Sustainable banking
Designs on green

More and more banks are using “green” to boost their purchasing powers. But just how far are the banks’ purchasing policies lending themselves to being “green”?

Can greener procurement pay off? Standard Chartered thinks so. For several years it has been on a mission to make its global operations more sustainable. Greener buildings, less waste, more efficient equipment and a focus on cutting unnecessary travel have all played their part, says James Berry, the bank’s Group Head of Global Sourcing.

Good environmental design and operational discipline when it comes to construction, facilities management, technology, operations and overall procurement standards also play their part, he adds.

“Since 2009, we’ve reduced our global energy consumption by 21 per cent. This is largely due to our investment into energy efficient technologies within our buildings, like smart lighting, multi-functional printing, photovoltaic panels and efficient cooling systems. We’ve also cut business travel related emissions by 29% and charge our own carbon tax on travel.”

The bank does all this because it believes it is right but also because it sees business benefits, says Berry. “Sustainable procurement not only helps us protect the environment and benefit our communities, it also raises productivity, supports innovation and enables long-term growth.”

Have the conversation

At a time when banks are looking harder than ever at their operational costs, such measures may seem like a luxury. Berry says the savings on energy can pay for themselves relatively rapidly, however, while other initiatives are surprisingly inexpensive and in many cases reasonably painless. “On the whole it is not expensive. The cost of environment-friendly products and services is rapidly decreasing.

Sean Evans, Procurement Strategy and Relationship Manager for the Co-operative Banking Group, agrees. “Low carbon emissions often equals low cost. By reducing the environmental impacts of your procurement you often open up opportunities to reduce cost.”

Simon Lee, a supply chain expert at Business in the Community, a business-led charity dedicated to helping business become more socially and environmentally responsible, is not surprised to hear about the benefits these banks are reaping.

The simple act of having a conversation with suppliers about procuring goods and services more sustainably and often leads to savings and efficiencies, says Lee. “An amazing number of companies tell us that simply by having a conversation with their suppliers they have created new opportunities to save money and do things smarter. Working with them on things like energy or resource efficiency initiatives can often generate savings quite rapidly.”

There are particular areas where the financial sector can make substantial improvements, says Lee. “Buildings and estates, ICT and facilities management are all areas they can focus on. In ICT, for example, improvements can be achieved by using servers more efficiently and by ‘upcycling’ used PCs and mobile phones.”

One strength banks have is that often their supply chains are relatively localised, says Lee.

It means they can gain closer oversight of their suppliers and at the same time demonstrate their connection to their communities through initiatives that support local enterprise and social cohesion. A great example is working with cleaning and catering providers to ensure their employees receive a living wage.

Done right, such non-financial benefits to greening your procurement operation can be substantial, adds Lee, including greater staff engagement and retention as well as deeper consumer trust.

This has been the experience at Standard Chartered, says Berry. “Our staff have been fantastic in bringing to the table creative ways to make sustainable solutions work for us. The engagement with our customers, communities, suppliers and staff has been superb.”

But to get the most from the effort you put into greening your procurement operation, the initiatives you embark on should be genuine, aligned to your business goals and not just focused on burnishing your corporate reputation, says Lee. “It has to be grounded in business action otherwise it will be seen as greenwash. If you’re genuinely taking action it will serve as a great support to other key brand messages.”

This is not always an easy process and must be supported by the organisation’s values, says Evans. “It is something that has to align with your principals, otherwise there’s a real danger people will find you out.”

Staff engagement is critical

Banks must be prepared to recognise that this sometimes comes at a financial cost, for example when the Co-op stopped trading with a supplier who had been taken over by BAE owing to its stance on defence firms, says Evans. “There are clear examples of when the business has taken a decision to effectively increase its costs to meet its sustainability commitments.”

Despite the sacrifices required, Standard Chartered believes its greener procurement effort is paying pay off for the brand as a whole. “Linking sustainable procurement to our brand promise ‘Here for good’ has been very powerful for us,” says Berry. “It has made what we are trying to do tangible to every employee and staff engagement is very critical to making any organisation’s sustainability efforts successful.

“We need to harness their passion and motivate them to become ambassadors of change. Our suppliers also connect well with our intent around sustainability. It pushes them to propose new ways of doing things.

“It’s important to make sustainability and the environment part of your values, make your goals in the various goods and services you require stretching but simple, and be clear when engaging with suppliers about what your aspirations are. They can’t help if they don’t know.”

More could be achieved through collaboration at an industry level and banks can learn from other sectors here, says Lee. “In construction for example, Lend Lease worked with a software provider to develop a platform for doing supplier audits and sharing the results. They have led a group of seven companies in the construction sector to create greater supplier visibility. By pooling this supplier information they have been able to drive greater sustainability and agree common criteria and processes.

“There’s often a sense that CSR is a competitive issue but it’s also about addressing risk and spotting new opportunities and in many cases you can do more by working with your competitors. There’s only so much you can achieve on your own; there’s power in numbers. If you are doing something it may be as well to do it with other companies because the impacts are likely to to be stronger.”

The Co-op’s Evans, who is also Co-chair of the Financial Services Corporate Responsibility group on the Financial Services Procurement Forum, says the group has made steps towards this by encouraging its members to align the questions they ask of suppliers and is discussing further initiatives: “We’re now looking at carbon reduction, what we can do as an industry to focus minds and encourage our respective organisations to do. We need to raise the visibility of this agenda in the industry.”

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