Foreword by Jan Pronk

Sustainable development has featured more and more prominently on the international agenda for governments and business over the last few decades. Environmental policy in The Netherlands originally focused on business, the main source of environmental damage. The financial sector was explicitly brought on board for the first time in the late 1990s. The 1997 policy document on the environment and the economy was the first to describe a role for the financial sector. It states that capital and financiers will need to be involved in integrating the environment into business practice and the economy.

Three initiatives that have strengthened the role of the financial sector in environmental policy are:
1. The Green Investment Incentive Scheme, launched in 1995, which offers individuals, companies and public authorities loans at 2 or more per cent below market rates for green or environmentally friendly projects. 
2. The Netherlands Bankers' Federation and the government's multi-year energy conservation agreement, concluded in 1996, which aims to increase energy efficiency by 25 per cent over 1995 levels by 2006. 
3. An Environmental Council for the Banking Sector, set up in 1999, which enables the banking world and the government to consult on how the financial sector can do more to promote sustainable development. Topics debated include how banks can get involved in the clean development mechanism and joint implementation, and what banks are contributing to funding for soil remediation. 

There have also been sustainable banking initiatives at the international level, including UNEP's important declaration on banking and the environment. Financial institutions which sign up to this declaration recognize their duty to stimulate sustainable development and commit themselves to integrating environmental considerations into their internal management and commercial decisions. So far some 175 financial institutions around the world have signed the declaration. It is vital that sustainable banking should not be confined to just a few countries, as banking activities and capital flows are not confined by national borders. 

The financial sector is involved in the environment in many ways:
- as investors, providing businesses with capital for investment; 
- as developers of financial products that can strengthen sustainable development, such as energy-saving or green investment funds; 
- as stakeholders who have an interest in preventing businesses running environmental risks; and 
- as polluters. 

The financial sector used to view the environment as a source of financial risk, for example when companies discover their site is polluted. Nowadays, the opportunities presented by the environment are also being discovered. Banks in The Netherlands and elsewhere are increasingly developing sustainable banking products, such as environment-related investment funds, green mortgages and sustainable insurance policies. Trailblazers began on a small scale in the 1960s and 1970s. New challenges lie in climate issues and in coming up with financial innovations and ideas to help businesses manage carbon dioxide in a cost-effective way. The financial sector can give sustainable development a tremendous boost with activities of this kind. 

This book describes such activities in detail, along with other sustainable banking and finance issues. It gives an interesting view of sustainable banking from inside the sector. It combines countless examples, blueprints and analyses to provide a detailed overview of the trend towards sustainable banking. The book is written from the angle of the sector as a whole, not from the viewpoint of a particular bank or institution. It contains a wealth of background information and examples of the products and activities of various banks. The author is the first to tackle this subject in such broad and accessible terms, making his book of interest not only to experts in the financial sector or government but also to people with no specialist banking or financial expertise. I have no doubt that this book will inspire many people to take up the challenge of sustainable banking.

Jan Pronk
Minister of Housing, Spatial Planning and the Environment
The Netherlands
April 2001

Foreword by Hans Smits

Much of the 20th century's focus has been on economic progress, in which mankind has made giant steps. Increasingly, side effects such as loss of biodiversity, climate change and various forms of environmental pollution are manifest and need attention. The same is true for social issues such as poverty alleviation and equal development chances for all. Therefore, the issue of sustainability has become more and more important. In my opinion it will be one of the key issues for the 21st century. As such, sustainable development is about the welfare of human beings and a natural environment that does not reduce possibilities for future generations, without losing sight of the economic continuity of the current generation.

The path towards sustainability will involve citizens, non-governmental organizations (NGOs), governments, companies and, obviously, the financial sector as well. In addition to our historical socioeconomic objectives, our mission statement puts the ecological dimension well: 'The Rabobank Group believes sustainable growth in prosperity and wellbeing requires careful nurturing of natural resources and the living environment. Our activities will contribute to this development.' These activities are numerous, and include standardized environmental risk assessments, and products such as our Green Bank for green savings, investments and mortgages; our RG Sustainable Equity Fund; and our environmental loans, leases, mortgages and insurance products. Obviously, we also continuously try to improve our internal environmental care as well and report on all sustainability issues in a transparent way. Moreover, we are a signatory of the UNEP Statement by Financial Institutions on the Environment and Sustainable Development, and a member of the World Business Council for Sustainable Development. Furthermore, we think climate change is a major issue and therefore, among others, participate in the Prototype Carbon Fund of the World Bank.

As a large, international, all-finance and cooperative bank and a major global player in agri-business finance, we are quite naturally involved in the concept of sustainable development. In our policies we focus on the sustainability leaders of today and also help companies which are having difficulties in integrating sustainability into their activities. In my opinion sustainable banking is about both supporting the innovative and proactive companies, and stimulating the reactive companies. Alliances and cooperation between NGOs, governments, companies, consumers and the financial sector are a natural outcome of this 'double strategy' and will pave the way towards sustainability. As the major financial player in The Netherlands with a large local network, our bank is well placed to do so and is involved in various such alliances. In my opinion, this joining of forces is the best strategy for achieving more sustainable development.

This book is impressive in both its scope and depth and is, to my knowledge, the first major publication which deals integrally with all aspects of sustainability and banking. My compliments go to the author for making the book's structure and content accessible and of interest to readers from the financial community, the environmental movement, business, government and society in general. I sincerely think this book can improve the dialogue within the financial sector and with their stakeholders, and propel many towards a sustainable future.

Hans Smits Chairman
Rabobank Group
The Netherlands
April 2001