BankspiegelThe magazine of The gls Bank

Special Edition 

1/2013

Change–makers: The global alliance for

Banking on Values

2 3Bankspiegel — Special Edition 1/2013

EditorialIn short

and thus the largest part of their as-sets, is used by the GABV banks to grant credit, whereas conventional financial institutions utilise just 40.7 per cent of their assets to support the real economy.

sourCe: “strong and straightforward: The Business Case for sustainable Banking”, a study by the rockefeller foundation, 2012

72.4%

of European institutional investors such as insurance companies and pension funds exclude certain com-panies when investing in the capital market due to human rights violations and environmental destruction.

source: “esg strategies of asset owners — Different scen- arios across europe”, a study by the french research insti-tute novethic, 2012

57% around the world are touched through the work of the sustainable GABV banks.

sourCe: www.gabv.org

10 million pEoplE

million us dollars represented the collective credit volume of all gaBV members in 2011.sourCe: www.gabv.org

47,120

billion euros were invested through-out Europe in sustainable mutual funds in June 2012. The volume in-creased by 12 per cent within the space of 12 months. At 31 per cent, the strongest growth was recorded in France, where fund managers have recently been encouraged to take into consideration sustainable aspects when making investment decisions. With a growth rate of 18 per cent, Germany was in third place behind the netherlands.

sourCe: “green social and ethical funds in europe”, market study by Vigeo, 2012

95worked at the smallest gaBV bank — the norwegian Cultura Bank — in 2012. Vancity is the largest among the member banks with 2,565 employees.sourCe: Cultura Bank, Vancity

15 employees

billion us dollars’ worth of assets are profession-ally managed while tak-ing into account social and ecological criteria as well as aspects relating to responsible corporate governance.sourCe: global sustainable investment review 2012

13.6 CoVer: Dr simon kagugube, Ceo Centenary Bank, uganda, at the gaBV confer-ence in Berlin

481% GroWTh has been recorded by the members of the global alli-ance for Banking on Values in the credit sector since 2002. This equates to average annual growth of 18.5 per cent. During the same period, the assets of the world’s largest system–relevant banks grew by an average of 10.4 per cent.sourCe: “strong and straightforward: The Business Case for sustainable Banking”, a study by the rockefeller foundation, 2012

Dear Reader, Our societies are so intertwined with one another these days that social chal­lenges don’t stop at national borders — and ecological challenges certainly don’t. Sustainable change can therefore only be considered from a global perspective.

That is why the GLS Bank is active in a number of networks, one of which is the Global Alliance for Banking on Values (GABV) — an association of financial institutions intent on achieving a great deal together with the responsible use of money. In March, the GLS Bank hosted the annual GABV meeting and also organ­ised the international conference with the title “Change–makers: Transforming Banking Values”. In this special issue of our customer magazine we would like to tell you about these stirring days and about the aims and work of the GABV and its members. Accordingly, we have summarised the talks given by the speakers, captured some impressions and asked prominent GABV representatives to tell us about their visions and experiences.

The numerous encounters have reminded us of the fact that people all over the world are committed to values–based banking and sustainable development of society. And we are all part of this global movement. “We” not only refers to the employees of the 22 GABV banks, but also to the many customers around the world who have made a conscious decision to take a different approach to the way in which they deal with money. Together we can make a difference.

We hope you enjoy reading this issue! With best regards Eva Schneeweiss, Chief Editor of Bankspiegel, and Janina Zajic, Executive Assist­ant and Project Manager of the GABV Conference 2013

4 5Global alliance for bankinG on ValuesBankspiegel — special edition 1/2013

Authors

Thomas Jorberg is CEO of GLS Bank. He is a member of the Supervisory Board of Elektrizitätswerke Schönau, Hannoversche Kas­sen, Fair–finance Holding AG Austria and a member of the Steering Committee of the GABV. In 2011 he received the German Fairness Award of the Fairness Foundation.

peter Blom has been CEO and Chair of the Executive Board of Trio­dos Bank since 1997. He is a member of The Club of Rome, co–founder and Chair of the Global Alliance for Banking on Values, and a member of the Board of the Dutch Banking Association.

Tamara Vrooman is President and CEO of Van­city Credit Union, based in Vancouver, Canada, and a member of the Steering Committee of the Global Alliance for Banking on Values. From 2004 until mid–2007 she was Deputy Minister of Finance for Brit­ish Columbia.

muhammad a. (rumee) ali joined the Board of BRAC Bank in 2007 and was elected Chairman in 2008 taking over from the Found­ing Chairman Mr Fazle Hasan Abed. He is the Managing Director, Enter­prises and Investments at BRAC Bank.

mary houghton was a co–founder of Shore­Bank Corporation, the first and largest US regulated commercial bank holding company that specialised in community development and environmental finance. She is a member of the Steer ­ ing Committee of the GABV.

Dr katrin käufer is research director at the Presencing Institute, and Fellow at the Community Innovators Lab (CoLab) at MIT’s Department of Urban Studies and Planning. Her current work includes a research focus on social transformation and non– hierarchical coordination. Since 2010 she supports the GABV in different roles.

Global Alliance for Banking on Values

The Global Alliance for Banking on Values (GABV) is a world­wide network of banks with a social and ecological focus formed in 2009. The members come from Africa, Asia, Austra­lia, Europe, Latin America and North America. Together they stand for humane banking.

ConTenTs

2In short

3Editorial

4Authors

6Why wouldn’t everyone want to bank this way? Tamara Vrooman

10Development banks for a financial sys­tem of the futureThomas Jorberg

12Perspective XacBank, Banca popolare etica, one pacificCoast Bank

16Dynamic variety

18Change finance — finance changeDr katrin käufer

20From economics to humanomicsDr Tomáš sedláček

22From ego– to eco–system economiesDr C. otto scharmer

24Drivers of changeDr Wendy luhabe

26Viewpointrolf kerler

27Cash check: What's in your purse?

27Imprint

7Bankspiegel — special edition 1/20136

Why wouldn’t everyone want to bank this way? TeXT: Tamara Vrooman

A living vision

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8 9gloBal allianCe for Banking on ValuesBankspiegel — special edition 1/2013gloBal allianCe for Banking on Values

Bankers have a significant role in society that may not be that obvious at first glance. But it is a serious one, with con­sequences that linger long into the future.

That role? Lending money, extending credit, making investments. Whom we lend to (and for what) matters, because where we allocate capital today is the primary determinant of society’s future health, no matter where in the world you may live.

The world needs, and wants, a healthy banking system, one that works well and in a way that people can easily understand. The financial collapse of recent years confirmed for many in the public what they had suspected for some time — the system wasn’t working, but it was difficult to see why.

This same public wants to see transformation of the banking system in response to the increasingly urgent social, environmental and economic challenges they see in their communities and our world. a network of forerunners There are bankers (yes, bankers) who want the very same things. They are at the forefront of positive change, leading a worldwide movement to find global solutions to sustain­ability challenges and to promote a positive, viable alterna­tive to the current financial system that is fair, accountable, transparent and inclusive. They are championing an evolu­tion to a more modern banking system.

Who are they? Members of the Global Alliance for Bank­ing on Values (GABV), an international, independent network of the world’s leading sustainable banks, banking coopera­tives and credit unions. Their work? Focusing on the needs of people and using the tools of banking in service of the economic, social and environmental development required to improve lives.

