Retail Banking and the Green Economy

What is a Retail Bank?

Retail Banks mainly serves individuals and small businesses. They offer green products which include green mortgages, loans, savings and investments, and green payment services.

What are the main functions of Retail Banks?

• Deposit taking
• Managing the payments system
• Extending credit to individuals and small businesses

What are the examples of Retail banking products and services?

1.Deposits and savings accounts, and payment services - Some banks offer green current accounts that enable customers to influence how their deposits are used.

• Ekobanken in Sweden, allows clients to direct their savings towards specific areas of the bank’s loan portfolio. Eg - Climate protection
• Nordea in Sweden have embedded a CO2 tracker in their mobile and digital banking apps. It helps customers see the impact of their consumption decisions
• YES Bank in India offers a “Green Future Deposit” savings product. This 18 month, fixed-term deposit scheme offers high rates of interest and allocates the funds raised to invest in projects and sectors aligned with the UN Sustainable Development Goals
• China’s “Antforest” app combines behavioural ‘nudges’ with gamification to promote more sustainable, climate-smart consumer behaviour, reduce carbon emissions and increase reforestation

2. Green Mortgages - Provide customers with attractive interest rates for purchasing energy-efficient homes or investing in green retrofits, energy-efficient appliances or green power.

• Barclays launched the UK’s first Green Mortgage in 2018, It was available to the customers, purchasing a new-build home with a high energy-efficiency rating

3. Green Car Loans - Bank Australia links all car loans to the environmental impact of the vehicle being purchased. The bank calculates the greenhouse gas emissions associated with the vehicle type and uses this to determine the interest rate.

4. Green Business Lending - These generally offer more favourable terms such as lower interest rates, or more relaxed collateral requirements for loans with a clearly defined green or sustainable purpose, such as investing in more energy-efficient or otherwise more sustainable production equipment, or premises.

• HSBC in 2019 launched a green loan scheme for small businesses, offering loans of up to 300,000 pounds linked to sustainable investment and activities
• In Kenya, the Climate Smart Lending Platform links lending to the adoption of more sustainable farming practices by smallholders
• Nordea Bank in Sweden has a more developed scheme, where customers commit to reporting positive environmental impacts from investments made