Keep­ing it real

Rarely are ethics and fi­nance com­pa­nies men­tioned in the same sen­tence these days.

Element - - Finance - By Adam Gif­ford

If you’re look­ing for a loan to build a straw bale house, you may ex­pect a frosty re­cep­tion from a com­mer­cial bank loan of­fi­cer – be­fore she heads off to her flat-roofed, mono­lithic clad, un­treated-tim­ber-framed sub­ur­ban man­sion. At Prometheus Fi­nance, they un­der­stand eco-houses. Napier-based, but soon to move to Welling­ton, Prometheus has a 28-year record of lend­ing for so­cial or en­vi­ron­men­tal ob­jec­tives.

“Us­ing straw bases as a struc­tural and in­su­la­tion ma­te­rial may sound crazy, but the sta­tis­tics say those houses are much more ro­bust than a lot of the fast tim­ber-framed hous­ing that caused all the prob­lems,” says chief ex­ec­u­tive Glen Saun­ders.

“We are in­ter­ested in the en­vi­ron­men­tal ben­e­fit, but we re­search. That cre­ates op­por­tu­ni­ties for us.”

While Prometheus is tech­ni­cally a fi­nance com­pany un­der New Zealand rules, it’s part of a world net­work of so­cial banks in­clud­ing Nether­lands-based Tri­a­dos, for whom Saun­ders previously ran the UK branch. “With greater in­ter­est in en­vi­ron­men­tal is­sues, so­cial bank­ing is start­ing to grow”.

Glen Saun­ders

As well as com­mu­nity and eco-hous­ing, Prometheus lends to arts groups, schools, or­ganic farm­ers and the pro­cess­ing and re­tail ac­tiv­i­ties around or­gan­ics.

En­ergy sav­ing and re­new­able en­ergy is big, and while its part­ner­ship with the En­ergy Ef­fi­ciency and Con­ser­va­tion Au­thor­ity to lend for sub­sidised so­lar wa­ter heat­ing has come to an end, the re­la­tion­ships it built up with sup­pli­ers and in­stall­ers means it still makes a lot of small loans in that area.

It is will­ing to look at com­mu­nity eco­nomic de­vel­op­ment schemes, which of­ten cross over into re­cy­cling busi­nesses, so there are both en­vi­ron­men­tal and lo­cal em­ploy­ment as­pects.

“When you look across our loan book there is a broad spread but you can al­ways see a clear so­cial or en­vi­ron­men­tal ben­e­fit. It’s not like we are a con­ven­tional busi­ness and this is the warm, cud­dly part of what we do – this is our busi­ness,” Saun­ders says.

“We are not cheap fi­nance, we are not ex­pen­sive fi­nance, we fol­low mar­ket rates. There has to be a rea­son­able re­turn be­cause there needs to be a real re­turn to savers as well.”

Cur­rent re­turns de­pend on how much is in­vested and for how long, but range from one per­cent for a sav­ings ac­count to 4.25 per­cent for $10,000 and over left in for two or three years.

Saun­ders says so­cial bank­ing is a com­ple­ment to tra­di­tional char­i­ties.

“A lot of trusts and foun­da­tions around New Zealand are start­ing to ex­per­i­ment with pro­vid­ing loans as well as grants. That has been hap­pen­ing over­seas for a while and you of­ten find a project is bet­ter run if it has the dis­ci­plines needed to have be able to han­dle a loan – for­ward think­ing, think­ing about how they are earn­ing their money, man­ag­ing their bal­ance sheet.

“It means you can do big­ger projects than if you were re­ly­ing on grants and do­na­tions.”

Be­cause it has ex­pe­ri­ence in the area, Prometheus is be­ing used by or­gan­i­sa­tions like the Tin­dall Foun­da­tion to man­age such loans.

“The thing is try­ing to sep­a­rate the wheat from the chaff, not just who has good ideas but who has good ideas and can de­liver. We have been able to do that.”

Saun­ders came to Prometheus nine years ago after help­ing Tri­a­dos dou­ble its UK op­er­a­tions each year for sev­eral years.

He says Prometheus was grow­ing at 30 per­cent a year un­til the global fi­nan­cial cri­sis, and he hopes the move to Welling­ton will help is achieve 50 per­cent an­nual growth.

“So­cial bank­ing has not de­vel­oped here as it has in Europe over the past 20 years but, now, with greater in­ter­est in en­vi­ron­men­tal is­sues it is start­ing to grow.

“You have to get to get a crit­i­cal mass of peo­ple un­der­stand­ing what it is you are do­ing and I think we are get­ting to that now.”

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