The GABV was originated in 2009 by a handful of fore­runners, all of whom had been developing and employing sustainable banking practices for many years. They were dotted here and there, in countries around the globe. The urgency of the financial crisis provided a catalyst to bring their work — and their voices — together and to seek out others who wanted to see change as well.

Quickly expanding across six continents, these banks are deeply rooted in local communities and focused on support­ing the real economies in which people live and work.

While they differ in size, history and the market environ­ments in which they operate, the members of the GABV share a common purpose — promoting a financially resilient model of banking that is good for people and the environ­ment and becoming a reference point for leadership in sus­tainable banking.

All of our members comply with the principles of sus­tainable banking, which in essence require a triple–bottom–line approach at the heart of the bank’s business model — so an integration of social, ecological and economical aspects in every decision; a grounding in local communities, serving the real economy; long–term relationships with clients, cus­tomers and members, and a direct understanding of their economic activities and the risks involved; a self–sustaining resiliency to outside disruptions; and transparent and inclu­sive governance. Importantly all of these principles are embedded in the culture of the bank. And they are the con­ditions for a GABV membership.

With combined assets exceeding $60 billion, members of the GABV touch the lives of more than ten million people in 25 countries and collectively represent a significant con­stituency with an increasingly powerful voice. picturing the future Our vision for a sustainable banking system is focused first on serving human needs. Generating reasonable profit is essential for growth, but is not the primary nor the sole objective of our work. We see a sustainable banking system as an essential element of a healthy society — helping indi­viduals fulfil their potential and build stronger communities. It is deeply connected to the people and the communities it serves and is more accountable for the risks it both takes and creates for the people who use its products and services.

A sustainable banking system is composed of banks using sound business models. And it is inclusive: putting basic banking products in the service of a greater number of people, rather than developing highly sophisticated prod­ucts available to only a few.

Ensuring that our banking system works on behalf of people is crucial. Where we allocate capital today — who we decide to lend to and who we don’t — matters, because it is a significant determinant of our world’s future health. So we are focused on putting capital to its highest and best pur­pose — social, environmental and economic sustainability. We believe there is a more responsive way to bank and we are proving that not only is sustainable banking the right thing for people and their communities, it’s a way to ensure strong, healthy banks.

Where’s the proof? In 2012, the Rockefeller Foundation studied the financial performance of 28 of the Global Systemically Important Financial Institutions (GSIFIs), the so–called “too–big–to–fail banks”, and 22 sustainable banks over the period 2002–2011.

Across almost all the measures that are important in banking, the sustainable banks outperformed their peers, with a greater proportion of exposure to customers in both deposits and loans, relatively high and better quality cap­ital, better returns on assets and equal returns on equity with lower volatility of returns, and significantly higher lev­els of growth.

Importantly, the results showed that the sustainable banks allocated almost twice as much of their balance sheet to lending in the real economy than the GSIFIs, which meant more capital in the hands of the entrepreneurs and busi­nesses interested in producing solutions to complex global problems that matter to our social, environmental and eco­nomic health.

The study concluded overall that sustainable banks were resilient, supported the real economy, and provided stable returns. The GSIFIs lent less, attracted fewer depo­sits, and had a weaker capital base than their sustainable banking peers. our ambitions As sustainable bankers, we believe that we must improve the quality of life for everyone on the planet, recognising that we are responsible to future generations. We require a direct relationship with our clients, customers or members to ensure a sound understanding of the economic activ­ities in our communities and a realistic assessment of the risks involved.

We would like to see politicians and regulators use the sustainable banking model as a reference point for making the banking system more resilient and fair, transparent and accountable. We also want to see inclusion — more people using the banking system, not fewer. Apart from regaining the trust of the public in the values and ethics of banking, we also need to reach out to those who are marginalised or excluded from the system altogether, taking down the bar­riers whether they are caused by a lack of accessibility or a lack of literacy.

So — a banking system that is focused on the needs of people, now and in the future, is inclusive, puts capital in the hands of those who are creating solutions to complex social, environmental and economic problems, and has strong, profitable banks. We think values–based banking responds to the changes the public wishes to see. Why wouldn’t everyone want to bank this way? —

1. affinity Credit union, Canada 2. alternative Bank schweiz ag, switzerland 3. assiniboine Credit union, Canada 4. Banca popolare etica, italy 5. Banco fie, Bolivia 6. Bancosol, Bolivia 7. bankmecu, australia 8. BraC Bank, Bangladesh 9. Centenary Bank, uganda 10. Crédit Coopératif, france 11. Cultura Bank, norway 12. first green Bank, usa 13. gls Bank, germany 14. new resource Bank, usa 15. merkur Cooperative Bank, Denmark 16. mibanco, Banco de la microempresa, peru 17. one pacificCoast Bank, usa 18. saC apoyo integral s.a., el salvador 19. sunrise Community Banks, usa 20. Triodos Bank, the netherlands 21. Vancity, Canada 22. XacBank, mongolia

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The GABV members come from a wide range of countries and continents with diverse social environments. The emer­gence of this global movement and the success of every sin­gle member bank show that the time is right for lasting transformation. The GABV banks represent this change. What characterises them? a change in cultureThe owners, management and employees of GABV banks see the core value in the social and ecological benefits for their customers and society. With various business models — whether socio–ecological banking in Europe, socially ori­ented microfinance in Asia and South America or broad social solidarity from cooperative banks in North America — all of them have integrated humane values at the heart of their business policies which significantly influence their business culture.

GABV members operate in their respective markets, are subject to the same regulatory framework, generate an eco­nomic profit and yet in terms of their range of products and services and the way in which they work, they are oriented towards people and their integral needs. At the same time, in adhering to their values–based business policies, these banks are now and again facing contradictions, which they nonetheless handle in a considered manner and communi­cate to customers and owners with transparency.

Another element of the culture of these banks is their enhanced understanding of profit, of which they have a three–dimensional view, incorporating social, ecological and economical aspects.

a change in the systemOn the financial markets, decisions relating to a given term and, as a rule, an abstractly valued risk are made solely on the basis of the extent of the return. In this one–dimensional decision matrix, responsibility for societal, humane, social and ecological matters doesn’t enter the equation. GABV banks have enhanced this decision–making system to include the essential criterion of what the money will actu­ally be used for. Key to the granting of credit is therefore the social and ecological impact of the investment. Also for the depositing customers of these banks, it is an essential motive to know that the money is being used in a socially meaningful way. By enhancing this decision–making sys­tem, it is possible to be socially and ecologically respon­sible when making investments and granting credit. a change in customer relationsThis also changes the relationship between the customer and the bank. It isn’t reduced to the rate of interest and a discussion about the distribution of risks. GABV banks develop and maintain a participatory relationship with their customers and owners by ensuring that the question of social responsibility plays a key role. Bankers and customers in this relationship both see themselves as players shaping the economy and society. Bank and customer are both aware of their social responsibility when it comes to hand­ling money and demonstrate the corresponding level of consciousness when exercising this responsibility. a change in reportingBesides the figures–based annual report, all GABV banks publish in various forms the social and ecological impact of their activities on society. In these reports, they show their customers, owners and society how they have implemented their values–based aims. A standard evaluation procedure and individual as well as joint publishing of the social impact of GABV banks will be a key project for the coming year. a change in trust The key currency among GABV banks is not money, but the trust of the owners, customers and society. The basis for this is the commitment to and assumption of responsibility in a social context. It goes without saying that GABV banks comply with regulatory requirements, in which there has been a sharp increase since the financial market crisis. How­ever, trust is only created when a dependability based on values is restored to the humane customer–bank relation­ship which goes beyond that which the rules require. This trust can neither be built up by following the rules, nor only through transparent reporting. Instead, it must be built up and demonstrated in the developing relationship between bank and customer with every business transaction. global changeGABV banks see themselves as part of a global movement which can initiate developments. They haven’t yet created a “banking paradise”, but they have a clear, positive vision of how a values–based banking business and customer–bank relationship should look in an ideal world. By pursuing these visions and the associated business policies, GABV mem­bers consider themselves to be development banks of a financial market fit for the future. —

Development banks for a financial system of the future  TeXT: Thomas Jorberg

Fundamental changes require visions and pioneers

neW resourCe Bank, usa instead of replacing aging streetlights with newer mod-els, Tanko street-lighting retrofits existing fixtures to provide energy–efficient lighting. municipalities save money on both the retrofit, which costs much less than a replacement, and ongoing lower utility bills. Today, thanks to a loan from the new resource Bank, the company serves more than 200 cities in the us.

