environmental efforts and making headlines in their communities.

“Greening any business is still newsworthy,” Horowitz says. “Banks can reach out to eco beat reporters with what they’re doing; to the banking and financial trade press about what motivated them and how other banks could emulate them; and to the general press to highlight what they’re doing for clients in the nonprofit world who are greening up.”

It’s important to remember, however, that even with the potential long-term brand and financial benefits, eco-friendly practices also have inherent value for the planet.

“Being an early leader in this charge has tremendous potential to enhance brand reputation in an increasingly environmentally conscious world, particularly among consumers who are already committed to sustainability,” Siddiqi says. “Banks should also be cognizant, however, that it’s not all dollars and cents. Eco-friendly choices may be more expensive today, but they will help preserve our planet in the long run.”