June 24, 2011

Why a Green Banking Revolution is Necessary (& Who’s Leading It).

elephant journal is proud to be the official new media partner with LOHAS Forum. Click here for our ongoing LOHAS coverage, and be sure to follow our live coverage on Twitter. [Our editor Waylon Lewis is honored to serve on two panels during this event.]

An interview with Vince Siciliano, CEO of New Resource Bank, who is redefining the cutting edge of green-slow-banking awesomeness. Since New Resource embodies pretty much the coolest concepts I’ve seen in banking today, Vince was a little bit of a celebrity to me, and I giddily introduced myself and asked for an interview.  It was a fascinating talk, and he enlightened me on some really interesting principles about new paradigms in banking—including how to account for and include intangibles in your life or organization.

elephant journal:  How is LOHAS different from other sustainability conferences you go to?

Vince Siciliano, CEO of New Resource Bank:  There’s a different flavor here, and a level of passion that is more tangible.  This might be a factor of it being a community smaller businesses and more entrepreneurial minds.  I also notice a theme of more spiritual connection, much more than any other conferences I go to.  The session yesterday on Liberating the Corporate Soul was a great indicator of that.

Aaron Patterson, Co-Founder of Noble Creative (http://withnoble.com)

elej:  What’s the corporate soul of New Resource Bank?

VS:  I define soul as the essence of who you are.  New Resource Bank is a place that brings together people’s needs for achieving security, success, and significance in life. We all, as individuals and as organizations, have a hierarchy of needs.  Simplifying Maslow’s approach, at the bottom level we’re just needing security. For a company, that’s at least a break-even cash flow.  Then we move past basic security needs to success.  From a company perspective, that can look like financial wealth, some kind of accumulation.  But then we get to the more important level, which is meaning and purpose. Why am I here, what’s the impact I can have?  A focus on legacy and values can lead to the self-actualization of an organization.

I don’t think we need to leave the purpose section to the end.  It’s not like, “Let’s get rich and then I’ll get philanthropic.”

elej:  How have you incorporated the purpose aspect into New Resource?

VS:  In terms of the client we’re looking for, we’re looking for individuals who want not only a financial return, but also an environmental and social return.  We have integrated a sense of purpose into our bottom line and our clientele.

elej: Is that sense of purpose integrated internally, as well?

VS:  It’s uneven…when it comes to talking to employees about their own lives and growth, I think we still have a long way to go.  However, now that we have a sense that we’re going to be successful, we can put more research and resources into asking those types of questions.

elej:  What makes New Resource different from other banks?

VS:  It’s a mission-oriented bank.  There’s only a handful of those in the country.  That mission is to promote sustainable living in the community.  By sustainable, we mean that we want to work with people and organizations that are managing a social as well as environmental and financial return.  The money that goes into the bank will go out in loans and investments that will nurture that vision.

We ask people, “Do you know where your money spends the night?”

Most people don’t.  Most people don’t even think about that.

elej: What are your intentions and goals here at LOHAS?

VS: It’s about the relationships and connections.  This is my second time here, and I’ve come to learn that this is a gathering of a lot of really amazing and interesting people, who have been thinking about things from a variety of perspectives. And they’re living it.  It’s not just business, it’s not just something that they’ve added on to improve their bottom line.  It’s a way of life.

elej:  What are some of the challenges of walking the walk while running a mission-aligned business?

VS: A lot of people don’t think about mixing success and significance together.  They tend to think of that as falling into “business vs private” realms. They say “let’s improve the top line, let’s improve the bottom line, and with the profits generated, we can go and do good, but they’re not really marketplace issues.” But you really can talk about values and mission in the marketplace.

The second challenge is that the way investments are evaluated has to do with the internal rate of return (IRR).  However, the rate of return is somewhat flawed and limited.  An interest rate of return does not even begin to capture all the possible returns on an investment.  If all that we look at is the interest rate, we’re going to make different decisions than we would if we were looking at other aspects of return.

For example, what if we were to look at the lives of our grandchildren when making an investment decision?  If we were to look at that from a Present Value Analysis perspective, their lives and well-being would really not fare at all, because our grandchildren do not even have a seat at the economic table today.  So if we were to look at climate change, resource conservation and renewal, for example—they really can’t be justified solely on economic returns because the time horizon is too long.

elej: How would you incorporate and account for other aspects of return? What metrics would you use?

VS:  Paul Herman, who wrote a book called The HIP Investor (Human Impact + Profit) has developed a way to bring some of these things onto the balance sheet and say, “how do you value people”?  So you could take that system and bring in the value of people, the value of legacy.  However, I find that hard to do…as a result, I’d say it’s less about coming up with new metrics, because I think that over time, we’ll come up with new metrics naturally.  It’ll just be a matter of starting out by qualitatively bringing those things to the table.

We just have to change the way we make decisions.  Even as we add up the financial implications of our decisions, we need to take into consideration the long run of people and planet—and we may have to do that without metrics.

elej:  But, what incentives would there be for a corporation that might be looking at dipping into their profit margin in order to consider outside intangibles, the External Rate of Return?

Well, let me stop you right there, actually.  There need not be a reduction of IRR because you consider ERR.  Sure, we could argue that.  But I disagree.

A business that runs from a perspective of integrated top line, can bank into the business concern for planet, people, and legacy.  If you bank into the issues of conservation, preservation, and renewal, you will in fact enjoy certain business benefits that will increase your firm value.  You will attract and retain employees better, your brand will be more attractive, the business will be more resilient and will resist ups and downs and be less risky.  All of that will improve firm value.

I’m not convinced that there needs to be a financial reduction in the long run by considering these broader implications.

New Resource Bank is based in San Francisco, CA — but anyone can open an account online and tap into the satisfying feeling of mission-aligned banking.

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