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Published: 2009

Sustainable commitments insulate financial leaders

Alexandra de Blas

Banks and super funds have been battered by the gale of the global financial crisis but not everyone is suffering. Alexandra de Blas looks at some sustainability leaders in the financial sector to see how they are beating their competitors.

Peruvian microfinance bank, Mibanco, lends money to around 450 000 borrowers. José Antonio Ccencho Limache is one of them, and has been able to develop his company thanks to loans from the bank. Triodos Fair Share Fund, Triodos-Doen and Hivos-Triodos Funds are shareholders in Mibanco.
Credit: Triodos Bank

Dutch based Triodos, one of the world’s leading sustainable banks, has had its best year on record. At the close of 2008, savings had risen by 20 per cent to ¤2 billion and bankruptcies were on a par with the previous year.

‘The number of new customers has risen by 30 per cent’, says Bas Rüter, Managing Director of Triodos Funds Management. ‘We’ve never grown so fast. People are fed up with their mainstream banks and are seeing us as a viable alternative.’

The big four banks in the Netherlands, with 80 per cent of market share, were shattered by the financial crisis. The Dutch Government came to the rescue and now owns ABN Amro and Fortis and a share of ING.

Triodos began in 1980 with the mission to stimulate sustainable development using finance as a vehicle. It funds companies, institutions and projects that add cultural value and benefit people and the environment.

Its equity funds have been hit by the global financial crisis (GFC), but its investment funds, outside the stock market – in renewable energy, organic agriculture, art and microfinance – are all making a profit.

In March, Triodos joined with 10 of the world’s leading sustainable banks to form the Global Alliance for Banking on Values. These banks are profitable, growing and appear to be ‘crisis resistant’.

Between them they have assets of over ¤10 billion and serve over seven million customers in 20 countries. Together they hope to lead debate on the banking models which could inspire profound change in the financial industry.

While they are minnows, Bas Rüter believes ‘size doesn’t matter. People are looking for alternative ideas.’

After 28 years Triodos is yet to make a loss or cut back on staff – evidence that it is possible, and financially safe, to think and act differently.

Here in Australia where the banking system is more tightly regulated, our ‘big four’ banks are in relatively good financial shape. They recently posted half yearly profits of $8.4 billion, six per cent down on last year.

For two years ANZ has held the top spot on the Dow Jones Sustainability Index – as the world’s most sustainable bank. Westpac was in the chair for five years prior and National Australia Bank is also among the leaders.

Terence Jeyaretnam, Director of Net Balance Management Group, an Australasian sustainability advisory and assurance firm, says, ‘Globally we’ve seen a shift away from sustainability commitments as the financial sector was hardest hit by the crisis. But here in Australia we are seeing at least the same amount of activity as last year.’

In 2008 ANZ introduced four social and environmental policies which set the standards for decision-making in sensitive sectors – including forests. The idea was to ‘transform’ businesses rather than ‘decline clients or deals’. For example, although ANZ declined to support the controversial $2 billion Tasmanian pulp mill in May last year, Gunns Ltd continues to be an important client.

Cherry Orchards is a therapeutic community offering rehabilitation and support to people recovering from a life crisis brought about by physical or mental illness, helping individuals to take increasing responsibility for their lives. A Triodos Bank loan from the UK has enabled Cherry Orchards to refurbish its existing facilities and invest in new projects.
Credit: Triodos Bank

The new ANZ Centre under construction in Melbourne’s Docklands will be the bank’s green flagship. The headquarters will emit 60 per cent less CO2 and use 60 per cent less water than the standard office block. Blackwater recycling and rainwater harvesting will be features, as will 1000 square metres of solar panels, wind turbines, a green roof and an air conditioning system that uses cool water from the Yarra.

Despite its socially responsible intentions, ANZ’s restructure in 2008 led to over 1000 staff leaving the Australian business. Westpac, meanwhile, has put its restructure on hold. Both Mike Smith and Gail Kelly are relatively new CEOs at ANZ and Westpac, respectively, and it will be interesting to watch how they drive sustainability as the recession progresses.

At the smaller end of the spectrum, credit union mecu is punching above its weight on the sustainability front. The only credit union with a Standard and Poors credit rating, it aims to be Australia’s pre-eminent socially responsible bank.

A year ago, in Victoria’s west Wimmera, mecu established a Conservation Landbank – a world leading initiative that protects prime conservation habitat. Mecu uses the Landbank to offset the biodiversity lost due to new home constructions, and tree planting mitigates climate change.

Minimay in Victoria’s west Wimmera, home to remnant buloke woodlands, is the first property to be deposited into mecu’s Conservation Landbank.
Credit: Sharon Maloney ©Tribal Pty Ltd

Minimay’s buloke trees provide vital habitat for red-tailed black cockatoos which are threatened in southern regions of Australia.
Credit: mecu

On the customer side, mecu’s Eco Pause program allows home loan repayments to cease for three months, or halve for six, while borrowers pay for green upgrades such as water tanks or solar systems.