BanCo fie, BoliVia felipa is one of a group of women who formed a part-nership three years ago in a rural com-munity in santa Cruz. Dedicated to the production of organic foods, the group grows citrus fruits, corn, carrots, cassava and coffee. a $400 Banco fie loan enabled felipa to purchase sup-plies and expand the coffee and cas-sava plantations.

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Perspective

energy effiCienCy in The ColDesT CapiTal in The WorlD

yondon nansalmaa and her family live in ulaanbaatar’s ger districts — an expanse of sprawling, peri–urban neighbourhoods burdened by low incomes, poorly insulated housing and harsh winter conditions. families typically live in wooden houses or gers (traditional mongolian felt tents). ulaanbaatar is the coldest capital city in the world. Temperatures regu-larly drop to below –30° Celsius. struggling to keep warm, most fam- ilies rely on inefficient stoves, burning 4.5 tons of coal per year per house-hold. The consequences are twofold: the cost of fuel consumes up to 30 per cent of annual income, and the massive quantity of coal burned con-tributes 60 per cent of ulaanbaatar’s pollution — making it the second most polluted city in the world.

Therefore, XacBank established a network of product centres through-out the ger districts, each selling energy–efficient products subsidised by the Clean air fund of mongolia and the millennium Challenge Corpor-ation. By facilitating product sales and by offering below–market–rate loans for products, XacBank ensured that a broad base of customers could access an environmentally friendly lifestyle. The provision of microloans for these products with relaxed col-lateral requirements, a reduced inter-est rate and flexible loan repayment terms was an important element of expanding access to low–income cli-ents. By installing the energy–effi-cient measures — an improved stove,

re–skilling former inmaTes in siCily

The Messina Community Foundation is an act of love for people who have been below the threshold of economic and social poverty for years. It was founded to promote personal development to vulnerable adults by integrating education, welfare and craftsmanship. It is a thriving social enterprise providing training in traditional local skills, employing and reintegrating former inmates of the psychiatric prison hospital of Barcellona Pozzo di Gotto. All surpluses from its income–generating activities are reinvested in social and cultural projects that involve the local community. The foundation has been recognised by the OECD, UNOPS and WHO as one of the most interesting local wel­fare and development models in the world.

The Messina Community Foundation is also symbolic because of its location in an underdeveloped part of Southern Italy, where there is a huge gap between rich and poor, and where civil society is still in the grip of organised crime and extortion. The headquarters of the Founda­tion are in artistic and natural sites, reclaimed from the occupation by the Mafia. With this background, the Foundation has the fight against the Mafia in its blood — its partners and network of enterprises con­tinue the daily fight against all forms of crime; starting with total transparency in their production relationships through to reporting any observation of protection rackets or extortion. The foundation is fully independent, not reliant on the government and even generates its own electricity using solar panels.

The foundation is involved in numerous social and environmental initiatives. One of these initiatives is located on land owned by the Ministry for Justice outside the Barcellona Pozzo di Gotto psychiatric prison hospital, where plants, flowers, fruit and vegetables are grown in order to sell via cooperative buying groups jointly promoted by the Slow Food Movement. “We must remember that first and foremost we eat our food with our brains and then our mouth, because everything we produce and serve must have a positive environmental and human impact,” says one of the staff. The foundation also works on numerous cultural projects for the Strait of Messina, including music festivals, lit­erature promotion and the initiation of music to babies and children from the city.

Banca Etica has been its main financial partner since it started. The bank provides everyday banking services, assists with fundraising and finances various social and cultural initiatives. —

Banca popolare etica, italy

hoW reneWaBle energy TeChnology is keeping farming aliVe

Kevin and Daryl Maas are natives of Skagit County of Washington state and grew up surrounded by dairy farmers in the area. As children, the brothers watched pressure from low milk prices and real estate devel­opment force family after family, sometimes close friends, out of busi­ness. They wondered if renewable energy might offer a way to sustain these small farms and help reverse a long–term trend in America, loss of precious farmland and farmers.

In 2007, the Maas brothers met with dairy farmers and local dairy service businesses, where nearly all agreed digesters would provide the essential solutions they needed. By spring of that year, Farm Power Northwest LLC was formed.

The timing and economic environment was extremely challenging. Kevin and Daryl soon faced a chorus of rejections from the finance community, most of whom had no experience or interest in financing renewable energy projects. Despite much improved technology, older digester systems had developed a poor reputation for performance in prior decades, and American banks and many dairymen were sceptical about their value or longevity. While these beneficial systems could be found by the thousands all over Europe, by the end of 2007 there were less than a hundred across all of America, and most were concen­trated in the Midwest.

Nonetheless, the opportunity to educate American farmers, devel­opers and financiers regarding the value of these systems was en ­ ticing. The key seemed to be community digesters, where the dairy–business risk could be mitigated by a group of farms, while the benefits of a large and efficient digester could be spread across the same group with tangible benefits. Other upsides included substan­tially reduced cost and price certainty for cow bedding, bacterial con­trol affecting water quality was invaluable for regulatory compliance, and opportunities for revenue sharing.

Financed by One PacificCoast Bank, Farm Power today owns and operates a fleet of five anaerobic digesters in the Pacific Northwest of the United States — working with 15 farms, producing up to 4.25 MW of renewable electricity, and reducing manure–methane emissions by the equivalent of 40,000 tons of carbon dioxide annu­ally. The Maas brothers are regarded as innovators and leaders in their sector, demonstrating the cutting–edge possibilities of digesters and their potential advantages for dairy operators, business profitability, the environment and communities. Moreover, the credibility of anaer­obic digesters is growing throughout the Northwest, as a result of the successful implementation of these systems. —

one pacificCoast Bank, skagit County, usa

a ger blanket and a vestibule — cli-ents could reduce fuel consumption by 50 per cent. XacBank’s microloan was designed so that the monthly savings from the use of the energy– efficient products is greater than the client’s monthly loan payment.

for nansalmaa, the savings and the added comfort provided by energy–efficient products was trans-formative. The reduced cost of fuel was worth more than twice nansal-maa’s monthly salary, allowed her to spend more on food and other basic necessities; it allowed her to help her sons and daughters financially. nansalmaa’s experience with XacBank’s energy–efficiency prod-ucts is one of almost 100,000 house-holds. Collectively, these individuals are making an enormous impact on ulaanbaatar’s air quality, improving the health and livelihoods of their communities and establishing a standard for environmental con-sciousness that will be followed for years to come. —XacBank, ulaanbaatar, mongolia

Ideas become realityImpact loans from all over the world

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BankmeCu, ausTralia Women’s property initiatives (Wpi) provides long–term safe and secure housing for women and their children, many of whom are escaping domestic violence. since 2009 bankmecu has pro-vided $3.4 million in funding, which has assisted 110 women and chil-dren to gain access to affordable rental housing.

