Westpac wins, but what about Prometheus…
Westpac has won the award for having the most socially responsible banking product, according to the Sunday Star Times. Their Green Home Loan has vouchers to make it cheaper for home buyers to install insulation, solar hot water and other environmentally friendly stuff. It is good that Westpac have done this and I congratulate them for it.
However, we should remember that Westpac hasn’t had an impeccable record: there was all that tax they didn’t pay; pushing credit on their customers via a reward scheme for their staff; their involvement in uranium mining; their opposition to locating their backroom in New Zealand; their intervention into the last election on the side of the National Party; the vast profits that get shipped back home to their Australian owners adding to our current account deficit; and no doubt more.
Which makes me think it would be good if next year the competition was opened up a bit to include other financial companies like Prometheus, who have a much more ethical approach across the spectrum. True, they’re not a bank and it is a different scale of operations, but it would be good to give the banks some stiffer competition for who can be the greenest.
April 15th, 2007 at 5:50 pm
russel, this is an interesting issue - this post should be read along with the comments of your “ethical investment” post back in feb.
of particular interest here is that “Westpac’s initiative has a broader sustainability theme and impact in contrast to the narrower conservation focus of the BNZ”. the judging panel (rightly) found that w’pac were directly addressing their product’s impact as opposed to bnz where its business as usual but for a nice side project.
looking at their products and improving them (w’pac) is the level at which businesses sustainability push starts. facilitating change externally is a good step (bnz), but does little to clean up the direct (and in the case of banking, significant) impacts of their own business.
to apply a carbon profile analogy, w’pac can be seen as reducing their impact while bnz are merely offsetting. dealing with the issues direct has so much more impact. hopefully this award puts “direct action” on all banks radar.
cheers
mike
April 16th, 2007 at 12:26 pm
Doh, Banks make money out of selling debt. You know the difference between what they pay and what they charge is called gross profit. Its how they pay all the wages to the thousands of NZers they employ. Why should a business not encourage its staff to sell more of the product that makes them money?
Also I note Westpacs ex CEO Sherry is a close personal friend of Clarks. Westpac is the Govts Banker…….They donated quite a bit to labours election fund as well
April 16th, 2007 at 12:45 pm
Mike,
Agree, and I think the carbon profile analogy is a good one and Westpac’s move to establish a Green home Loan scheme is a good step in the right direction in regard to reducing their emissions footprint - or improving their sustainability impact.
To extend the analogy though to cover Russel’s observation about finance organisations other than banks being left out of this competition - a good look at Prometheus’ range of lending activities suggests the emissions footprint of their loan portfolio is a lot closer to neutrality than Westpac’s.
For a start, although they don’t offer vouchers for green products with their loans they do provide low-interest loans for solar water heating installations (courtesy of being EECA’s preferred provider for their SWH finance assistanace programme), their home mortgage provision is almost exclusively for eco-housing, their business finance provision is largely for socially responsible and environmentally sustainable businesses and their consumer finance provision is entirely for eco-friendly products such as hybrid cars, insulation retrofits, greywater recycling systems, household photo-voltaics etc.
No contest really, except for the scale issue. Wonder when the banks are going to seriously compete on sustainability?
April 16th, 2007 at 2:20 pm
It seems to me that Westpac is just trying to save face for it`s past sins.
How genuine it is with regards to green issues remains to be seen.
Yours Drakula
April 16th, 2007 at 2:58 pm
kiwinuke:
on russels “ethical investment” post i linked to an earlier post of mine with a similar theme. in my post (have a read) i discussed in the context of decoupling growth and emissions. there i noted that “Prometheus… are more “decoupled” than the typical investment offering”.
at the risk of posing “a rediculous russian doll situation” you and i had commented variously on that issue on an earlier frog post about “exponential growth”.
in short, its all linked, and yes the holy grail of decoupling income/growth and emissions is one worth persuing. thats where carbon neutrality lies.
–
drakula:
i’ve no problem if “Westpac is just trying to save face”. the fact is that they’ve taken a basic banking product and improved it’s emissions profile. for me the reasons for addressing impact are less important than the fact itself.
i’m not wishing to push them, but globally and regionally w’pac are recognised as a sustainability leader - as indicated on this often quoted survey.
national issues such as those mentioned by russel above bely that. as do the image portrayed by industrial action a few years back. still, on balance their business model seems more sustainably attuned than the average bank. its a good start.
–
cheers
mike
April 16th, 2007 at 3:06 pm
# Blue Says:
> Doh, Banks make money out of selling debt. You know the difference between what they pay and what they charge is called gross profit. Its how they pay all the wages to the thousands of NZers they employ. Why should a business not encourage its staff to sell more of the product that makes them money?
My pharmacist makes money by selling medicine. Would it be appropriate for him to try and encourage everyone to take as much medicine as well, even if it made their health worse, just so he could make more profit?
The Australian government exports uranium. Should they aggressively try to sell as much uranium as possible to everyone who might be thinking of building a nuclear bomb, just because this would make them more money?
It’s not always ethical to do everything you can to increase profits.
April 16th, 2007 at 4:17 pm
We are talking about Westpac not Chemists or the Australian Govt so leave the silly blog comparison debating trick at the door.
April 16th, 2007 at 4:27 pm
Hi Blue,
So you don’t ascribe to the view that too much debt can be bad for your health? or personal finance stress levels?
One of the things I really liked about the Credit Union movement when it kicked off was that it’s prime focus was on encouraging good savings and financial management habits of their lower income members as much as it was about financing new consumer goods, cars or hoildays.
I’m not sure that they all still have that balance in mind when encouraging members to borrow for the things they want rather than save toward them.
