32. International Influencers: Appealing to Climate Conscious Clients
Rise of the Ethical Banker
The Research
A recent consumer report on green finance from Mambu – a leading global firm focused on digital banking and financial services technology – employs the term “ethical banker” to describe a market segment of banking customers. The term represents banking clients driven to make a positive impact and seek out ways to make their finances work for good and ensure that their banking partner aligns with their personal values, too.
In the survey from Mambu that included 4,500 consumers, 31% fell into the ethical banker category. While this group only represents a third of the surveyed consumers, nearly 80% of this segment said they are more likely to use a bank that’s putting purpose over profit. In similar research from Mambu, 63% of a surveyed group of 6,000 consumers say they would like the core financial services they use to be sustainable, and nearly 50% would consider switching to providers with stronger sustainability commitments.
Why it Matters
The rise of ethical banking customers signals a larger shift occurring among clients who are looking for more than just a safekeep for their finances. Growing segments of younger markets – think Millennials and Gen Z, ages 20-40 years old – are increasingly interested in banks well-positioned to drive change as it relates to the social, environmental, and economic well-being of their communities. Looking at climate change and environmental issues specifically, research from the Bank of West’s Money Matters Report revealed that “nearly 4 in 5 (79%) people in the U.S. report they are ‘passionate’ about climate change.” For an increasing number of consumers, that passion is driving behavior: “More than 3 in 5 Gen Z (Gen Z 61% vs. Millennials 53%, Gen X 59%, Boomers 47%) would switch to another bank if they knew their current bank was financing [fossil fuels].”
It’s not enough anymore for banks to simply say they’re sustainable. In this case, actions truly speak louder than words. Being engaged in solutions to social and environmental issues not only helps put your institution on a sensible path towards a sustainable and prosperous financial future, but it also provides a competitive edge in appealing to new clients and standing out against the competition.
Mitigate Risk, Prioritize Growth
The new wave of finance prioritizes strategies that not only enable growth but also mitigate the inherent risks associated with an accelerating climate crisis. Climate change has already caused disruptions and financial damages to the tune of billions of dollars. Individuals and organizations alike increasingly expect and demand that their financial institutions integrate sustainability into all facets of the business; groups like BankFWD are creating networks to turn up the pressure and accelerate climate action. As concern for this issue grows, banks who stay ahead of the curve can avoid downside exposure; they also ensure their continued relevance and success in the changing tide of finance.
How can your bank ensure that you’re capitalizing on this moment of ethical banking? For banks looking to put capital to work to fight social, economic, and environmental issues, investing in clean energy can be the answer. Community-based solar projects, in particular, offer a low-risk, non-correlated financial return backed by the Federal renewable energy Investment Tax Credit (ITC); and also delivers energy access, green jobs, and savings for organizations and communities. The Federal ITC is set at 26% for solar projects completed in 2022, and 22% for projects completed in 2023. Since tax credit investors typically represent only a portion of the capital stack, but receive the majority of tax benefit, this investment structure allows tax credit investors to recoup the majority of their investment through tax incentives in Year 1.
At Sunwealth, we’ve deployed over $100 million in over 500 community-based solar projects in communities across the U.S. We’ve developed an expertise in working with banks and financial institutions to put their money to work in projects that deliver strong financial returns as well as positive community impact. Environmental Finance recently recognized Sunwealth as their 2022 Environmental Fund of the Year (North America).
Banks that are investing in communities and in solutions that address climate change and inequality are well-positioned to capture the business of ethical banking customers. As banks and financial institutions look for ways to appeal to climate conscious clients, partnering with Sunwealth can mitigate risk, prioritize growth, and help tell your story of impact that sets you apart from the rest.
Let us help you write your impact story.
Christian Morris is a Marketing and Investor Development Associate. Prior to joining Sunwealth, he led communications for a Boston-based research and advocacy nonprofit focused on climate policy.