The idea of sustainability has infused nearly every industry imaginable, from energy to design to food. But is the world really ready for sustainable banking?

Peter Blom, CEO of Tridos Bank, headquartered in the Netherlands, thinks so. With 600 employees, operations in five European countries and $6.8 billion in assets under management, Tridos's stated policy is to lend only to organizations "working to bring about positive and lasting change." That can include organic farms and food producers, schools, medical centers, arts and cultural centers, eco-tourism initiatives, and fair-trade retailers. The bank won't lend to companies producing nonsustainable products or services such as weapons, tobacco, gambling, or any company that breaches fundamental human rights.

Speaking at the Social Enterprise Conference at Columbia Business School in October, Mr. Blom noted that this policy, rather than limiting profitability, actually helped the company weather the financial crisis of 2008. In fact, its net profit that year of 10 million euros was 1 million euros higher than the year before.

In his talk, Mr. Blom emphasized the importance of transparency in the banking industry and the need to disclose where deposits are invested. On the Tridos website, he noted, the company discloses all of its investments publicly, which helps customers understand the business model and find sustainable businesses in their community to support. While he acknowledged that his bank could be run more profitably, Mr. Blom believes that social responsibility should be priced into the cost structures of all businesses today. Such socially conscious pricing strategies — like carbon taxes, tax incentives, and government investment in sustainable energy — have been more common in Europe than the United States, he noted.

More broadly, Mr. Blom called for a skeptical look at the assumption that free market capitalism always prevails. Sometimes markets need artificial incentives to function effectively for all segments of the population, he said. Again citing the recent financial crisis, he argued that the banking sector should think beyond maximizing profit to maximizing sustainability.

At the conference, Mr. Blom received the 2010 Botwinick Prize in Business Ethics, awarded by the Sanford C. Bernstein & Co. Center for Leadership and Ethics at Columbia Business School.

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