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When Banks Become Local Enablers for Sustainability

Good for [your city], was the motto of the German savings banks (Sparkassen) some time ago, referring to the traditionally strong ties to their respective locations and their broad range of tasks between financial services, services of general interest, and orientation toward the common good. While cities and businesses are facing major transformation challenges, regional banks are also increasingly asking themselves how they can support this process or perhaps even become a driving force.

The list of challenges is long. It ranges from the transition to renewable energy, combating climate change, creating a genuine circular economy, strengthening of social cohesion and the need of a fundamental transformation of our food and mobility systems. What is new, however, is the quality of implementation, which has reached an unprecedented legislative priority, especially with the European Commissions’ Green Deal. These developments do not come by chance either and are an expression of social changes negotiated at a global level (e.g., through the Sustainability Development Goals of the UN Agenda 2030 and Fridays for Future), but in many cases also with a strong focus on the local level: city quarters, municipalities and local companies.

Local financial institutions, such as the German savings banks, have always seen themselves as a formative part of the respective city or region. While donations and sponsoring are the main means of support, such banks are increasingly asking themselves what additional design and support options can be used to actively promote the required sustainability transformation in their area. At the same time, external pressure is also increasing: on the one hand, banks such as German GLS Bank have long enjoyed a lively influx of sustainability-savvy customers; on the other hand, the Corporate Social Responsibility Directive Implementation Act (CSR-RUG) requires many banks to report on their corporate responsibility from the 2017 financial year onwards.

A helpful view from the outside

A good starting point is listening to what employees, customers, partners and other stakeholders think. The focus does not always have to be on narrowed-down and pre-defined concepts of sustainability. The “Good for …” principle is suitable for addressing a community’s needs in a more comprehensive way. When is a savings bank good for its city? What is a bank already good at and where does it need improvements? These and other questions can help make sustainability-related fields of activity concrete and tangible – also for wider target groups. In addition, the ability to respond to growing customer demands and expectations can be directly reflected in critical ways. In a first step, this can lead to the identification of important – and potentially new – fields of action.

The institutionalised view from the outside: The Sustainability Committee of Sparkasse Wuppertal

For companies, it is always important to learn about “blind spots” (“Betriebsblindheit”). They need to exchange with people and organisations operating in other networks in order to gain a better view on risks, challenges, opportunities or new approaches and ideas of other sectors that might be of relevance for them, too. In the words of its CEO Gunther Wölfges, Stadtsparkasse Wuppertal wants to “live and promote all three dimensions of sustainability so that prosperity is possible in the long term”. In order to benefit from different perspectives and a wide expertise, a Sustainability Committee was established in November 2020. It is composed of five members with strong scientific and practical expertise in the field of sustainability, among which the CSCP’s Executive Director, Michael Kuhndt. The committee, which meets twice a year, focuses in advancing the sustainability performance of Sparkasse Wuppertal at all levels.

Engage motivated employees and support them in shaping the future

Sustainability is a goal that stretches beyond professional targets. In addition to job satisfaction and good pay, young professionals are increasingly expressing their commitment to contribute to the ‘bigger picture’. Parents, whose children go to demonstrations against climate change, are beginning to question their own professional role, and for many grandparents the desire for a ‘grandchild-friendly’ life and work has already become an important personal guideline. These people exist in all organisations, including financial ones. Taking their concerns seriously and involving them actively has many advantages. In a workshop that we held with bank employees from different hierarchical levels and functional areas, it simply required a brief introduction and presentation of potential fields of action for the participants to become active themselves: What could sustainability and the identified fields of action mean for individual working environments? Which aspects can be meaningfully integrated into existing processes? How can we do so in effective and seamless ways?

Invest, request, inspire

The results of such group work and discussions are often practical suggestions enriched with an operational implementation perspective. In addition, such approaches are much better accepted than top-down ones. Surveys conducted at the end of such workshops regularly revealed that dealing with sustainability issues and their concrete implementation was experienced as very motivating and meaningful by the participants. Their insights have also proven to be key for integrating sustainability in a cross-sectional way, as the ultimate goal is that in everything we do, we ask ourselves: Is it possible to do it more sustainably?

A holistic approach like this enables strategic results that go far beyond what can be achieved through donations and sponsoring. Local sustainability transformations need trendsetters and role models. Firmly-rooted banks with regular contacts to citizens and communities, crafts enterprises and other companies have a special role to play. The following chart summarises the various starting points. Not everything can be implemented quickly and comprehensively. The key, though, is to engage in transformative learning and experimentation processes together with customers, city administrations, and other businesses and to better understand and use the available levers and opportunities.

For further information and to engage with us in accelerating the sustainability transformation, please contact Stephan Schaller.

Photo by Julius Döllefeld on Unsplash