BraC Bank, BanglaDesh fisheries are one of the most vital resources that sup-port the rural com-munity in Bangla-desh. BraC Bank values the need to bolster the devel-opment of this sec-tor and provided a loan for mr faizud-din to start his own fishery.

alTernaTiVe Bank sChWeiz ag, sWiTzerlanD romanens pilz gmbh is the only swiss provider of an entirely organic assortment of mushrooms. founded in 1988 the company sup-plies the local wholefood markets. Thanks to hygienic care and mechanic- al pest control it is able to work with-out using chem-ical–synthetical fungicides or insec-ticides.

16 17Bankspiegel — Special Edition 1/2013GloBal alliancE for BankinG on ValuES GloBal alliancE for BankinG on ValuES

to have covered the most important players in values–based banking.

how do you jointly want to influence international bank regulation? is the gaBV able to influence a new culture within the financial sector?

BLOM: GABV members serve their customers with an integrated approach, socially, environmentally and econom­ically. This happens on a voluntary and not a regulatory basis. At the same time it has become more obvious that conventional banks — because of the function they have in allocating capital for economic development — should also start to include more and more non–financial criteria, too. In that sense what we already do voluntarily as values–based banks should gradually become normal practice for all banks, and ultimately end up as part of conventional regula­tory requirements.

I do think we can influence the culture within the finan­cial sector; primarily because so many talented young peo­ple would love to work in finance, but only in values–based institutions. The GABV can play an important role to sup­port this new generation of sustainable bankers. In addi­tion, we should make more effort to educate people who already work for conventional banks. Because if they bring in this new type of banking we can also change larger banks from within and, step by step, build a very different bank­ing sector. —

peter Blom, Ceo Triodos Bank, the netherlands

eVa sChneeWeiss: peter, together with others, it was your initiative to establish an international network of values–based banks. What has been your intention?

PETER BLOM: The idea emerged two or three years before we founded the network when it became very clear that there was a need for a worldwide network of financial institutions who share a values–based agenda. Interestingly, the idea behind, and establishment of, the GABV coincided with the outbreak of the financial crisis, which meant the need for an international network became even more urgent. That helped us accelerate the foundation of the GABV.

At the beginning we didn’t think about creating a big organisation. We wanted to be a lean network of values–based banks that are linked together by a shared conviction that banking can be a powerful force for good. We also wanted to establish a Senior Executive’s network, made up of key decision makers. We wanted the CEOs of banks, and Board representatives, to come together and share what they wanted to achieve with their own banks and explore what they could do together. Then we designed a thought– leadership strategy to highlight the business models of the member banks — the example they provide, and the impact they make. Today, we also discuss practical issues like the question of how to finance the growth of the values–based banking movement.

Back in 2009 ten financial institutions co–founded the GABV. Today, we have 22 members, and counting. We think the limit will be between 30 and 50 banks, when we expect

Dynamic variety  inTerVieW: eva schneeweiss

An interview with members* of the GABV steering committee

eVa sChneeWeiss: mary, the study funded by the rocke-feller foundation revealed in november 2012 that values–based banks are also economically more sustainable than the so–called global systemically important financial institutions. how do you explain this?

MARy HOUGHTON: To me the most meaningful learning from the study was the difference in the level of loans out­standing in the sustainable bank group and in the large bank group. On average, over 70 per cent of assets were consist­ently invested in loans by the group of values–based banks and about 41 per cent were consistently invested in loans by the “Global Systemically Important Financial Institu­tions.” This is a large difference!

I believe the fundamental function of commercial banks is to lend into the real economy. This is an important way that a nation’s deposits are converted into loans to busi­nesses and other organisations that create jobs and build the net worth of business owners and residents.

So this is a strong argument for institutional and individ­ual depositors to increasingly support those independent banks that are indeed rooted in their communities and com­mitted to supporting economic growth and social and envi­ronmental goals.

What are the obstacles to sustainable banking becoming the norm and not the exception?

HOUGHTON: In America the major obstacle to more banks targeting social goals in poorer communities is the bankers’ fear that small loan sizes and small deposit bal­ances are unprofitable. However, deployment of new mobile and web technology is making the profitability of small transactions much more possible. And, all over the world it has been proven that low–income people repay their loans at the same rate as everyone else, when given the opportu­nity to establish a long–term relationship with a financial institution.

In America many banks are eager to provide bank financ­ing for environmentally beneficial investments. To date, the federal government certifies 85 banks in the United States as “community development financial institutions” based pri­marily on their business focus on low–income markets. Just under a dozen banks focus primarily on environmental bank­ing opportunities. A few banks have adopted both bottom lines, environmental and social. We need more to do so! —

mary houghton, Co–founder of shoreBank Corporation, usa

eVa sChneeWeiss: muhammad, what are currently the biggest challenges for the microfinance institutions within the gaBV?

MUHAMMAD A. (RUMEE) ALI: To be able to respond to a growing perception that microfinance is not helping poverty alleviation. — This has happened because in many countries microfinance was being “sold” as the “silver bullet” to pov­erty alleviation. BRAC does not believe it is. We in BRAC emphasise a holistic approach to poverty alleviation. BRAC’s development programmes therefore focus on the three ne­ cessary preconditions of poverty alleviation: health, educa­tion and finance. Microfinance can only work in alleviating poverty when this intervention is used in holistic develop­ment programme along with health and education interven­tions.

The other challenge is avoid the path that has been taken by many microfinance institutions to move away from the concept of microfinance being a “development activity” to a “commercial business”. This move has prompted some microfinance institutions to go for listing in stock market. Stock Markets are notoriously “profit driven” and by listing a microfinance institution, the organisation moves away from the fundamental mission of helping poverty alleviation to seeking profit and some cases “profiteering”.

how does BraC Bank benefit from being a gaBV mem-ber?

ALI: The main benefit is in knowledge sharing and trans­fer of knowledge. The sharing of best practices and innova­tive solutions to issues that are common among values–based banks, allows us access and also enables solutions.

It helps all values–based banks including BRAC Bank, to more effectively mobilise opinion by creating a platform. It is very important that we establish the understanding and need for banks like ours to co–exist in the ecosystem of the financial world. —

muhammad a. (rumee) ali, Chairman of the Board, BraC Bank, Bangladesh

*The gaBV steering committee comprises: muhammad a. (rumee) ali, Tamara Vrooman (president and Ceo Vancity, kanada), mary houghton, luis felipe Derteano marie (Chairman grupo aCp and Vice Chairman of the board of mibanco, peru), peter Blom, Thomas Jorberg (Ceo gls Bank, germany) (picture above from left to right)

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Change finance  — finance change  TeXT: Dr katrin käufer

The GABV Conference in Berlin

“Students, CEOs, conference participants and co–workers from different values–based banks sit at one table. I have a feeling that something is changing”, reflected Luise Eisfeld, a student of economics who joined at the GABV conference on March 14, 2013 in Berlin — as well as almost three hundred participants from the economy, the banking sector or several universities. The public event with the title “Change–makers: Transforming Banking Values” was hosted by the GLS Bank.

