Growing Green Profits

Originally published in the December 2008 edition of the New Zealand Marketing Association's DLB magazine - authored by Carlson Marketing 

An inconvenient company.

One of our clients, a senior manager in a big Australian finance company, went to see Al Gore’s Inconvenient Truth.  The next day he demanded from us a totally Green customer strategy for his entire division’s customer base and what’s more – he had the CEO sign off the investment before the week was out. 

Global Green

This wasn’t an isolated incident for us.  Our colleagues in other countries reported either a strong demand for Green solutions or the launch of Green solutions in banks in their markets. To understand why, we launched a study into the reasons for and responses to Green as bank strategy.

What is Green

Yes – it did start with tree huggers.  No – it’s no longer possible for an astute businessperson to openly claim that climate change is not real.   Your last chance for doing that died when the Global Climate Coalition (GCC) died in 2002.  Composed of companies such as Exxon, Shell, BP and GM, the GCC invested heavily to cast doubt on global warming.  Visit the websites of any of those past champions of the falseness of global warming today and their new environmental credentials are headlines.

The science says; global warming is driven by the emission of Greenhouse gases into the atmosphere, chief of which is the Greenhouse gas carbon dioxide. These gases trap heat in the atmosphere, forming a blanket around the earth which retains heat and generates global warming. Almost every activity that a company or an individual engages in releases carbon dioxide. The sum of these emissions comprises the individual’s or organisation’s “carbon footprint”.

Why is it important

The science no longer matters.  What matters now is what customers believe that global warming is real.  More important though is who they believe should be responsible for addressing it – every company on the planet.  More and more over the last decade, curing social ills has become the responsibility of the companies that customers deem to have contributed to the problem. Supposed polluters and those who fund supposed polluters are all responsible, in the eyes of certain customers, for addressing global warming. 

Why banks and what are they doing

Banks are certainly not significant contributors to Greenhouse gas emissions. Yet major players including HSBC Bank, GE Money, Citibank, Bank of America and Westpac have implemented Green strategies.  These range from offering environmentally conscious credit cards to linking their brand identity to Green principles.

Bank first, customer second

Our Australian customer’s new Green strategy never got to market.  A lucky coincidence for him perhaps.  Had he got to market, his proposition would likely have failed because it would have been what is know as Greenwashing – pretending to offer Green products before putting in the investment to become a Green enterprise yourself. 

Citigroup started its Greening process in 2002 with significant energy consumed to light and heat its more than 9 million square meters of office and branch space around the world.  80% of their energy consumption came from just 10% of buildings which included skyscrapers and data centres.   New offices and branches now maximise the use of natural sunlight and minimise the use of electrical lighting.  As an added benefit – staff morale and engagement rose.  As one Citigroup manager noted “People are much more like cats and plants than we like to admit”.

Two ways to play

Our research found two distinct customer propositions on offer from banks around the world.  Their order is important.  First - work to reduce your customer’s carbon footprint.  We found innovative and practical financial instruments ranging from car finance for fuel efficient vehicles (generally hybrids) through to mortgages that funded solar water heaters and building insulation improvements to reduce the power bill.  These products save money for the customer. 

Second – help your customers offset their remaining impact through carbon credits and the like. These all come at a cost to the bank or the customer and included a UK bank’s offer to plant 40 trees on your behalf through to funding wind and solar power projects.

That bank’s not red - it’s Green

Westpac’s a great example of a bank doing it well and is recognized for its success by topping the Dow Jones Sustainability Index - a global rating for Green firms - for five of the last seven years. 

Westpac in Australia was a corporate trailblazer linking its Green and sustainable initiatives to its corporate identity through its adverts.  Our client Westpac New Zealand is up there too and in late November launched a customer innovation.  Back to its Green trailblazing roots, Westpac has developed and launched an online ecoshop subsidising a raft of Green, money and planet saving goods for all Westpac Online Banking customers.   The first bank in the world to offer such a service; it includes Green goods from energy efficient appliances to worm farms.

A similar catalogue of goods is now also available for redemption in the Westpac hotpoints credit card rewards program. 

The results of our research

A Green strategy benefits four groups: 

1. Customers – Green Products.  Aligned with specific values of certain customer segments, Green products offer a good solution for banks to differentiate themselves in a new way.

2. Operations – Cutting Costs with Green.  Reducing electricity consumption also reduces Greenhouse gas emissions.  Saving money and saving the planet are tightly aligned. 

3. Shareholders – A Sustainable Investment.  Many investors seek out businesses which effectively create long-term value by implementing strategies that will grow the business today without compromising future growth.  

4. Green organisations benefit from enhanced employee engagement.  Talented staff and graduates are being attracted to organisations based on their Green credentials. 

Get the report.  For a copy of Carlson Marketing’s report “Banks – Growing Green profits. Winning with customers, shareholders, employees and operating costs while saving the planet” email simon.rowles@carlson.co.nz