Triodos: The good bank

Posted by Michael Wale

Peter Blom explains how ethical bank Triodos sailed through the economic downturn unscathed.

Triodos - sustainable bankingBelieve it or not, there was a bank that did not get up to the same risky financial tricks like the rest of them, didn't need a Government bail out, pays a mere few hundred euros in bonuses, and yet still had to pay out to save the rest back in their native Holland.

This is Britain’s only truly ethical bank, Triodos, based in Bristol but founded in Amsterdam during the early 1980s.  Peter Blom, one of the original founders, now runs the bank, which developed from an organic café and food shop, run as a co-operative by a group of Amsterdam students. Looking back to those days, Peter admits: “I was uncertain whether to become a philosopher-anarchist or a successful entrepreneur. It was very important to me to see if I could combine the two.”

Fortunately for the future of ethical banking, he chose the latter. Although, as he reflects now, it could easily have gone the other way as he had been studying economics at university and also become interested in all sorts of groups including ones preaching Marxism.

He remembers: “After we left university, we set up the Triodos Foundation, helping alternative businesses to become more professional.” The next stage was to form their own bank with the same principles. As Peter admits: “We could not have done it like that today, because there are many more regulations in place now.”

Competitors in Amsterdam said that their new small-time competitor would not last, and that ‘they will come back to us for help’. They were to be proved wrong.

Peter’s first job at the newborn bank was Loans Officer, setting off in an old Mercedes to drive across Holland searching for new customers. There was one rule from the start, that Triodos would only back organic ventures. As Peter says: “There was a long tradition in Europe before the Second World War of organic farming. After the war, farming in the Netherlands was very intensive, causing pollution with a lot of chemicals. We had a lot of organic farms starting in the 1970s and that was what we invested in”.

By the time Peter became Managing Director, there were still only 22 employees. By the 1990s, however, the bank began to grow. One of the reasons for Triodos's success was its affinity with small businesses. As Peter says: “I had been involved in a small business myself. My own family had a small mechanical shop with just a very few people working there. I always felt very comfortable with small businesses.”

Triodos then opened a UK office in 1995, basing itself in Bristol, while using the same organic lending policy that had made them successful in the Netherlands. In fact, it has been converts from the mainstream of British banking who have driven the ethical bank forward since. One was a Barclays high flyer by the name of Charles Middleton, who is now Managing Director, and Ian Price, who joined from NatWest and is now the Senior Relationship manager with an expertise in organics.

Ian says: “I joined NatWest from school, and I was coming up to 50 and thought ‘do I want to do this for the rest of my life’? It was a lifestyle change. I’d been lending to conventional farmers for nearly eight years, broiler units, things like that. I felt there must be a change. When I was interviewed for the new job all they wanted to know was why I wanted to join.”

He now spends his time meeting customers on a yearly basis to discuss how they are getting on if Triodos has backed them, and helping them out if they get into trouble. One area he is trying to expand into at present is renewable energy, care of farmers who want to provide their own energy. He enthuses: ”That would be a fantastic way of proving that the business could be sustainable from every angle”.

When I met Charles, meanwhile, I wondered aloud why, even in Britain, Triodos favoured an organic approach. He did not hesitate in replying. “We believe organic is the best sustainable option for the long term future of the soil. Our experience is that it is a more joined up process. The same applies to retailers. They certainly appreciate the understanding that goes into the stuff they are selling. We respect the organic certification service and it’s a benchmark for what we want to see”.

Charles asserts that Triodos is always looking for a social-environmental idea. 'Social' could here be defined, for example, as a a village wanting to buy the local shop to save it from closure. He says what really pleases him is when someone is at the start of their journey as businessmen: “If we like the idea, we will ask for a business plan. We sympathise if they are not just in it for profit. There are others who might just like a little hand holding along the way. We make an assumption that we will lose 0.25 per cent of our lending book. We’ve done very well to manage that over the last 12 months with property prices falling through the floor.”

So how does Charles view the banking crisis that happened around, but did not effect or involve Triodos? “The crisis is not over. There are some banks making healthy profits again. For example, there nave been some good figures from Morgan Grenfell's bonds trading recently. But that doesn't add value to the real economy. Many of the bankers we meet say ‘it’s just part of the game’ But it’s really a systemic crisis, and not just in finance. It’s also an environmental crisis and a poverty crisis. All the Government hopes for is that we will keep spending money and get the machine going again. But what is the purpose of the machine? Triodos asks that time and time again”.

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