In his opening remarks Dr Norbert Lammert, president of the German Bundestag (German Parliament), pointed to the limits of our economic system and emphasised that these changes are not only about regulations but they are also con­cerned with how we think about our economic system and society. Today financial markets only simulate values but are not really a part of the value–creation chain, Lammert asserted. “Instead of being an instrument to support economic proces­ses, money becomes a self–perpetuating tool.”

The call for a change was pervasive in all the keynote speeches of Dr Tomáš Sedláček, Dr C. Otto Scharmer and Dr Wendy Luhabe (see also page 20 – 25).

In the afternoon the participants split up into four different workshops to discuss the role of consumers and the need for regulations; they looked at innovative financial products that address societal challenges, and asked how the financial sector could be transformed.

The day closed with a panel, that discussed the “German Model” with Sparkassen, Genossenschafts– and Volksbanken, a decentralised banking structure that is unique in Europe. Involved in the discussion were Uwe Fröhlich, President of BVR (Federal Association of German Cooperative Banks), Sven Giegold, member of the European Parliament, Georg Fahren­schon, President of DSGV (Federal Association of German Savings Banks and Giro) and Thomas Jorberg, CEO GLS Bank. It became clear how important it is that the advantages of such a model be recognised on the broader European level where regulations are solely created with a view towards large financial institutions.

“I am delighted to be the host of this year’s conference and that we received such a big response”, summarised Thomas Jorberg. “We advanced the GABV internally and were able to set signs to the outside world about this positive momentum and about the discussion evolving around the banking sector.” —

find an extensive documentation at www.gls.de/gabv13.

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Dr Tomáš seDláček is a Czech econo-mist and univer-sity lecturer. he is the Chief macro-economic strategist at Czechoslovak Trade Bank (čsoB), former member of the Czech national economic Coun-cil and previously served as an eco-nomic advisor to former president Václav havel. his book “economics of good and evil“ is an international bestseller and won the 2012 prize for the best economics book in germany.

The first rule of economics states: you do not talk about ethics. We have been trained to not only ignore but even be cynical about the whole question of public good. To quote St. Paul in the Epistle to the Romans, Ch. 8: “I want to do good, but I end up doing evil.” Econ­omists are taught to rely on the mys­terious workings of the invisible hand of the market. This invisible hand rep­resents exactly the opposite: an indi­vidual wants to do evil, but it turns out to be for the public good. This in turn completely fills the vacuum of any eth­ics. There is an automatism, called the invisible hand of the market, which turns vice into public benefits. In retro­spect, is it really true that economics, or banking in this case, is value­free?

Economics tries to pretend that it is. It means to be absolutely beyond good and evil, to quote Nietzsche. It pretends to be scientific and positivis­tic, while it appears to have nothing to do with opinions or any value state­ments. I claim exactly the opposite is true: today economics is full of values determining what is and isn’t import­ant in life. It tells people what they should strive for in their lives, empha­sising that profit is a huge value; effi­ciency is a huge value; value freeness is a huge value. This is a perfect trick: it appears that economics act as an arbi­ter of values, but in fact it’s really eco­nomics that tells you what the value of milk vis–à–vis the value of Coke is. Eventually, the market becomes a deity and we rely on it.

predicting the future The core idea of banking is the idea of an interest rate. Our belief that we can calculate it, the modus vivendi of eco­nomics, poses the first problem. All economic models, start­ing with the model of the well–known homo oeconomicus, are special–purpose vehicles for one thing only, and that is calculation.

Until 150 years ago, the interest rate was predominantly an ethical issue. This is a fine case study of how economists reduce a subject, rid it of all ethical content and present it as a technical discipline. However, several literary examples stress that the interest rate is always an ethical issue: from Aristotles, the Holy Quran, the Bible, to the Hammurabi Codes from Babylonia and even Shakespeare’s “The Mer­chant of Venice”. All texts have one interpretation in com­mon: they warn us not to use interest rates — especially not against our brothers.

Do we understand the interest rate? Of course not. If we knew how to calculate proper interest rates, then Greece’s bankruptcy would be business as usual. Because banks have been lending money to sovereigns for hundreds of years to hundreds of different states. The attractor over interest rate is the probability of bankruptcy. Not only can we not estab­lish it, we can’t really insure ourselves against it, either.

So interest rates work very well when the sun is shining — unless something happens. Interest rates are an anti–proxy against bankruptcy. When you’re lending out money, you have one crucial question in mind: what’s the probabil­ity that this person will return it to me? Since there’s no way for us to properly calculate that, there are terrible buffer zones and we have to be terribly fussy. Interest rates serve as a proxy for trust. To a close friend, someone you trust, you will give a very low or zero interest rate. To a stranger, who you don’t trust, the tendency will be to give high inter­est rates. Trust is fuzzy; interest rates are exact. Exactness in this case is not helpful in any way.

We have to be aware that we are dealing with a very powerful energy, which we cannot master. In the 21st cen­tury, we cannot calculate proper interest rates. We’ll never be able to do so. Why? Because the future is uncertain. We can’t predict it, not even with the best of mathematics.

For 2,000 years, top theologians have been debating whether God knows the future, whether or not it is techni­cally or philosophically or in any other way possible that this being knows the future? yet, there’s still no answer. But economists pretend they do know it.

The fact is, we cannot see into the future, and even if we could, we cannot see past the decision that we can’t under­stand. Sociologists don’t believe in human freedom so much, they believe in social structures. Psychologists don’t believe in human freedom, but rather in archetypes. But eco­nomists believe that human beings are indeed free. But then again, we don’t allow it in our models, because we live under the dictate of mathematics of rationality and utility calculus. Values in economics In our lives, there are many values. Some values have a price, and there is nothing wrong with that. A pen has a value for me, and it can have a price. I can sell it, I can buy it — this is a value, it has a price. Then there are other values in our lives that do not have a number. Every now and then I’m asked to describe what the inflation rate is going to be. Every time

From eco nomics to huma n – omics  TeXT: Dr Tomáš sedláček

I answer: “I don’t know. Nobody knows and whoever claims that he knows, is lying.” Then I’m asked about next year’s gross domestic product. And my answer is: “I don’t know.” Financial analysts will always give you exactly the same answer: “Well, I don’t know. Don’t be silly, I don’t have a crystal ball, but 3.2.” The result of economics or any mathe­matical calculation of value should always be considered at a little bit of a distance.

Is there something wrong with banking? yes. As with everything that’s human. We have a tendency to fetishise economics. There is nothing wrong with economics as long as we don’t believe it too much; as long as we don’t believe our models too much. The very problem with economics was that we were too exact. If we would have been a little more fuzzy and a little less certain, it would have worked quite well. economics and myths Is there anything wrong with economics? No, but we must understand that it’s not the deity that we have been trying to turn it into. It is not an omnipresent, omniscient market that always knows better than everybody else, including the actors themselves. We must understand that there is no such thing as the unorchestrated orchestrator, which is yet another name for the invisible hand of the market. you mustn’t orchestrate it — it will orchestrate you. Markets are — quoting Nietzsche — human, so human. Markets are not godlike, they are not omnipotent, they won’t lead us out of all trouble that exists on the face of the earth. That’s why we need to defetishise them, and we need to get rid of this reli­gion called economics.

