#Bankingonvalues: Moving Forward Together by Global Alliance for Banking on Values

#BankingOnValues: Moving Forward Together

Contents Preface I. Who are we? What is our purpose? II. What do we stand for? What are our principles? III. Who can be a member? IV. What is the work of the GABV? V. How do we accomplish our work? VI. A Regional Approach to complement a global movement VII. Summary VIII. Appendix List of GABV members List of GABV Supporting Partners List of GABV Board Members Contact details of GABV Secretariat, regional and part-time Senior Associates Principles of Values-based Banking â&#x20AC;&#x201C; CEO focused questions Principles of Values-based Banking â&#x20AC;&#x201C; general focused questions

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he Global Alliance for Banking on Values (GABV), founded in 2009, is a network of banking leaders from around the world committed to advancing positive change in the banking sector. Our collective goal is to change the banking system so that it is more transparent, supports economic, social and environmental sustainability, and is composed of a diverse range of banking institutions serving the real economy. We connect banks, banking cooperatives and credit unions, microfinance institutions and community development banks and support their work on systemic change of financial systems.

Our members focus on one shared mission â&#x20AC;&#x201C; to use finance to deliver sustainable economic, social and environmental development, with a focus on helping individuals fulfil their potential and build stronger communities. We deliver our work by upholding to the Principles of Values-based Banking:

Read more about our history. Who are we? What is our purpose?

Triple Bottom Line Approach

$$$ At the heart of the business model

Real Economy

Client Centred

Long Term Resiliency

Transparency

Culture

Long-term, self-sustaining, and resilient to outside disruptions

Transparent and inclusive governance

All of these principles embedded in the culture of the bank

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Grounded in communities, serving the real economy and enabling new business models to meet the needs of both

Long-term relationships with clients and a direct understanding of their economic activities and the risks involved

s the GABV grows and develops, additional affirmations and signals of who we are and what we stand for have been established and agreed by all members. These include the Berlin Declaration (2013) to communicate to the banking industry, policy makers and regulators the GABVâ&#x20AC;&#x2122;s focus on driving a fundamental banking paradigm shift, and the Kathmandu Pledge (2017) to add greater specificity to the commitments of our individual members and the reasons why we commit to bank this way. Read the Berlin Declaration and the Kathmandu Pledge

he GABV takes a leading role in the debate about how to build a values-based financial future, and fosters joint projects between its

members to help deliver it. It is both a talking and, crucially, a doing organisation. We deliver our ambitious goals through a number of actions, each accompanied with clear and specific goals. Learn more about what we do

communities across the world have become more aware that they have a wider choice of banking services available and that if they choose for a GABV member they know that their money will be invested in ways that aspire, as a first priority, to improve their quality of life and wellbeing of people everywhere on Earth. Presently there are 54 independent GABV member banks, profitable and growing, from Asia, Middle East, Africa, Australia, Latin America, North America and Europe, with combined assets of USD 163 billion, including third party funds under management as of year-end 2016. Members include microfinance banks in emerging markets, credit unions, community banks and sustainable banks financing social, environmental and cultural enterprise. Together they touch the lives of more than 500 million people in 36 countries. 4

Preface

any people currently contributing to the GABV and the values-based banking movement have no easy way to link our shared intense efforts to build this movement into the long flow of our Allianceâ&#x20AC;&#x2122;s journey. We lack creation myths, those stories that convey collective learning, the chains of kinship and mentoring, and the webs of shared experience that contribute to creating coherent cultures. Therefore, like the aboriginal grandmothers who transmit tribal lore around the communal fire through long winter nights, this

document seeks to play the role of â&#x20AC;&#x153;resident eldersâ&#x20AC;? placing our current movement into the context of the purpose we serve and how we got here. It is not a complete history, but a recitation of the essential elements of the GABV that can help current and new members explain some aspects of the alliance to colleagues, co-workers, client and others seeking a better values-based banking system. As there is not a single story, we will depend on the threads of experience and thinking of our members to continue to refine and shape this document as we grow and mature.

I. Who are we? What is our purpose?

n the early part of this century, many conversations, crossinvestments and cooperative initiatives had taken place between several social, environmental and culturally conscious banks throughout the world. An intense and wide-ranging debate about the meaning and purpose of banking had arisen for some years prior to the global financial crisis of 2007. With that financial crisis, the critique turned to capitalism itself, with media headlines posing questions such as ‘Crisis in Capitalism?’ and ‘What’s wrong with capitalism?’ Criticism specifically targeted the dominant international financial system and business models, questioning the role and activities of banks.