Mike, I remember that discussion as being a good one - thanks for the links, I’ll go back and refresh my memory a bit more.
Cheers.
April 16th, 2007 at 4:51 pm
Hi again Mike,
That was a nice refreshing read - lot of good sense contributed to that discussion.
Re you link above to often quoted survey my understanding is that’s based on their product range and performance in Australia - which is rather good, but unfortunately bears very little resemblance to their performance or their range of prodcuts in this field here in NZ.
It’s surpising the number of financial organisations who are active in the ethical/sustainability space overseas yet show no or very few signs of that as part of threir policy or priorities in their NZ operations.
Westpac is one, Mercers is too (re that earlier thread Mike linked to above) and Rabobank is another. Raises questions abpout the sincerity of their commitment to those objectives in their other spheres of operation - perhaps its all just driven by market demand after all and we Kiwis just aren’t interested enough so we’re not getting the offer.
April 16th, 2007 at 5:33 pm
Blue: Kiwinuke’s comparison is completely valid, and vividly illustrates the simple point that generating profit is not necessarily justification for a given action. People who disagree with this notion include those in the human traffic business, drugs, arms …
April 17th, 2007 at 2:34 am
As James L says Blue, you haven’t really provided any reason why Westpac’s situation is different to that of Chemists or of the Australian Government’s- you’ve just acted as if we have reason to believe you straight off. A little clarification behind your reasoning couldn’t hurt anyone I think.
The point mikey seems to be making is that banks should encourage only sensible levels of debt that profit them, their customers, and society in general, instead of large amounts of debt that profit only the bank. You borrow to make an investment, especially if you have capital you don’t mind risking for that investment. You *don’t* encourage people to borrow beyond their means, and especially not borrowing to the point where they don’t have a realistic chance of paying off the interest.
And analogy is not a “blog debating trick”, it’s one of the fundamentals of arguement.
April 17th, 2007 at 11:02 am
I subscribe to the notion that people are not that stupid that they buy everything from every promotion put to them. But maybe in your world you are surrounded by stupid people and feel the need to “protect” them from themselves. Know better than them do you? How patronising. I also subsribe to the ideal that people should be sufficiently educated on how to avoid these pitfalls and that advice on budgeting and saving money should be compulsary in schools.
If you think banks deliberatelty lend money to lose money you are naive. It seems that you have a bias against a financial institution merely because it is a financial instituition.Shonky south auckland finance companies are another story.
April 17th, 2007 at 1:08 pm
Blue,
I think you’ve just exposed the flaw in your own argument. Shonky south auckland finance companies are not entirely “another story” they are just a slightly more extreme end of the same spectrum.
It is not only south auckjland car finance firms that go bust from over-extending credit to underperfoming borrowers. Witness the whole US sub-prime mortgage market and the impacts that is starting to have on their supposedly more robust sources of capital.
Witness also the lending frenzy in the mid-80s here in NZ when banks started lowering their own prudential risk standards so as not to miss out on the credit boom of the time - and witness what happened when the chickens came home to roost from that behaviour - namely a government bailout for the BNZ.
Banks are not a special (or more moral) case, they simply have larger balance sheets and larger capital bases. Over the last 200 years in western economies banks have shown themselves to be as prone to failure as most other financial organisations - and as prone to over extending credit to borrowers unable to afford repayments.
This doesn’t mean that the banks will necessarily dip out - that’s what loan security is for. The borrower may well lose their house and other assets, the bank will just face some collection costs. But if it gets taken too far it can hardly be seen as moral business practise.
And yes, many people do need protection from sharp financial practises that they don’t understand. This doesn’t mean that they’re stupid, just that they may be a little too trusting because they’re used to dealing with people that are trustworthy.
Neither the Commerce Commisssion nor the Consumer magazine were established to protect stupid people from themselves - but to protect honest people from dishonest, deceitful and manipulative ones.
April 17th, 2007 at 3:05 pm
ari
what i was saying was that mainstream banks are much alike. they offer pretty much the same product - underpinned by mortgage lending. making improvement on “business as usual” in carbon terms is where they can lead (albeit incrementally).
using the w’pac eg, by offering a whole lot of “green supplier” vouchers they’re helping ensure that the spend is more carbon responsible than the next.
remember the anz ads on telle? the dude busking for “extra cash” in his mortgage? anz give borrowers a kitty to spend freely - carbon is not an issue for anz.
in that scenario bnz are being more carbon responsible than anz.
thats all
mike
April 17th, 2007 at 8:38 pm
Blue, you say we are talking about Westpac not Chemists or the Australian Govt … are you alleging that chemists should have ethical standards, but that bankers shouldn’t?
Interesting.
Since you love analogies, here’s one for you : A healthy young person wants to buy a dozen bottles of the strongest cough medicine… It’s good for business if the chemist sells it, but I think we’ll all agree that professional ethics requires them to check whether the purchase is legitimate, because there’s a health risk associated.
A businessman goes to a banker to borrow money, to import “certain substances” from SE Asia… so the banker charges him a fat interest rate to cover the risk, and business is business eh?
You may object that this is a matter of legality rather than ethics. Well how about this : the businessman wants the money to clear fell tropical forests in SE Asia and sell the timber. All perfectly legal, let’s say.
According to you, no problem hey?
According to me : It’s up to society to fix the ethical framework in which business takes place. Others have pointed out that NZ bankers are trailing behind public opinion on ethical questions. It’s time for consumers to demand transparency, apply pressure, and exercise discrimination in choosing their banking institutions.
The bankers will fall into line. As a matter of good business.