New model bank: why business is booming for Triodos

Q. Why is Triodos doing so well at the moment, in the midst of a global recession?

A. In the context of the banking crisis, Triodos continues to grow very fast and is receiving ever increasing recognition in a time when we really do need a new model for banking.

People and businesses are choosing to vote with their feet, using the power of consumerism to create positive change. If a small to medium-sized enterprise, for example, has sustainable products and goals, then this is the time to be thinking about what its bank does with the money it deposits. It does have the option of choosing a bank that focuses on long-term sustainability rather than short-term profits.

A lot of businesses that meet our criteria will have struggled to raise finance with the high street banks, or perhaps their existing banks have declined to renew their overdraft facilities. We hear a lot of this. We state we won’t change our terms, so I think businesses should be conscious of their banking partners.

Q. What types of businesses are you looking to lend to at the moment?

A. The organisations we lend to must demonstrate a positive, social or environmental impact.

In terms of sectors, we are very interested in the potential of food waste to generate electricity. I am delighted to say that we have just completed our first investment in this sector with an 'in-vessel composting' company in Oxfordshire.

This sector is currently creating a lot of interest – with Government targets to remove biodegradable waste from landfill and rising energy prices – and Triodos is right at the forefront of it because we have now adapted a successful finance project model to finance these facilities.

In this particular sector, investment really lends itself to existing organisations that have transferable skills, that are financially strong and that have a proven, knowledgeable management.


Q. More precisely, what is your lending criteria?

A. We are looking for businesses with good products and services that have unique selling points. They will be able to establish themselves quickly in the market with proof of sales, or, contracts for services. We also want to see a proven management that have run similar businesses.

We are looking for very committed people and that means financially committed as well. Historically, banks may have lent the largest proportion of the money, but now we are looking for businesses that have a proportion of their finances from other sources.

Q. When do you find yourselves turning businesses down?

If they are under capitalised and don’t have enough money in the business, which means that if we lend them money and if anything goes wrong they may run out of working capital, this can be down to a lack of proven sales or too few contracts.

Q. Which other sectors does Triodos see as set for growth?

Small scale hydro in the UK looks promising and when the new 'Feed-In Tariff' comes in to law, I think we will see businesses that are involved in micro renewables take off, with some interesting businesses emerging in that space.

Another sector that looks promising for growth over the next few years is the one involved in retro fitting the existing housing stock. How can we improve the energy performance of existing stock to make it more energy efficient or even energy generating? This is going to be one of the next big environmental challenges.

Q. What impact do you think the banking crisis has had on the environmental industries?

A. The high street banks have turned off lending to things that they don’t understand well and that means some new and innovative businesses aren’t getting supported and good, established businesses aren’t able to grow.

Q. What do you think the high street banks could learn from Triodos?

A. There should be greater transparency in banking. We have just launched 'Know Where Your Money Goes' and this isn’t just a gimmick. It means people can see where there money is being used and people should have this right because it is absolutely key to unleashing the power of consumerism for positive change.

The financial sector generally has a hugely inflated view of its own value, and if it remains in a bonus culture, then it will always be focussed on short-term profits. But, banks do have a huge influence on all our lives and they should take more responsibility for the type of society and environment that they help create.

But, in my view the opportunities have never been greater. If people and businesses want change then they can vote with their feet, plus there are great opportunities arising from the energy crisis, waste, energy efficiency and food sustainability issues. I think that now is the time for those operating in these sectors to really take off.

I constantly get asked if money can really be made from the businesses that we lend to, and I say that we have a phenomenal range of hugely successful organisations on our books; they may not be making returns of 30 per cent, but they are making very solid, sustainable profits across the whole range of sectors that we lend to. If you look at the bank’s stable financial performance with consistent growth, this illustrates that investing in sustainable environmental and social businesses actually makes a great deal of financial sense and there are an awful lot of these organisations out there that are growing very fast and are very profitable.

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Related Sites
www.triodos.co.uk