Sustainable banking

Much has been made in recent years about how a sustainable economy can’t be one that depends on growth in the same form as the industrial-financial economy has.

True enough: almost all the growth we’ve experienced has actually been due to the exploitation of cheap resources, especially energy ones. Now we’re faced with the other half of the earth’s bounty: the hard to get at, expensive to extract, potentially not worth doing (if it costs more energy to get the energy resource than the resource will produce, for instance) part.

Still, innovations and changes will continue to appear, and these, too, create their own form of growth. (It’s important not to be deluded into thinking that necessarily means “more monetary wealth”: a productivity innovation may not lead to “more”, but to using less to do the same work, something that’s often hard to capture in money terms.)

So — whether we move from a money-drenched world to a non-money-drenched one (as the Romans did in the early fourth century CE), or remain one where money is a daily part of every exchange we undertake — we will continue to need the utility of banking.

I had the pleasure of hearing about Triodos Bank on Radio New Zealand’s Ideas programme of October 21. Triodos is a bank that eschews the culture of bonuses and financialisation to provide utility services — bill payment, deposits that earn interest, and lending — in a sustainable way. Their lending targets are innovators and entrepreneurs building sustainable businesses and nurturing communities.

This approach is being picked up around the world by other financial institutions that are already in the markets: VanCity (the Vancouver City Savings Credit Union) is working to transform its loans portfolio to fit this model (as with most credit unions, its current portfolio is dominated by real estate).

Triodos deliberately set out to create a governance structure that would uphold its approach to banking. All its shares are held in a trust, which is chartered to ensure the bank is operated prudently and in line with its triple-bottom-line approach. The trust, in turn, is enjoined from selling the shares (thereby insuring a predatory competitor does not have the ability to buy up the firm and remove it from competing in the way it does).

VanCity, as with all credit unions, is owned by its members. Both of these institutions indicate one of the key elements of any sustainable venture going forward: mutuality, or common ownership, limiting the ability of both “investors” or management to alienate the institution from its purposes.

The fit of these sort of institutions — VanCity is a dominant player in financial services in Canada’s third largest city; Triodos is a Dutch-based multinational — with smaller community ventures along the lines of the microfinance approach pioneered by Grameen Bank — point to a future sustainable banking model to replace the “too big to fail and grow at any cost” system we have created in the final decades of the cheap resources blow-off.

That (for instance) these sort of institutions are also being used in some communities to be the anchoring, issuing institution for a community currency system shows the value as well of integrating local money — with all its known positive effects on sustaining a community’s economy — with a sustainable financial institutional core.

More of these will arise in the years ahead. The temptation to “take them larger” will always exist. What’s really needed, though, is locality and mutuality.

I know I (as a former VanCity customer) would love to see them open for business in Toronto. But seeking out a sustainable bank here, in my community, that’s building my neighbourhood would be even better.

That shift — from the virtues of big to the virtues of small — is part of getting over the hurdle into the joy of a sustainable economy, and life.

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