Keeping it real
Rarely are ethics and finance companies mentioned in the same sentence these days.
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”.
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.”