Green Banking

Amy Kalloch
Bonnie Bachman, Missouri University of Science and Technology

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Executive Summary Green banking is generally defined as promoting environmentally friendly practices that aid customers in reducing their carbon footprint through their banking operation activities. These practices include such things as online banking, statements, bill payments, and account opening. Banks also invest in internal initiatives to reduce their own carbon footprint. The majority of programs consist of energy efficiency, recycling, ride sharing, and environmentally friendly lending. Banks that support the local community and environment are seen as leaders in this movement. Many online banks and smaller community banks are seen as 'greener' than the large corporate financial institutions. One criticism of the large banks includes the financing of environmentally detrimental endeavors, such as British Petroleum's oil spill. Those banks that received Troubled Asset Relief Program (TARP) or bailout money are also seen in a negative light as well as held to higher standards based on the sustainability initiatives they have promised publically. Sustainability has varying definitions depending on the organization's core practices and strategies, but carries a common importance to corporations as a critical success factor as seen from the recent increase in companies producing annual sustainability reports and creating a C-suite position called Chief Sustainability Officer (CSO). The banking industry recognizes green initiatives as an increasingly important business strategy, for which the top U. S. banks are all striving to gain a competitive advantage. Recent research and surveys of these concepts aid in the conclusion that sustainability will continue to play a large role in the banking industry's competitive dynamics; in addition, long-term consequences for the environment and overall business practices will be realized.