Final presentation Strategic Management FourContinent Social Consulting Group

Final presentation - Strategic Management Four-Continent Social Consulting Group B. V. USA – Japan – France - Brazil/Colombia Simi Gambhir Katsuya Nakamura Thierry Zedda Renata Peregrino de Brito Antonio Patron Implementation Technology Strategy Group C 5 / A 14

Final presentation - Strategic Management Where will we draw the line? Group C 5 / A 14

Final presentation - Strategic Management Triodos Bank SUSTAINABLE BANKING Group C 5 / A 14

Overview • Banking Industry Overview • What is Triodos Bank? • Financial Analysis • Strategic Intent • Recommendations Group C 5 / A 14

Banking Overview Group C 5 / A 14

Overview How do banks function? rts Im po po Ex rts International Markets Government In es ve s Ta x tm en s g vin Financial Markets ts Inv es tm Sa en ts Consumptions Households Companies Production The Changing Environment of Banks. M. H. A. Jeucken, J. J. Bouma. GMI Theme Issue: Sustainable Banking, 1999. Group C 5 / A 14

Banking Industry Sources of Income for a Bank Interest Earning Provision Earning • Work on its own behalf and risk. • Interest income received on loans minus the interest expense for borrowed funds • Works on behalf of and at the risk of its clients. • Securitization and investment banking Group C 5 / A 14

Banking Industry 4 Main Functions of a Bank Transform money by scale Money surpluses of one person are not the same as shortages of another Transform money by duration Creditors have short-term surpluses, while debtors have long-term needs Group C 5 / A 14

Banking Industry 4 Main Functions of a Bank Transform money by location Bank brings money from a creditor in Rio to a debtor in Rotterdam. Risk Assessment Value the risks of various investments Group C 5 / A 14

What is Triodos Bank? Group C 5 / A 14

Overview Triodos (tree-odos): from the Greek “tri hodos” meaning “three way approach” Social Ethical Financial Group C 5 / A 14

Mission “The Triodos Bank aims to be a pioneering force in the world of sustainable banking … to contribute to a more decent, dignified and kinder society and a world that respects people, the environment and culture. ” Group C 5 / A 14

Objectives Funds Provides funds for entities that add value to society, culture or the environment Information Makes funding and investment decisions transparent to customers Profit Funds are economically sound and positively impact the bottom line Group C 5 / A 14

Key Dates in History 1971 1980 1993 1995 1997 1998 2004 Triodos Foundation established Triodos Bank fully licensed in The Netherlands First ¨Green fund¨ offered and listed on the Amsterdam Stock Exchange (AEX) Belgian branch opened UK branch opened Triodos Green Fund on AEX Solar Investment Fund introduced Spanish branch to be opened Group C 5 / A 14

Products and Services Personal Savings • • Fairtrade Saver Medical Foundation Amnesty Saver Organic Saver Earth Saver Just Housing Dana Partnership Shares and Funds • Cafédirect Share issue • Ethical Property Company • Golden Lane Housing Group C 5 / A 14

Financial Analysis Group C 5 / A 14

Customer Characteristics Bank Depositors Financial Return Borrowers Maximization Triodos Vision Financial　&　Social Depositors Transparency Borrowers Group C 5 / A 14

Key Figures Deposits (000 s) Loans (000 s) 20% in average Rapid growth Data source: Triodos Annual Report Group C 5 / A 14

Key Figures (ABN AMRO: 90%) (000 s) Ratio of Loans to Deposits % of Deposits Deposit 3 years Loan Data source: and Triodos time Annual Report Saving-lending mismatch due to rapid growth lag Group C 5 / A 14

Key Figures Pre-tax profits % of total assets Triodos potential (90% util of deposit) ABN AMRO Bank Not only Financial, but Social Return Data source: Triodos Annual Report Social projects can be profitable Group C 5 / A 14

Strategic Intent Group C 5 / A 14

Sustainability & Strategy The Sustainaility concept in Business: • Long term strategy in a profit maximization world • Being conscious of limited resources In the Banking Industry: • Slow change • Reduces Risk for Lending • But also bring new opportunities Group C 5 / A 14

Sustainability Typologies Four different attitudes commercial and investment banks have towards sustainability. Sustainable banking • Sustainability as a core strategy Offensive banking • Look for highest sustainable rate of return Preventive banking • Applicable to niche players Defensive banking The Changing Environment of Banks. M. H. A. Jeucken, J. J. Bouma. GMI Theme Issue: Sustainable Banking, 1999. Group C 5 / A 14

Models of Sustainability as new banking strategy Public Administration Regulations Sustainability as value driver Investors Bank Business Leaders NGO´s Employees Business Policy Business Practise O. Weber, R. Reiland B. Weber, “Sustainability benchmarking of european banks and Financial Service organizations” 2002. ETH. Group C 5 / A 14

Affinity Finance “…seeks to restore a sense of relationship between depositor and borrower which […] tends to be broken in normal banking practice. ” (C. J. Cowton, 2002) Group C 5 / A 14

Value, Cost and Speed Value Costumers • Investments go beyond the usual risk and return analysis • Specify more precisely the uses of funds Cost Company Speed • Low annual expenses (overhead) • Fee charges • Diversification: Insurance products • First mover advantage • Few business sectors Competitor Group C 5 / A 14

Strategy Implementation External: Internal: • ISO 14001 certification for environmental management • Gender equality regarding salaries • The bank only invests in social and environmental harmless business, projects and sectors. • Annual Report • The Meerwaarde Fund Group C 5 / A 14

SWOT analysis Strengths Weaknesses • Stakeholder approach • Transparency • Unified proposal • Niche orientation • Innovative products Opportunities Threats • Increasing demand • Alliances with other institutions • Financial Return • Fiscal “green scheme” • Acquisition threats Group C 5 / A 14

Recommendations Group C 5 / A 14

Recommendations Problem Opportunity Alliances & Partnerships Recommendation: • Valuable partner to other financial institution • Exchange: sustainability expertise & brand recognition • Access to new customers and markets. Group C 5 / A 14

Recommendations Problem Opportunity Sustainable Growth How to keep the same transparency level? • Recommendation: • “Keep small” • Change the current level of information Group C 5 / A 14

Recommendations Problem Opportunity Ratio of savings to lending. Are sustainable initiatives limited? Recommendation: • Administrative speed to evaluate and reach new market • Risk taking attitude - less mature projects Group C 5 / A 14

Recommendations Problem Opportunity Customer Service Recommendation: • Inclusion of payment services: debit & credit cards, and internet banking • Incorporate the banking facilities Group C 5 / A 14

Recommendations Problem Opportunity European Focus Recommendation: • Local resistant to foreign bank • Do not ignore US market. Us Market US$ 2. 16 trn European Market € $ 336 bi 18. 7% Group C 5 / A 14

Conclusion So…what can you do to support sustainability? Group C 5 / A 14

THANK YOU Group C 5 / A 14