An aim of being successfully sustainable

       
Whereas all the signals in the financial markets from autumn 2008 onwards at the latest were set to insecurity and crisis, customer demand at the GLS Bank in Germany rose by leaps and bounds. If in the equivalent period of the previous year the financial institution processed 2,500 calls per week, that number rose to 5,000-6,000 after the start of the crisis.

“Something which this small cooperative bank can manage should also be possible for other financial institutions,” the newspaper Süddeutsche Zeitung demanded in August 2008. The Ruhr Nachrichten newspaper noted: “The GLS Bank is growing and growing and growing.”

In recent years, the bank has grown by 20 percent, but in the crisis year 2008 it recorded growth in the balance sheet total of more than 27 percent and thus crossed the billion line for the first time in its history. Corresponding growth of 25 percent was also recorded by the GLS Bank in the field of loans and deposits. The GLS Bank is continuing its successful course without interruption, with growth of more than 30 percent in 2009.

So on what is this consistent success based? In Germany, a rethink is evident among investors. Instead of solely pursuing the aim of the highest return, increasing numbers of investors are readjusting their objectives. Growing numbers of investors want to know the social and ecological effects of their investments in the real economy and have a say in how their money is used. There are good reasons for such a rethink:

First, the financial crisis has sharpened the awareness both of the effects which investments have and of the consequences of the decoupling of the financial sector from the real economy. Since the volume of financial losses and the large number of affected financial institutions worldwide has become known, since the rule “too big to fail” was not applied, distrust of the banking sector is rife among investors. The awareness has grown that banks were involved in financial transactions, some of which were complex and lacking transparency. Customers are questioning the hunt for the highest returns in which money is earned with money in an abstract way. They feel that they have not been properly informed and want to know for what possibly speculative transactions the banks are using their money.

Second, increasing numbers of people see themselves as being obliged to take personal responsibility in the face of the growing challenges to society brought about by social problems and advancing climate change. The number of consumers of organic food, green electricity or clothing produced in an ecologically and socially compatible way is steadily growing. Such a “Lifestyle of Health and Sustainability” (LOHAS for short) also includes taking account of sustainability criteria in financial investments. Investors see their investments as a lever to promote the sustainable development of society. For some it also represents a political statement.

The current situation makes clear that long-term confidence of investors in banks can only exist if customers are given a real basis on which to assess banking products through a transparent way of working and are thus enabled to make an informed decision which takes all aspects of a financial investment into account. In addition, it is clear that there is growing demand for socially, ecologically and economically sustainable investments. That is precisely the gap in the banking world which the GLS Bank fills with its products.

Transparency and Sustainability
The GLS Bank was established in 1974 as the first social and ecological bank in Germany. The aim of its business activities is the sustainable development of society. The GLS Bank sees money as a means to make things happen in society. On that basis it focuses the whole of its business activity on services which combine the individual benefit for its customers with a social and ecological benefit for society. It addresses people who wish to produce non∞material added value in addition to their financial added value and makes financing available in accordance with strict criteria exclusively to businesses and projects which serve social objectives in the ecological, social and cultural field.

From the perspective of the economy, the function of banks consists of supplying the real economy with a medium of exchange and capital. The GLS Bank focuses on precisely these core tasks – deposit and loan transactions. With banking services from current accounts through savings products and asset management to old age pensions and financing, the GLS Bank offers the most comprehensive range of sustainable banking products in Germany. Together with its current 73,000 customers, the bank is at present putting into practice more than 6,600 forward-looking enterprises and projects in regenerative energies, ecological agriculture, ecological building finance, natural food, independent schools and kindergartens, facilities for people with disabilities and housing projects.

This utilisation-oriented concept of the GLS Bank includes comprehensive transparency unequalled in Germany as well as an open communication policy. The bank is transparent about the way it uses resources and informs customers about the enterprises and projects financed: it regularly publishes all new loans in its customer magazine Bankspiegel, specifying the institutions receiving the loans as well as the amount and purpose of the loan. In this way investing customers can see at all times in which enterprises their money is being invested.

In addition, the GLS Bank offers its customers for all bank products – starting with opening a current account – the opportunity to decide the sector in which their money is to be invested. In this way customers can support specific areas of society. This exemplary transparency does not stop at the publication of its own investments either. Everyone can inspect the GLS Bank’s own investments on its website. In order to separate the sustainable from the non-sustainable sectors, enterprises and business activities, the GLS Bank works with rigorous positive and negative criteria. The 15 excluded criteria in total include, among others, nuclear energy, the arms industry and child labour. The bank refuses to work with enterprises which are tangent to these sectors because meeting the criteria is the prerequisite for loans being granted by the GLS Bank. It applies equally to the bank’s own investments.

In order to guarantee the highest quality and a consistent sustainable investment universe, the GLS Bank has implemented a two- stage research process. To this end it works together with the experienced rating agency Oekom Research AG as a first step, which also includes ecological and social criteria in its company analyses alongside the economic ones. On the basis of the values suggested by the agency, the in-house GLS investment committee examines in detail which businesses can be included in the GLS investment universe. The committee consists of internal and external experts who meet several times per year and routinely monitor the investment universe.
 
In questions of transparency and the strict implementation of a sustainable banking strategy, the concept of the GLS Bank sets standards. It provides investors with a sound basis on which to take decisions and makes the GLS Bank’s transactions verifiable and assessable. Furthermore, it offers a high degree of protection, something that is a central investment criterion specifically in times of crisis. Protection is also assured through the GLS Bank’s membership of the Volksund Raiffeisenbanken’s guarantee scheme, which guarantees all deposits to 100 percent, as well as a business policy which strictly excludes speculative financial transactions.

That the concept of the GLS Bank creates sustained confidence and proves convincing is shown not only by the enormous growth in the deposit and loan business but also by the increased number of customers. If the Bank had about 62,000 customers in 2008, this has risen to 73,000 in 2009. And growth is continuing. The GLS Bank clearly reflects the spirit of the times.