Mecu was also the first car loan provider globally to offset the CO2 emitted from all the vehicles it finances. Energy efficient cars and homes attract reduced interest rates on loans.

Mecu is among the most proactive financial institutions working in the affordable housing sector and is evaluating more than $100 million in project finance.

‘The GFC has affected our margins,’ says Rowan Dowland, mecu’s General Manager Development, ‘but we are on track to achieve the same level of profitability as June last year. We are recording our highest membership growth in six years – people want to bank with an institution whose values match their own.’

If some proposed mergers proceed, mecu will have $2.4 billion in assets and 145 000 members by August.

For VicSuper, one of Australia’s largest public offer superannuation funds with over 245 000 members and $5.7 billion in assets, sustainability has been a central operating principle since 2001. Since then it has invested 10 per cent of its shares in leading sustainability companies both in Australia and overseas. Last year it lifted the international component to 20 per cent by bringing in Generation, a fund co-founded by Al Gore.

VicSuper staff work on a land management and restoration project with one of VicSuper’s community partners, Conservation Volunteers Australia.
Credit: VicSuper

‘We started by putting our toe in the water,’ says Bob Welsh, VicSuper’s Chief Executive. ‘We would like to ramp these percentages up over time, but members can already invest 100 per cent in leading sustainability companies if they wish.’

The GFC has brought a big drop in member account balances. This has also led to a drop in fees and as a consequence there is less money to run the business. But VicSuper will maintain services and staff by finding innovative ways to ride out the recession.

The fund is about to introduce a new climate-friendly investment portfolio that will maximise returns while reducing carbon exposure by 50 per cent. ‘It’s a way we can send capital to those companies who are doing well in a way which produces less carbon.’

For Bob Welsh the GFC is an opportunity to do things differently and the financial sector is well placed to show leadership, particularly on climate change.

Published: 2009

Negotiating the national e-waste mountain

Mary-Lou Considine

A voracious national appetite for electronic goods is creating a waste problem we can no longer responsibly ignore.

When discarded computers, TVs and other e-waste find their way to landfill, they leach toxic chemicals such as lead, mercury and flame retardants into soil and groundwater.
When discarded computers, TVs and other e-waste find their way to landfill, they leach toxic chemicals such as lead, mercury and flame retardants into soil and groundwater.
Credit: iStockphoto/Lya Cattel

Australians are generating electronic waste – discarded computers, TVs, mobile phones, DVDs, printers, keyboards, cameras, iPods and game consoles – at an unprecedented rate. In 2006, we threw out around 1.6 million computers1 alone, and the volume has risen since. Over the past decade, we’ve committed an estimated 37 million computers and 17 million TV sets to landfill, as a result of our constant demand for new electronic products.2

Yet, while Australia is among the top 10 consumers of electronic technology in the world, we are behind many OECD countries in our recycling rates: 1.5 per cent for computers, less than 1 per cent for TVs and less than 4 per cent for mobile phones.

One reason is that e-waste is a complex waste stream for councils, recyclers and regulatory authorities to deal with, because it not only contains mixed materials such as plastics, metals and glass, but also toxic substances like mercury, lead, arsenic and flame retardants.

This mix of commodity and toxic materials means the cost of processing and recycling e-waste is higher than that of other waste streams, relative to the value of recovered materials.

The question is: if landfill is not an option for e-waste, who will bear the cost of recycling? Would it be manufacturers and importers, or councils who would ultimately bill ratepayers or consumers through increased rates?

Interestingly, many of Australia’s major brand-name computer and TV manufacturers say they are ready and willing to factor the cost of recycling their e-waste into product prices, if national regulation is introduced that would make it compulsory for all manufacturers to take responsibility for the goods they produce.

In late May, at the time of writing, these manufacturers – along with environment groups and councils – were keenly awaiting an announcement from an Environmental Protection and Heritage Council meeting of state and federal environment ministers about whether or not the government would go ahead with national regulation to mandate producer responsibility for the collection and recycling of e-waste.

E-waste is one of the few issues where environmental groups and industry are supporting each other in a joint effort to lobby for national product stewardship regulation.

A few weeks prior to the May meeting, the Total Environment Centre (TEC) and the Australian Information Industry Association (AIIA) signed an ‘End-of-life Computer Equipment Compact’, also supported by Environment Victoria, Clean Up Australia and Choice.

The TEC said the compact sets out the principles required for an effective regulatory regime that would cover the entire industry and provide a ‘safety net’ so that those who complied were not ‘outpriced’ by non-compliant manufacturers, ensuring a level playing field in terms of competitive product pricing.

Jane Castle, the TEC’s e-waste campaign manager, believes a regulated national computer and television recycling scheme could lead to much higher recycling rates – perhaps as high as 75 per cent for computers.

According to Castle, the ‘patchy’ nature of current e-waste schemes around Australia has helped contribute to the country’s low recycling rates.

‘Some councils have set up e-waste collection days, but ratepayers have borne the cost. Other councils are not acting, but waiting for a push from state and federal environment agencies.’

Among the local e-waste schemes already in place around the country, one of the most well-known is Byteback, a collaboration between AIIA, numerous major brand owners, local government, Officeworks and Sustainability Victoria.