We should not look on economics as a neutral body in the way that physics is, but we should look at it as a reli­gion. It tells people what to do, what to value, how to think,

that you should be rational, that you shouldn’t be emotional — that’s a huge normative or value statement. But it is not value­free in any meaning of the word. It tells you, for example, that egoism is good. This is the famous saying: greed is good. But this is, of course, a little bit overdone, but we all get the point, we all get the irony. This is the new religion. This is the new ethics. Try to maximise the utility. This is the basic point of economics for an individual, as well as for the company: try to max your utility, which is a value statement.

So this is how we economists believe our own myths. Sallustius, who was a pre–Socratic philosopher, said a wonderful thing: myth is something that never happened, but it’s happening always. Homo oeconomicus is a fine example of a myth like that. Have you ever met homo oeco­nomicus? No. But then again, everybody is one. Even if you are a mad person, you’re a homo oeconomicus. It never happens, but it’s happening always.

you can’t fight a myth with facts. In other words, every­body pretty much knows that we can’t predict the future. Predicting our weather requires one of the most difficult mathematics. you need the most advanced computers to compute the wrong weather predictions. During the Second World War, the fighters needed weather forecasts in order to know where to fight and how to fight. There was a unit who was responsible for forecasting the weather, and the generals continuously asked them: So, what’s the weather going to be like tomorrow? And they answered: Well, we can’t tell, we don’t know, it’s complicated. you have to give me something. But it’s unreliable. Well, I know that it’s unreliable, but I still want it. And this is how we treat eco­nomics. We really still believe that we can roughly predict the future.

We all should try to work in the system. That’s why I don’t really believe in individual effort but rather in a sys­temic effort. I don’t think it’s a Messiah that we need — I think a system is required that actually makes incentives in a way that it is rational for you to act well. Whereas the sys­tem the way it’s defined today, it works against this. It is very often irrational. As I understand it that’s why the GABV strives to make a difference. That’s a lot of your effort. That’s why you’re going up against the stream.

Changing the banking sector, yes, it can be done. But it’s impossible without the GABV. you cannot have bank­ing without values. How would you lend to anybody? The question is what values those are. you cannot not believe in anything, you even have to believe in atheism. you have to believe a scientist or somebody else. We don’t under­stand gravity or quantum. But we believe in them. So you can’t exit the value system; but you can influence it or it will influence you. —

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From ego– to eco– system economies  TeXT: Dr C. otto scharmer

Similar to an iceberg where only 10 per cent of the structure is visible the dif­ferent crisis symptoms that we are confronted with today are connected underneath the surface and need to be addressed on a systems level. What is visible on the surface are eight struc­tural disconnects and bubbles that define our current condition. structural disconnects and bubbles First, there is the financial bubble. One number that illustrates its size is the total value of foreign exchange trans­action in 2010: $1,500 trillion. How­ever, the total value of international trade was only $20 trillion. So less

than 1.4 per cent of these foreign exchange transactions are related to the real economy. Even if you include foreign direct investment and other transactions at least partially related to the real economy, the resulting number only comes to 5 per cent. We see the financial bubble bursting for example in the Latin American financial crisis in the 1980s, the Asian financial crisis in the 1990s, the saving and loans crisis in the US in the “noughties”, and the global financial crisis of 2008. Many faces, and yet one underlying problem: the growing disconnect between the financial and the real economy.

The second bubble concerns the ecological disconnect. We currently operate our economy on a footprint of 1.5 planets. We overuse the regeneration capacity of our planet by 50 per cent. The third bubble concerns the social polari­zation, with 2.5 billion people living below the poverty line. In the US today the top 1 per cent owns more assets than the bottom 90 per cent combined. The fourth disconnect concerns leadership; leaders are disconnected from com­munities and people. We collectively create results that nobody wants. The fifth bubble concerns consumerism. This disconnect concerns the decoupling of gross domestic product (GDP) and well–being in developed countries: more GDP does not translate into more well–being.

The sixth disconnect concerns governance. Hundreds of millions of people are voiceless in key decisions that affect their future and livelihood. Case in point are the six biggest Wall Street banks that hold combined assets of 55 per cent of the US GDP prior to 2008. This size allowed them to use excessive risk­taking, betting that the govern­ment (the taxpayers) will pay the costs of a failure. And they (we) did. After 2008 this number only went up, to 64 per cent in 2010.

The seventh bubble and disconnect concerns owner­ship. We have two concepts of ownership — state and pri­vate ownership. Both are successful, but both also have issues such as a massive destruction of ecological and social commons worldwide. The question is how to create a third concept of ownership that better protects the local and global commons and better reflects the vital interests of future generations. The eighth bubble concerns technol­ogy. Most of the research and development spending fo­ cuses on already over–served markets, while the real needs in communities, particularly in the global South, remain under–invested in.

Those are eight structural disconnects and bubbles con­nected to them. But what is driving them? economic thought and the evolution of consciousness The source for these problems starts with the way we think about key economic concepts and relationships. Let us look at the example of coordinating the modern division of labour. Historically, we can differentiate three main answers. The first or 1.0 response features a state centric or central planning­based coordination mechanism that focuses on inputs and operates through the central coordination mechanism of hierarchy, regulation and control. Mercantil­ism and state–centric types of socialism are examples.

The second response features the 2.0 free market econ­omy and corresponds with the rise of the private sector and of competition as a decentralised coordination mechanism, focusing on outputs rather than on inputs. The laissez faire

Dr C. oTTo sCharmer is senior lecturer at the massachu-setts institute of Technology (miT) and founding Chair of the presencing institute. he has co–designed and delivered award–winning leader-ship programmes. he introduced the concept of “pres-encing” — learning from the emerg-ing future — in his book, “Theory u”.

economy of 19th century Europe is an example. The result has been enormous growth, enormous success and enor­mous problems in the form of negative externalities, that is e.g. an impact on social structures or the environment.

The third response features the 3.0 social market eco­nomy and corresponds with the rise of the social sector and with stakeholder negotiation among diverse interest groups. This phase comes with institutional innovations, including the creation of federal reserve banks, social security sys­tems, labour unions and environmental standards all de­signed to suspend the unfettered market.

While the 3.0 approach has served the OECD countries throughout most of the 20th century, we now see the limits of the 3.0 approach by its failure to address the issue of glo­bal externalities such as environmental pollution. At the beginning of the 21st century we find ourselves in a situ­ation where the debate revolves around three major options: (1) muddle through or more of the same, (2) go backwards in history, or (3) move forward by building a co–creative stage in which the three sectors — business, government and civil society — are not working against, but co–cre­atively with each other.

The evolution of the economy and of economic thought embodies the evolution of consciousness. The centralised 1.0 economy requires the individuum to fit into an existing hierarchical structure; the market–driven 2.0 economy builds on an egosystem awareness, in which the individuum takes the initiative to maximise one’s own utility. Most of the neoclassic economic theory is based on the 2.0 rational­ity called homo oeconomicus. But we see that current rea­lity is characterised by another type of rationality that we refer to as 3.0 type or stakeholder awareness. Here an indi­vidual actor internalises some of the externalities of one’s key stake holders into one’s own decision–making.

Today, the biggest challenge is yet another transition, where we need to move the many egosystem and stake­holder–based awareness structures into something we call ecosystem awareness. Ecosystem awareness means that I not only maximise my own well–being, but I internalise the well–being of all other participants in the ecosystem who I’m dealing with. leading through letting go The number–one leadership challenge today is how we can help diverse stakeholder groups to let go of their egosystem awareness and to open up to the other aspects of well–being that originate from the well–being of other stakeholders.

