Sustainability – at least as a loosely defined concept - has been a focus for financial institutions since the early 2000s, when concerns about the effects of global warming skyrocketed worldwide. In some arenas, interest in confronting and adapting to changes
in climate and society started growing well before that.
Has that focus paid off in the financial services arena? Richard Peers, founder of
ResponsibleRisk and co-presenting 2024’s
Sustainable Finance Live conference and
Hackathon with Finextra in October, says it has indeed, and he’s been at the forefront of sustainability in the financial industry for the past 17 years.
“We are making huge progress, absolutely phenomenal progress,” he said, the sustainable banking movement is growing, and “green” investment incentives and campaigns are yielding results, despite any claims or political rhetoric to the contrary.
Amid this general progress, two banks, one Peers profiled in an interview earlier this year, and another, on the opposite side of the Atlantic, have put their sustainable values directly into practice for their businesses and for their customers, and done
so profitably. Before sharing updates on these trailblazing three-year-old institutions,
Oxbury Bank and
Climate First Bank, it’s important to take a look at the conditions and concerns which encouraged their creation in the first place.
After more than two decades, the truth is out on what being ‘green’ really means
Consumers and investment firms over the past 20-25 years have sought increasingly more specific information on where and how their money was being invested, what types of methods and practices were employed by the companies they had funded, and whether those
companies were ultimately helping or harming people, the environment, or society through their operations. What was initially termed ‘impact investing’ or ‘socially responsible investing’
with roots going as far back as the 1700s in the US alone, has, since the 1980s, steadily grown as an influential practice across the modern business world.
Especially since the turn of the century, industry watchers have pointed to how all businesses could potentially use their ‘new’, ‘earth-friendly’ operational changes and commitments to enhance their reputations in an increasingly environmentally and social
justice-aware world. In many cases, the encouragement worked, and negative practices began to be replaced with more enlightened ones.
In others, wanting to be ‘green’ developed for some companies into cynical, inauthentic ‘box-checking’ exercises. Exaggerated claims of being ‘more sustainable’ but using loosely defined or haphazardly proven practices grew. Many of these missives, pushed
into the media by overenthusiastic and often underinformed marketing departments began to be recognised by the marketplace (and industry regulators, in some regions) for what they really were – and the term ‘greenwashing’ was born.
Today, phony boasts of ‘greener’ practices and unfounded sustainability performance claims are still a problem, but the ways to avoid being branded as a ‘greenwasher’ are much more clear now to most organisations. This is largely because the sustainability
field has matured, and trained experts in and outside industry know accountability and proof are key components required to validate any sustainability promises made.
One such proof source that is now widely recognised is reporting on an organisation’s performance against carbon footprint and other target measurements. Climate reporting is conducted much more consistently in conformance with
global greenhouse gas (GHG) emissions measurements – especially as global
standards for such reporting have emerged.
Authenticity and a keen focus on the customer are propelling two truly sustainable banks to the top
Oxbury Bank and Climate First Bank are definitely not ‘box-checking’ banks. They have recognised the need for reporting and actions to prove their climate change mitigation commitments. Yet they also have enthusiastically embraced an additional opportunity
and responsibility - to make a direct, positive impact on the planet in light of the increase in the frequency and intensity of destructive events and conditions brought on by climate change and emerging social concerns.
Both institutions were intentionally designed - right from the start - to go much further than just claiming to be sustainable or ‘planet friendly’. Founded on specific and often strict environmental and social principles, they have strived to emphasise
these values in all their operations, including in many cases choosing not to offer service or invest in any businesses that didn’t align with them.
Oxbury and Climate First are two financial institutions (among a growing number in many countries) proving in the marketplace that being sustainable can also mean providing exceptionally competitive products and services for customers - and delivering positive
bottomline results to their investors.
Banking on farmers and technology, together – Oxbury’s surprisingly successful recipe for success
Richard Peers interviewed
Tim Coates, Oxbury’s CEO, earlier this year. Coates, joined Oxbury – bringing broad interest and experience in farming, regenerative agriculture and markets – plus financial expertise from a previous position in bank authorisation and advising at the UK’s
Financial Conduct Authority. Coates has agreed to speak at the Sustainable Finance Live in October, though not in his role as a banking leader, but as treasurer and director for the North East Cotswolds farmland and food network regeneration alliance
Evenswold Landscape Recovery.
Peers’s conversation with Coates highlighted the unique approach and substantial accomplishments of a financial institution that combines home-grown, flexible IT and system design ingenuity with experienced agriculture lending and supply chain experts. Oxbury
aims to not just compete, but win new business from its four largest, and firmly entrenched, rivals in the UK agricultural lending sector.
Clearly, the challenger bank’s strategy is working: Oxbury offers savings accounts to anyone in its operating area, though its lending activities are laser-focused on agriculture clients. It not only turned a profit in its third year of operation, but is
planning for international expansion.
Coates explained that Oxbury’s growth is by design. In 2021, Oxbury was formed to meet the post-Brexit need in the UK to increase food security, and also the requirement to address the climate crisis.
More than
70% of the UK’s land is dedicated to agricultural activity, and this sector is responsible for approximately 10% of the UK’s territorial greenhouse gas emissions. In Oxbury Bank’s view and per its mission, farms, food, banking, and climate change mitigation
efforts are inextricably linked.
Delivering specific knowledge, expertise, and agri-support all mission-critical for Oxbury, and world
Coates stated: “We identified that there was a real need for a new bank that served this crucial sector. Obviously, it's a sector that we don't just depend on for what it produces in terms of food, but actually its role in climate change mitigation and adaptation
going forward. So, it's actually a really exciting sector to be specialists in a sector crying out for dedicated specialist support, because it has some real intricacies and differences (as contrasted with) a lot of other parts of the economy. We wanted to
bring a new technology-enabled solution to the market to support the sector.”