The voluntary computer-product takeback program – involving 11 of Australia’s top-name computer companies – targets computer waste from Victorian households and small businesses.

Computer waste from collection points at eight locations throughout Victoria – six municipal drop-off points and two Officeworks stores – is sent to participating recyclers, SIMS, TIC and MRI. These companies disassemble and process the items for materials recycling in Australia or export the toxic components, under licence, to certified processing facilities overseas.

Jan van de Graaff from Sustainability Victoria points out that Byteback – now in its fourth year of operation – is really a pilot scheme established to identify how a broader voluntary e-waste program might operate.

‘One of the aims has been to gather data to show what percentage of waste products can be assigned to each different brand,’ he says.

‘It is conceivable that once companies take responsibility for their waste, they will design products to last longer, to be more easily disassembled and to include less toxic materials.’

The Byteback experience has proven the need for participation of all manufacturers and importers in a national scheme. ‘Only 45 per cent of the products recycled belong to the 11 participating brands,’ said van de Graaff.

‘The other 55 per cent belongs to non-participating big-name brands and smaller “white box” importers. Sustainability Victoria has covered the cost of recycling the waste from these non-participant manufacturers.’

How does Australia compare with other countries when it comes to e-waste? Product Stewardship Australia’s John Gertsakis says our international performance is under par. The European Union has a Waste Electrical and Electronic Equipment (WEEE) directive that provides for free e-waste collection schemes for consumers in member countries. Fourteen US states have e-waste recycling legislation in place, as do Canada, South Korea, Japan, New Zealand, Taiwan and some South American countries.

Gertsakis says Product Stewardship Australia (PSA) has developed a comprehensive product stewardship plan for managing a national TV recycling service for consumers that covers product recovery and disassembly, community education, program financing, and robust collection and recycling targets.

PSA’s 12 members supply 80 per cent of televisions sold in Australia. According to Gertsakis, they were keenly anticipating a ‘clear announcement’ from the federal environment minister in late May about a timeline for the introduction of a national regulatory scheme.

‘If we get that, PSA and its member companies could be in a position within six months to be able to operate a scheme,’ he said.

Given the tiny fraction of e-waste that is collected for recycling, the e-waste recycling industry has faced a real challenge in maximising returns from its infrastructure investments.

SIMS Recycling Solutions has five operations in Australia, including a recently built facility in Sydney with specialised equipment for separating and shredding tens of thousands of tonnes of e-waste annually.

A woman in China about to smash a computer monitor to pull out copper. Manual disassembly of cathode ray tubes exposes inadequately protected workers to lead in the CRT glass and highly toxic phosphor dust.
A woman in China about to smash a computer monitor to pull out copper. Manual disassembly of cathode ray tubes exposes inadequately protected workers to lead in the CRT glass and highly toxic phosphor dust.
Credit: Basel Action Network

According to SIMS’ Kumar Radhakrishnan, this facility, in tandem with metal, glass and plastics recycling operations of SIMS elsewhere in Australia and the world, produces high-quality commodity materials that ultimately help reduce the emissions and environmental damage caused by mining and manufacture of virgin materials.

‘Proper recycling costs money,’ he says, adding that some recyclers ‘just take the good bits’ and export the remaining waste, which can contain hazardous materials.

Another recycling company, MRI, also rehabilitates used products for a second or third life. MRI’s Will Le Messurier says most of the reused product is collected from corporate and government sectors, with the tested and registered second-hand product being sold to domestic and small business markets, including education.

CRT Recycling in Adelaide specialises in handling cathode ray tube (CRT) waste – the glass-screen units in older TVs and computer monitors that can contain up to 4 kg of lead per unit, largely encapsulated in the back-end ‘funnel’ glass.

Managing Director Michelle Morton says CRT’s automated recycling system is the only one in Australia specialising in recycling CRT glass. It uses purpose-designed processes and machinery that cleans, separates and removes contamination from the CRT glass to prepare it for recycling to manufacturers of new CRTs.

TES-AMM, another Australian recycler, recently issued a call for more public awareness of the practice of developed countries dumping e-waste into developing countries where it is manually broken down to recover minute amounts of precious metals and other by-products, exposing low-paid labourers in these countries to dangerous toxins.

However, Michelle Morton feels that without uniform national legislation to promote diversion of e-waste from landfill, Australia is effectively exposing its own citizens to the same hazardous substances, which can find their way from landfill to people via contaminated groundwater or land redevelopment.

‘When you consider that making one desktop computer and monitor uses the same amount of chemicals (22 kg), water (1500 kg) and fossil fuels (240 kg) as a midsize car,’ she points out, ‘it makes no sense to bury them when we have finished with them.’

More information:

EU Waste Electrical and Electronic Equipment (WEEE) directive,

1 Australian Bureau of Statistics (2006) Australia’s Environment Issues and Trends. Cat. no. 4613.0.
2 ‘Tipping point: Australia’s e-waste crisis’, Total Environment Centre report, December 2008.

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