How do you do that? All it takes is a journey that moves participants and stakeholder groups out of their own bubble, lets go of their old assumptions, and invites them to con­nect to some of the other views. What we learned in our work is that this takes a process that facilitates the opening of the mind, the heart and the will. Why is it that this pro­cess doesn’t happen that often? Because the hardest step is: letting go. The root of the word leadership actually means to cross a threshold. Letting go of one world and letting come of another world that we don’t even know whether it really exists.

How can we become more cognisant of the complex ­ ity without getting paralysed? Coming back to this ice ­ berg model, I believe what is needed today is a threefold revolution.

The first step is about rethinking the key categories of eco­nomic thought from a perspective and a consciousness that is grounded in an ecosystem awareness of possibility.

This requires rethinking nature away from a commodity to an ecosystem that we need to serve and cultivate. We need to rethink capital from money to the sources of all eco­nomic value creation, which is human creativity. We need to rethink technology from the old industries to renewable energy, communication technologies, and social technolo­gies that help us to become more co–creative.

We need to rethink the old–style, top–down leadership into something that is about building the collective capacity to co–sense and co–create. We need to rethink consumer­ism that is destroying the planet at this point, and relink it to well–being.

We need to rethink the way we coordinate the economy, from the three old mechanisms — hierarchy, markets and stakeholder negotiations — to something that I would call ABC — awareness–based collective action, which basically means creating a holding space where the awareness can broaden and deepen from ego to eco. And we need to advance our property rights from state and private property to common–space property rights that protect the future generations.

The second shift is a relational revolution. We need to transform our economic relationships, by shifting the centre of gravity of how we have our conversations in an economy, for example between producers and consumers towards a dialogue space and generative conversation.

The third shift is an institutional revolution where the old, top–down model of organising which is the hierarchical model is going to transition from centralised to more decen­tralised.

And yet, these three mechanisms are not solving the issues that we face today. What we need is a fourth form, in which there is space for transforming economic relation­ships. And that’s the journey from 1.0 to 4.0, from egosys­tem to ecosystem awareness. —

24 Global alliance for bankinG on Values Global alliance for bankinG on Values 25Bankspiegel — special edition 1/2013

Dr WenDy luhaBe is Chair of the Women private equity fund. her career experience ranges from cor-porate employment to social entrepre-neurship and the boardroom, with bridging the gap between women and the economy a common thread between all her endeavours. she is featured regularly in the media as one of south af rica’s most influential women.

The transformation of values in the banking sector is becoming an increas­ingly important issue. The topics the GABV identified for discussion are par­ticularly inspiring: from economics to humanomics, from egosystem to eco­system economies.

It is time to remember that our financial and economic decisions have a serious impact on the lives of others. If we don’t take this into consideration, egotistic motives become the founda­tion of our decisions — and the conse­quences of this change can be devas­tating. Therefore, society needs indeed an economy that is based on a combi­nation of humanomics and a dynamic ecosystem.

Taking this proposal into account, I acknowledge GLS Bank as a leading example of a new way of banking as well as being an inspiration for other banks to follow. What really matters is what we leave behind for future gener­ations. If we destroy everything, if we destroy values which enable us to dis­tinguish between what is morally right and wrong, then we leave nothing behind. a new economic model Transition, transformation, uncertainty, change and complexity, the growing social injustices: these are the big themes of the 21st century, and of our generation. Since the Great Depression nations have come to depend on sur­plus measures to avert crises. They have become the largest owners of sovereign debt as they continue to print new money. I suggest that estab­lished measures for economic perform­ance, e.g. gross domestic product, need to be reconsidered.

The world is desperate for a new economic model. A model that is not restricted to bonuses and profit maxi­

misation at any cost. Instead, we need a model that better understands business risks in a changing world. We need an economic model which recognises that our decisions have an impact on many generations to follow. A model that per­haps realises that there are indeed limits to growth, as the Club of Rome argued many years ago.

The current economic models have run their course. The poorest in society pay the most for basic services. In some countries, they are not granted access to banking services — leaving most people trapped in poverty and in debt. Encour­aging economic models that are prepared to extend eco­nomic opportunities and efficiencies to sections of society that are unskilled, sections that lack experience and access to resources, sections that constitute the majority of the global economy and the global community, should be a major concern. Best practice South Africa established one of the most impressive and advanced financial services industries in the world. It has also been consistently ranked third by the World Econ­ omic Forum’s Competitiveness Report, after Hong Kong and Singapore. It was least affected by the banking crisis in 2008. When many stock exchanges had to close down, South Africa stayed open. We have a conservative risk man­agement policy that doesn’t allow banks to be involved in gambling. One of South Africa’s most valuable contributions to the world has been the King Corporate Governance Sys­tem, which is premised on the assumption that institutions do not exist in isolation. Instead, we believe that they func­tion to meet a broader set of stakeholder interests and expectations.

More than ten years ago, the Johannesburg Stock Exchange launched a social responsibility index (SRI). The barometer of sustainable business practice is a code of good corporate governance and reporting on the “triple bottom line“ principles of environmental, social and financial sus­tainability.

Underpinning the South African corporate governance system, companies are expected to fulfil a number of responsibilities to equip today’s generation to meet tomor­row’s challenges in a sustainable and responsible way: 1. Companies have to contribute 1 per cent of their net profit

after tax towards corporate social investments; 3 per cent towards enterprise development; and 1 per cent of the salary bill towards skills development.

2. Companies are expected to create opportunities for black people to participate in economic and employment opportunities. The country’s primary motivation was ini­tially a form of reparation for the injustices of South Af­rica’s historic exploitation of black people and women.

Although reporting on the triple bottom line is not a listing requirement, it is a measurement criteria for companies that subscribe to the SRI. Since the index was first introduced, the extent of disclosure has expanded to a level that did not exist before. These developments illustrate that a re–exam­ination of the purpose of banking in society is long over­due. What should be the mission of the banking sector? Who should and who can be a responsible guardian of the financial sector?

Drivers of change  TeXT: Dr Wendy luhabe

Taking responsibility Banks need to be able to find a balance between profit mak­ing and social investments. They need to recognise the value of all stakeholders. The recent Swiss referendum that was passed and which determined the capping of salaries and bonuses of bank executives, offers an interesting devel­opment, given that the difference between executive sal­aries and those of average employees has grown 545 times since 1950. Banks are required to understand their responsi­bility to respond to social economic challenges. The finan­cial institutions need to take risk out of the market to pro­tect ordinary people who often have the most to lose. It is unethical for banking institutions to allow their employees to manipulate LIBOR rates or exceed their trading limits. To add insult to injury, the board of one of the banks that was found to be laundering drug money recently awarded 200 of its top managers a bonus of £1 million. This represents one of the best examples of the isolation of bankers from reality. The examples are endless and they are shocking.

Ultimately, drivers of change are not policies or proce­dures or systems, they are human beings. They arise out of responsible leadership, principles and human values, which are generally neglected and undervalued in most corpor­ations. We need to find the moral courage of our conscience and our conviction to change today’s workplace, which has become increasingly toxic for human beings at least, where employees are expected to leave values at home and com­ply with a different operating system. One can conclude that money is the most insidious, beguiling and pervasive temptations to the human race. Wealth can make people greedy, they become enslaved to it. It becomes their mas­ter, and it compromises their priorities, moral choices and accountability as institutions and as individuals.

