Welcome to the new Small business, Big impact case study series. These case studies will look at people- and planet-positive Australian small and medium businesses and startups, including behind-the-scenes information about these businesses' sustainability initiatives and how these initiatives have driven growth and profit. Our first case study is on Bank Australia.
Bank Australia is widely viewed as Australia's most ethical, socially responsible bank. Slightly larger than an SME, but small as banks go. Bank Australia is a B Corp, a member of the Global Alliance for Banking on Values, carbon-neutral since 2011, and focused on connecting people with the power of their money.
Who is Bank Australia?
Bank Australia is a customer-owned bank established 60 years ago and since merged with a number of similar credit unions. The bank started its modern sustainability journey in the early 2000s after recognising its customers’ growing desire for a more socially responsible bank, one that would use its money to fund positive impacts for people and the planet.
This led to early pioneering action, offsetting emissions from car loans as early as 2004 and the purchase of the bank’s first conservation reserve in 2008. Jane explained that the bank’s sustainability efforts have been “quite self-perpetuating... as a customer-owned bank we're guided by our customers’ expectations and the more socially aware customers that we attract, that join us, the higher that level of expectation gets.”
Responsible banking
In the last few years, the bank has worked to formalise its clean money commitments and continue to align the business with its customers’ values. Bank Australia’s Responsible Banking Policy was launched in 2018, committing its funds to sustainable finance, that is areas that have a positive impact on people and the planet such as community housing, specialist disability accommodation, and renewable energy projects, while committing never to invest in fossil fuels, live animal exports, gambling, arms or tobacco.
Shortly after, in 2019, the bank formed an Impact Finance Team which has used new sustainable finance products such as green and social bonds that pair financial outcomes with environmental and social ones like wind farms and community housing. One key initiative was the development of the Clean Energy Home Loan in partnership with the Clean Energy Finance Corporation, rewarding customers for building or buying a new green home or making ambitious green upgrades to their home.
Achieving B Corp certification in 2020 was a highlight of Bank Australia’s advanced sustainability journey. This holistic business certification, an achievement only 3,000 companies worldwide have achieved, brings the social and environmental sustainability work of Bank Australia across lending and operations under one umbrella. This certification and assessment process has helped to develop a ‘force for good’ strategy that identifies the bank’s direction for the next few years.
Infographic - what does sustainable finance mean?
Business benefits
Bank Australia’s commitment to responsible banking and to being “The bank Australia needs” has been a huge drawcard. In fact, 85 percent of new customers’ state they joined the bank because of that commitment. The bank now has around 180,000 customers around the country with around 2,000 new customers joining the bank each month.
The bank’s focus on investing in a positive future has been particularly popular with younger, socially conscious generations, with Bank Australia seeing a decrease in the average age of customers and reversing the trend of an ageing customer base often found by credit unions.
Jane says Bank Australia’s sustainability superpower is to emotionally connect its customers with the impact of their money. What gets financed and what doesn’t is a powerful factor in driving change toward the future customers want to see, and more and more people are discovering that aligning their investment with their values is a powerful force for change.
Measuring impact
Being carbon neutral since 2011, Bank Australia has been measuring the emissions from running the business, including from gas and electricity of their buildings, business travel, and data centres, in an effort to reduce them wherever possible and offset the rest.
Bank Australia is now working towards a net-zero goal, which expands its focus to indirect emissions as well, including emissions from both suppliers and customers. Jane noted the challenge here is largely in getting an accurate picture of those emissions and will drive a major undertaking of collecting that data.
Being able to collect data about a variety of impacts and measure the impact the bank is creating is very important, as it helps customers and stakeholders to see the tangible changes created and encourages continued efforts. But it is also deeply challenging. One loan may encourage customers to reduce their greenhouse emissions, another may create homes that allow people living with a disability to live independently, and another may help lower-income borrowers to buy their first home and start building wealth.
To solve this, Bank Australia is working towards building a structured impact management framework that will measure impacts against the Sustainable Development Goals. This will likely lead many in the financial sector and be an interesting space to watch in the next couple of years.
In the meantime, Jane suggests to small businesses to start preparing for such data requests from Bank Australia and other lenders, business customers, and insurers, as more and more commit to net-zero and other goals.
Top tips
Asked for her top tip for small businesses interested in sustainability, Jane encourages them to “invest some time to really understand and articulate your why… why does it matter for your business and your strategy?” Knowing why you want to incorporate sustainability into your core values is vital to show your customers and other stakeholders what you stand for.
She said for Bank Australia, the customers are their why. Thinking about customer expectations acts as a guiding light in making decisions and acting on what customers care about.
Jane Kern, Senior Manager Impact Finance, Bank Australia
For example, why might your business go carbon neutral? It might be important because it aligns with your values, or upholds your sustainability positioning. For Bank Australia, it’s important that everything we do aligns with our customers, our values and our positioning.
