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Resilience is the ultimate sustainability

Albert Slap, President, Coastal Risk Consulting

Environment, Society and Governance Shaping Finance Today

More investors are looking what’s opening new areas in finance.

Opportunities range widely, from finding new ways to fund solar panels on homes to handling deposits for medical marijuana and practicing Islamic finance, speakers said at a School of Business symposium on green finance held Oct. 18.

Event organizer Daniel D. Hicks described green or sustainable finance as looking beyond profits in mobilizing funds and considering the consequences longer-term. “We need to have a triple bottom line approach: people, planet and profits,” added Miami-Dade County Commissioner Daniela Levine-Cava, who calls herself the “sustainability commissioner” for her focus on the environment. She touted programs that let homeowners pay off loans for energy improvements along with property taxes and recently joined a purchasing co-op to add solar panels on her house.

Values-based banking is gaining ground, stressing fairness and inclusion as key values, said Jeffrey Cannon, values champion for First Green Bank, the Florida bank founded in 2009 that has grown to $650 million in assets. The bank is the state’s first allowed to accept deposits from medical marijuana.

Among faith-based investors, there’s opportunity in Islamic finance, which prohibits excessive interest and investment in alcohol and gambling, among other activities considered sinful. Islamic finance favors risk-sharing and equity over debt and won’t invest in highly-leveraged companies, said Bashar Qasem, president and CEO of Azzad Asset Management based in the Washington, D.C., area.

Within socially-responsible investing, one expanding field is shareholder advocacy – pushing for change as the owner of stock in a publicly-traded company. That might mean pushing for more diversity on corporate boards, a cut in egregious executive pay or a shift from fossil fuels to renewable energy, said Anthony Eames, senior vice president at Calvert Investments, a leader in socially-responsible investing since the 1980s and based in Bethesda, Md. The push often mobilizes other shareholders to push too.

What’s important in these initiatives is measuring the impact of investments as best as possible and trying “to get more impact bang for the buck,” said Megan Starr, vice president of Goldman Sachs Asset Management in New York. Among simpler ways to measure: Taking equity stakes in private companies changing lives, such as Kenya’s M-KOPA. That company lets families pay-as-they-go for solar panels on their homes and make tiny payments through their mobile phones.

It has helped more than 500,000 households in Africa, allowing them to replace kerosene lamps which pollute. The families save, on average, 50 cents a day with M-KOPA – a big impact, since most live on just $2 daily, said Starr.

“Yet green finance must take heed to measure the right things – including resilience or adaptation to climate risk,” added Albert Slap, an environmental attorney and president of Coastal Risk Consulting in Plantation. “For example, what’s the point of a bank checking whether a mortgage holder can afford to add solar panels on their roof, if the home stands to be swept away with rising seas?” he asked.

“Resilience is the ultimate sustainability,” Slap told students, faculty, alumni and guests at the Storer Auditorium. Concern for resilience presents new markets for banks, such as lending to raise the height of a home to avert flooding: “This is going to prevent people from becoming climate refugees.”

Cuba also offers opportunities in finance, as that Caribbean neighbor opens its economy, said Dave Seleski, who founded Florida’s Stonegate Bank, which was recently bought by Arkansas’ HomeBanc Shares/ Centennial Bank. Stonegate became the U.S. bank for Cuba’s office in Washington, D.C., in 2015, based partly on Seleski’s conviction that stronger U.S.-Cuba engagement would help the people of both countries. It later became the first bank to issue U.S. debit and U.S. credit cards for use on the communist-led island.

Seleski said closer U.S.-Cuba ties in recent years have helped boost Cuba’s emerging private sector, which now provides nearly one in three jobs island wide. He’d like to see the Trump administration keep encouraging that private sector, giving more Cuban people “the chance to make a living.” The School’s first annual Corporate Sustainability Symposium, held last year, prompted the launch of a sustainability course that Hicks now teaches.

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