Questions focused on how banks generated their returns and, even more closely, on how they shared their returns with their stakeholders including customers, investors, co-workers (especially senior management), and more generally with the wider society. While this debate continues without reaching a resolution, a group of banks around the world has for some time been answering many of these challenges by delivering strong, straightforward and sustainable banking services focused on a values-based banking model. Values-based banks have consistently delivered products and services to individuals and enterprises in the real economy delivering social, environmental

and financial returns. Their focus on the real economy rather than the financial economy is a core element of their business models. These banks demonstrate decades of responsible banking and a consistent commitment to productive economic activity. They have increased their activity during the present recession, expanding their lending to small and growing businesses in particular. Committed to providing a broad range of banking services to the real economy over the long-term, they highlight the powerful role of values-based banks as stewards of prosperous, equitable and inclusive capitalism.

I. Who are we? What is our purpose?

What Is #BankingOnValues? By Ralph, The Kid Banker (Click to open in browser)

I. Who are we? What is our purpose?

any of these values-based banks have been in business for a few decades, others for far longer. Their models of providing long-term, patient and sustainably profitable banking services have been at the heart of some of the worldâ&#x20AC;&#x2122;s most successful economies. The vital role that these banks play in real economic development is increasingly recognized in the debate over how to restructure local and global finance. The evidence of their success suggests a renewed emphasis in public policy, and by investors, on how values-based banks can provide a long-term path for responsible banking and economic development. Such models of responsible banking are proving necessary to support a more

just, environmentally sound, and sustainable economy, essential to fostering social solidarity and human well-being.

Accelerating Growth in Rural Nepal Through Solar Power NMB Bank Limited

Stories Supporting A Growers-owned Tea Factory Centenary Bank

Banking On The Future: Childrenâ&#x20AC;&#x2122;s Financial Literacy In Cambodia Teachers Mutual Bank Limited

Read more stories on our website 8

I. Who are we? What is our purpose?

In 2009,

seeking to provide support to the values-based banking model as an alternative to the banking models that led

to the financial crisis, the three values-based banks BRAC Bank, Shorebank and Triodos Bank founded the Global Alliance for Banking on Values.

Their aim was to contribute to the growth and development of social and environmental renewal in the global banking system by:

Global Alliance for Banking on Values i. Thought Leadership.

ii. Solidarity.

iii. Practical Solutions.

Building additional capacity to overcome current social, environmental and individual human development challenges for our communities, by combining the strengths and diverse experiences of values-based banking professionals at a multi-local, regional and global level.

Bringing together the Chief Executives of licensed banks who, through direct engagement would find and exchange ideas about operating methods, organizational structures, new forms of ownership and ways of further economic and social cooperation.

Combine different levels of senior management â&#x20AC;&#x201C; directors, functional management and young leaders to improve values-based banking practices, create new tools and methods and look for best practices beyond financial intermediation.

The founding members identified an intent and common purpose to: Grow, develop and more clearly define values based banking

Understand and express

shared intent through common and individual initiatives designed to create, through action, bonds between members

Sustain the alliance through

CEO commitment to actively participate in the meetings and initiatives of members

Welcome and seek out a

diversity of banks who shared common values, from different geographies, histories and banking models, recognizing that this would be an important contributor to learning and clarifying what we mean by values based banking

Develop a common way to

define and assess ‘values based banking’ so that all member banks could make use of and apply a ‘scorecard’ to themselves and to future members

The first meeting to discuss forming an alliance took place in March of 2009. Ten banks* were invited to the Netherlands for a public event and meeting.

Recognise the importance

of being thought leaders in the banking industry and develop ways to express our way of banking through common and individual bank initiatives

Agree that our impact on

the banking industry would come through growing and developing successful banks, recognizing that common values are a necessary but not sufficient condition for success

* Triodos Bank, Shorebank, BRAC Bank, Mibanco, Alternative Bank Switzerland, Merkur Bank, GLS Bank, Banca Etica, New Resource Bank and XacBank

I. Who are we? What is our purpose?

n the first meeting, there was far from common agreement about the agenda of the alliance. Some banks had a distinctly green orientation, some focused more on values and culture, and some were more committed to social inclusion. Some banks had been working for decades on their banking model, while others were just getting started. All were committed to economic development based on a set of conscious values recognised the importance and potential of money as tool and driver of transformation and all agreed on the importance of learning and growing together as a movement.

â&#x20AC;&#x153; Imagine when you go to sleep at night that your money flies out of your purse and travels around the world. Where do you want it to land? Where can your money do the most good?â&#x20AC;? Vince Siciliano, Previous CEO New Resource Bank

Presently there are 54 GABV member banks, profitable and growing, from Asia, Middle East, Africa, Australia, Latin America, North America and Europe, with combined assets of USD 163.4 billion, including third party funds under management as of year-end 2017. Members include microfinance banks in emerging markets, credit unions, community banks and sustainable banks financing social, environmental and cultural enterprise. Together they touch the lives of more than 500 million people in 36 countries.

