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Green banking: invest in a smarter planet

Sustainability is not an obstacle. It’s an opportunity.
In 2009, employees of HSBC (link resides outside of helped save 7.3 million kilowatt hours of electricity and 3.1 million kilograms of CO2 emissions, simply by turning their computers off at the end of the workday.

This kind of energy conservation is just one example of a bank thinking 'green'. Many banks are offering mortgage and home improvement loans for energy efficient homes. New banks have formed that focus on socially responsible investing, designed to aid environmentally conscious businesses and consumers through better loan rates and other incentives. Then there are green programs that take place at an operational level, helping banks to reduce their own impact on the environment. These include greener office buildings, paperless statements for consumers and enhanced collaboration tools to reduce business travel.

Eco-finance in Brazil: one bank's green journey. Watch the video.

HSBC says green is good for business. Watch the video.

Sustainability initiatives that are aligned with—not isolated from—current business priorities can become commercially viable. And one way of creating that alignment is to closely examine consumer values and beliefs.

The "Fit, focused and ready to fight: How banks can get in shape for the battle ahead" study, led by the IBM Institute for Business Value, concluded that banking consumers tend to fall into six major categories, based on their expectations. The "ethics seekers" category is most likely to be attracted by green banking. This demographic wants their bank to have a strong reputation, be transparent, give excellent service and unbiased advice—and follow green banking practices.

Green as a risk management approach
Most environmental experts believe that carbon will have a price tag attached to it within the foreseeable future. That price might be in the form of tariffs or it might manifest itself in efficiency incentives. Either way, it gives the finance sector a unique enabling role to play in the transition to a low-carbon economy. Businesses with higher carbon footprints could become higher-risk investments, and banks may begin shifting their focus to financing new technology solutions that capture or reduce carbon emissions.

This presents financial institutions with a new market, including new products for clients in the "Green" segment. For example, services that can help customers identify and manage climate risks―including regulatory, market or physical―or financial solutions to compete in new, green markets. For example, Desjardins (link resides outside of, the largest financial cooperative group in Canada, designed their Energy-Efficiency Loan product for businesses who want to modernize their equipment and buildings in order to reduce their energy bill and greenhouse gas emissions.

A greener—and smarter—financial operation
According to a 2007 Gartner study, data centers consume 10 to 30 times—and in some cases 100 times—more energy per square foot than traditional office space. That makes the data center the absolute starting point to begin implementing an energy-efficient strategy. To that end, the Energy Efficiency Benchmark Tool can determine your data center's current green status, identify concrete steps for improvement, and benchmark your efficiency against other companies worldwide.

While there is not a silver bullet for maximizing IT energy efficiency, one thing is certain: financial organizations need to develop a comprehensive plan that helps reduce energy consumption, minimize costs and cut CO2 emissions across the entire IT landscape. Some tactics detailed in the IBM Financial Services white paper called Take a leadership role in the new, low-carbon economy include:

Tracking energy usage
The first step in building a comprehensive plan for reducing energy consumption in your data center is to develop a system that tracks usage. Simply put, you can't manage what you can’t measure.

Upgrading outdated systems
In a recent study, researchers pointed out that the PC industry could save 40 billion kWh over three years—or more than US$5 billion—at virtually no cost by simply updating the design of power supply units used in computers.

Planning for higher energy costs
Between 2007 and 2011, energy expenses are predicted to increase by 54 percent. And by 2011, lifetime energy costs for powering and cooling servers will equal 71 percent of the server hardware costs. Put another way, power and cooling spending is going to rise more than four times as fast as new hardware spending.

Citi, the largest U.S. bank, will decrease its green house gas emissions by 10% by 2011. Deustche Bank is cutting energy use and CO2 emissions in its Frankfurt headquarters by 50% by upgrading water, lighting and air-conditioning systems. Industrial & Commercial Bank of China cut power comsumption bu 15% and water consumption by more than 40% between 1999 and 2006.

Green processes can reduce costs and raise operational efficiency. IBM can help lower the energy consumption of data centers that support financial services organizations, using systems that reduce cooling requirements, cutting annual energy costs up to 40 percent. IBM technology can also help banks deliver their products electronically, offering customers greater flexibility, and easily integrate green banking with practically any business model.

Today, IBM continues to employ expert research and development teams to gather information about the risks and opportunities in a low carbon future. We hope to assist those financial services organizations that are positioning themselves to roll out the kinds of products and services their clients and consumers are beginning to demand.

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Take a leadership role in the new, low-carbon economy Read the whitepaper

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