Recently, I had the opportunity to sit in on a roundtable discussion chaired by David Korslund, senior advisor to the Global Alliance for Banking on Values (GABV) at New Resource Bank headquarters in San Francisco. The dialogue centered on the creation of an effective investment vehicle to generate capital for banks around the globe that subscribe to a common vision for sustainable banking.
GABV member banks favor a triple bottom line approach and are committed to serving their respective clients and communities. The group emphasizes long-term partnerships, as well as transparency and good governance. In contrast with the “too big to fail” banks, GABV banks are focused on core banking activities, gathering deposits, and making good loans. At Portfolio 21 Investments we agree that the GABV model is an important foundation for a successful bank in a future with increasing environmental and social constraints. Furthermore, it is becoming apparent that GABV member banks often have better growth prospects, and tend to be better capitalized and generate higher returns on assets.
However, raising capital to foster bank development and growth is still a major hurdle for most GABV members. Most equity investors overemphasize earnings and asset growth at the expense of externalities. These externalities present risks that are often ignored by “traditional” banks. GABV constituents have attempted to address many of these external environmental, social, and governance risks with a new banking model. We expect to see other banks around the world increasingly adopt a similar philosophy as previously ignored risks emerge and become more widely known. Investor confidence and increased funding opportunities should potentially follow suit.
For more information on the Global Alliance for Banking on Values visit www.gabv.org.
And congratulations to New Resource Bank for its recent Best for the World Award from B Corporation!
Tony is Senior Portfolio Manager with Portfolio 21 Investments. He has 15 years of experience in the field of investment management.
The information presented above nor any opinion expressed shall be construed as an offer to sell or a solicitation to buy the security.