Despite their innovative tech and farm sector specialisation, Oxbury still has to compete with standard banking products and banks, Peers noted. Coates agreed, noting his institution provides most of what others in their sector do, and more.
“We're sort of full service across the savings side, where we offer a range of competitive products. All the normal things you’d expect there. But on the lending side, we’re focused on the agri-food supply chain, and primarily the primary producer, the farmer.”
This focus, Coates told Peers, means not just offering the right products at the right price, but also “being bespoke in the way we structure our products,” and doing so, he says, “in a holistic way, considering every aspect of what that business requires.”
Noting that Oxbury’s intention is to disrupt the incumbent banking marketplace, Coates said their knowledge and specialisation delivers tangible benefits beyond just knowing the customer. “We offer competitive rates, and we exceed their service.”
Sun, seas, and sustainable values – Florida bank is right in the heat of climate change action
Climate First Bank, headquartered in St. Petersburg, Florida, has, like Oxbury Bank, seen tremendous growth and success over a very short timeframe since it was started, also in 2021, by CEO Ken LaRoe and a number of former colleagues, partners, and investors.
LaRoe, a lawyer and three-time ‘green’ bank founder with
strong connections to the sustainability and regenerative movements, is a persistent proponent of more enlightened banking practices - and the importance of financial institution customers being aware of the local and extended impacts of their patronage
- or as he advises them: “Know where your money sleeps tonight.”
From its inception, Climate First, now with a digital branch and a handful of additional Florida locations in Winter Park, Mt. Dora, and soon, Orlando, has focused its mission on meeting the needs of agricultural clients as well, though not quite as intensively
or successfully (yet) as Oxbury.
Along with special programs for attorneys and renewable energy, Climate First– like Oxbury – is competing well with more established banking providers - including the US Farm Credit Bureau with its difficult-to-match 30-year loan terms - in one of the farming
industry’s US hotbeds. It’s also safe to say that Florida, with steadily increasing incidences of hurricanes, tornadoes, and floods, is a region severely impacted now and very likely more in the future by climate change disruptions.
In addition to joining the 1% for the Planet,
Global Alliance for Banking on Values (GABV), and
Net Zero Banking Alliance sustainability and social justice movements, Climate First, its holding company, and its key subsidiary took the unusual step, along with California-based Beneficial State
Bank and a handful of other institutions, to become
B-Corporation-certified last year.
Simpler solar financing products help Climate First stand out, farm lending expansion a challenge
To further differentiate their bank from others, Climate First has introduced innovative and “hassle free” solar installation and conversion financing
programs for individuals, businesses, community banks, credit unions, and community development financial institutions (CDFIs). These offerings are provided by the bank’s
OneEthos subsidiary, which they claim is “the only Federal Reserve regulated fintech focused on climate solutions.”
Not too surprisingly, Climate First’s management is aiming to expand the institution’s reach beyond its home turf. There’s a new capital raise campaign now underway, new board members and experienced staff joining the team, and plans to go nationwide soon.
Part of that includes a stronger emphasis on farmers as bank customers, which LaRoe admits the bank has been trying harder to serve, especially given his personal experience and given the criticality of farms and farmers to society’s overall resilience.
During Climate First’s most recent “Fireside Chat” – a series of online webinars with LaRoe leading conversations on trending sustainability and banking topics - LaRoe was joined by longtime friend and Cornell-educated lawyer Hugh Kent, who with his wife
Lisa, owns and operate King Grove Organic Farm in Florida where they grow
Real Organic Project (ROP) certified organic blueberries and develop innovative farm machinery, including patented non-chemical weed control technologies. King Grove’s unique growing
system emphasises responsible land stewardship and ecological function, which as a key side benefit apparently produces some of the most delicious blueberries available anywhere in the world.
Unfortunately, according to Kent, the Real Organic Project became a necessity to protect the true meaning and function of organic agriculture for the good of people and the planet. He says organic farms like King Grove are “threatened by a loss of integrity
in the United States Department of Agriculture (USDA) and its failure to administer the National Organic Program as intended, or to enforce its laws as written.”
Large agribusinesses have been able to lobby the USDA to loosen restrictions around the term “organic” to the extent, Kent says, where “Big money, big agriculture has started using its influence on the government to erode what organic really means to the
world. This has really troubled the farmers that started the organic movement in the 60s and 70s.” He and LaRoe agreed, this has to stop.
Mission-driven and focused means more to their customers, and to the world
Banks like Oxbury and Climate First aren’t the first banks to focus on narrow business or consumer sectors to capture and serve their clients. Many fintechs have also emerged to target specific industries and groups of individual users in any number of fields
and categories.
However, the dedication of these two growing banks on two sides of the Atlantic stand out from the rest. It’s not just their dedication to applying sustainable and regenerative standards and practices in their operations, but also in their determination
to provide fair lending opportunities to banking customers who share these values.
Wrapping up his discussion with Peers, Oxbury’s Coates pointed out that the bank’s mission to focus on farmers and their supply chains is now more important than ever, given the increasingly fragile ecosystem surrounding food production and distribution
that has been further threatened across the globe by rising climate change impacts.
“This is about the agricultural sector. This is about supporting farmers across the world putting healthy, nutritious food on people's plates, and addressing the challenges that come from the climate catastrophe and nature degradation that need to be addressed.
Farmers are right at the forefront of that fight, and they need to be supported in being able to do that, not just here in the UK, but globally.”