Bernard Lietaer, a Belgian banker, believes the financial sys­tem is the cause of society’s headlong rush to collapse. He suggests that it is based on flawed assumptions and there­fore will never be able to create sustainability. Instead, the current financial system encourages unsustainable behav­iour patterns that may end up threatening human survival on the planet. His approach suggest that the primary driver should be transparency. The system must demand disclo­sure from both the banking system and the entire econ­omy to allow people to better understand how the bank­ing system works, to be able to see where their money is invested.

Successful societies succeed because they find a sustain­able balance between three aspects: individual or personal endeavour, the freedom or individual agency to self–actual­ise and to have a better quality of life, the sense of responsi­bility towards community, because society cannot thrive if everyone pursues their own freedom at the expense of others and respect for eco–systems upon which everyone depends for survival. All of these three are essential for cre­ativity, for progress, and for innovation in society. The role of women Women are being recognised as the engine that is driving global economic growth and their economic power is rising. In 2012 alone, women contributed $20 trillion, a number that is expected to double within the next five years. It is a known fact that women invest money differently, espe­cially in developing economies. They feed their families healthier meals; they send their children to school; they invest in clean water, in education and in health care. As a result, the entire community prospers. What if women ruled the world? What if women were in charge? If we want stronger and sustainable economies, if we want to end global conflict and promote moral courage of leader­ship, and if we want to improve the quality of life all over the world, women must become part of the equation. Not to replace men, but to play their role and to make their contribution.

Economic conditions are vastly different to what they were when production was largely dependent on labour, and when economic growth contributed to the growth of employment opportunities and income. Today, we depend on technology and innovation to multiply production and to stimulate economic growth. Given all these developments, therefore, it is critical for banks to recognise that their deci­sions have an impact on ordinary people. Consequently, the resources the banks manage on behalf of the economy should respond to people’s needs, they should further respond to socio–economic challenges of society. The banks have to take on responsibility on how they create access to those resources. There are people out there who want to start enterprises that are really going to play a very mean­ingful role into responding to some of these challenges — yet they don’t have access to resources. It is important that the operating system used by banks is premised on values, hence I’m fascinated by the work of the GABV. —

26 Global alliance for bankinG on Values

Viewpoint

Back to the roots TeXT: rolf kerler

International cooperation is an inher­ent feature of the GLS Bank. Imagine the situation as it was being formed at the beginning of the 1970s: at a time when there had not been a new bank formed in Germany for decades, based on the notion of anthroposophical social science, the idea of a bank which set other paradigms was born: trans­parent banking, individual responsibil­ity, trust and mutual support.

Particularly in the beginning, this led to initiatives from all over the world approaching the new bank — whether a hospital under construction in Brazil, a biodynamic farm in Australia or a Steiner Waldorf school in South Africa: the bank was inundated with requests for credit and donations.

It was clear from the very start that the GLS Bank could not meet all these requests on its own. Besides, it was not

alone in the world in wishing to establish a straightforward, humane form of banking. In the 1970s and 1980s, micro­financial institutions in other countries set about their work to found a kind of banking based on community building and mutual give and take — the best–known among these was the Grameen Bank in Bangladesh.

During this time, the GLS Bank was not only a workshop for its own development, but also functioned as a seedbed for the establishment of related banking initiatives in other countries. The idea was to set up and finance these initia­tives in line with the circumstances and needs of the respec­tive countries. This resulted in a number of meetings and international conferences with people who had formed or wished to form a bank in their country, such as the Mercury Provident Society in England, Triodos Bank in Holland, Freien Gemeinschaftsbank in Switzerland, Merkur Bank in Den­mark, Ecobank in Sweden, Cultura Bank in Norway or La Nef in France. Meetings with interested parties in other coun­tries like the USA, Austria or Brazil did not lead to the formal establishment of banks, but organisations similar to banks, such as financial foundations.

In this cooperation, it was partly about addressing key questions relating to the nature of the money and ideas on modern social structures, but it was also about specifically establishing which steps were possible and necessary to get the banking idea off the ground at the location in question. The GLS Bank generally also participated financially in the start–up capital of these banks, some of which are GABV members today. Key considerations in relation to inter­national networking were:

1. Taking the example of the GLS Bank, it was demonstrated that it is possible to undertake something regenerative in the financial sector, which is viable and able to grow alongside the world. This emboldened others and acted as a stimulus for them.

2. It is possible (and also meets an increasing need) that people take on greater responsibility in dealing with their money — and needn’t be left behind by demonstrating their dissatisfaction with the existing situation.

3. The international cooperation is based on the understand­ing that our growing social problems — whether in educa­tion, agriculture, the environment or elsewhere — can be better tackled through the cooperation of a number of partners and not through competition or central manage­ment — with the greatest degree of openness and no hid­den self–interest.

That is why the GLS Bank is still committed to intensive and growing cooperation with partners in other countries — who contribute their various abilities and work together to try to make our world a little more humane. —

rolf kerler is a banker as well as a sociologist and economist. he was Chairman of the gls Bank from 1974 until 1988 and has been a member of the gls super-visory Board since 1996.

Cash check

Bankspiegel — special edition 1/2013

What’s in your purse?Cecilia Chimpén, businesswoman from puente piedra in lima, peru, and client of mibanco.

“my purse is small enough so that i can place it in the pocket of my trousers and walk around without the need to take a handbag. usually i only carry cash in small bills and coins, which i use daily to buy fresh merchandise for my minimarket. The store is located in my home and i supply my neighbourhood with fresh pro d-ucts. i say fresh, because i prefer to choose the best possible quality that i can offer my clients, and the only way to do it is by personally selecting it in the produce market. Twice a week i take my debit card with me in order to withdraw money or pay my instalments. hopefully, sooner rather than later, i will be able to use my debit card to pay my suppliers, without the need to carry much cash with me.”

imprinT

Bankspiegel, special edition

The Special Edition of “Bank­spiegel — the magazine of the GLS Bank” is being published for the GABV members, the participants of the GABV con­ference as well as friends of GLS Bank. The writers of the articles are responsible for the content themselves. The views do not necessarily represent the opinion of the publisher. Reprinting and copying of art­icles (even in extracts) requires the previous written agreement of the publisher.

puBlisher

GLS Gemeinschaftsbank eG Postfach 10 08 29 44708 Bochum Germany Telephone +49 (0)234 5797 100 Fax +49 (0)234 5797 222

Chief eDiTor

Eva Schneeweiss

eDiTorial Team

Vanessa Bolmer, Katharina Hahlhege, Christof Lützel, Bettina Schmoll, Dr Antje Tönnis, Janina Zajic, Falk Zientz

aDViCe anD Design

Stan Hema, Berlin

TranslaTion & Copy–eDiTing

Wort für Wort GmbH & Co. KG

prinTing

Offset Company, Wuppertal,

printed using mineral–oil–free ink on Envirotop 100 per cent recycled paper with the Blue Angel seal (RAL–UZ 14)

prinT run

1,000 copies

piCTure CreDiTs

GLS archive and projects, author portrait rights with the authors,

credit and member portrait rights with the projects and members; Cover: Oliver Helbig; p. 3/6/7/16/19/20/22/23 Stephan Münnich

27

das macht Sinn

Change is possible when good ideas cause a ripple effect.

money can be used to bring about changes in society — if we work together to make it happen.