I. Who are we? What is our purpose?

Our membership reach The GABV is expanding its membership to other financial institutions that meet its membership criteria and are focused on the traditional banking activities of taking deposits, making loans and processing cash payments for clients. In addition to members, the GABV selectively invites other organizations active in supporting values-based banking to become GABV Supporting Partners. See a list of our members

II. What do we stand for? What are our principles?

II. What do we stand for? What are our principles? The Global Alliance for Banking on Values delivers on its goals through clearly defined activities, annual meetings and public events. It also works with key partners to further its work. The GABV continues to be built on the principles of Values Based Banking, previously referred to as the principles of sustainable banking and finance. Since its founding, the GABV banks have been clear that a set of principles were needed to be developed and shared that distinguish in the minds of customers, partners and coworkers why Global Alliance banks are different from other forms of banking.

For the majority of banking institutions, the primary or exclusive driver of business decisions is based on the profitability of the services provided, even if the by-products of those decisions do not deliver sustainable economic, environmental or social development. For GABV members, business decisions start by identifying a human need to

Triple Bottom Line Approach

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Real Economy

be met, and then establish how to meet that need in a way that is sustainable from an environmental, social and economic perspective, including sustainable profitability for the bank. This meant that in agreeing to be a member of the Alliance, each bank would live by these principles:

Client Centred

Long Term Resiliency

Transparency

Culture

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Click the icons to learn more about each principle 13

Triple Bottom Line Approach

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II. What do we stand for? What are our principles?

Principle 1. Triple bottom line approach at the heart of the business model.

Client Centred Values-based banks integrate this approach by

Real Economy

focusing simultaneously on people, planet and prosperity. Products and services are designed and developed to meet the needs of people and safeguard the environment. Generating reasonable profit is recognized as an essential requirement of values-based banking but is not a stand-alone objective. Importantly, values-based banks embrace an intentional approach to triple-bottom-line business â&#x20AC;&#x201C; they donâ&#x20AC;&#x2122;t just avoid doing harm, they actively use finance to do good.

Triple Bottom Line Approach

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Real Economy

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Client Centred

Long Term Resiliency

Transparency

Culture

ottom proach

Real Economy

II. What do we stand for? What are our principles?

Principle 2. Grounded in communities, serving the real economy and enabling new business models to meet the needs of both.

Client Centred

Long Term Resiliency

Values-based banks serve the communities in which they work. They meet the financial needs of these geographic and sector-based communities by financing enterprises and individuals in productive and sustainable economies.

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Triple Bottom Line Approach

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Real Economy

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Client Centred

Long Term Resiliency

Transparency

Culture

onomy

Client Centred

II. What do we stand for? What are our principles?

Principle 3. Long-term relationships with clients and a direct understanding of their economic activities and the risks involved.

Transparency

Long Term Resiliency

Values-based banks establish strong relationships with their clients and are directly involved in understanding and analysing their economic activities and assisting them to become more valuesbased themselves. Proper risk analysis is used at product origination so that indirect risk management tools are neither adopted as a substitute for fundamental analysis nor traded for their own sake.

Triple Bottom Line Approach

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Real Economy

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Client Centred

Long Term Resiliency

Transparency

Culture

ent red

Long Term Resiliency

II. What do we stand for? What are our principles?

Principle 4. Long-term, self-sustaining, and resilient to outside disruptions.

Transparency

Culture

Values-based banks adopt a long-term perspective to make sure they can maintain their operations and be resilient in the face of external disruptions. At the same time, they recognize that no bank, or its clients, is entirely immune to such disruptions.

Triple Bottom Line Approach

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Real Economy

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Client Centred

Long Term Resiliency

Transparency

Culture

Term iency

Transparency

II. What do we stand for? What are our principles?

Principle 5. Transparent and inclusive governance.

Culture

Values-based banks maintain a high degree of transparency and inclusiveness in governance and reporting. In this context, inclusiveness means an active relationship with a bankâ&#x20AC;&#x2122;s extended stakeholder community, and not only its shareholders or management.

Triple Bottom Line Approach

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Real Economy

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Client Centred

Long Term Resiliency

Transparency

Culture

arency

Culture

II. What do we stand for? What are our principles?

Principle 6. All of these principles embedded in the culture of the bank. Values-based banks seek to embed these principles in the culture of their institutions so that they are routinely used in decisionmaking at all levels. Recognizing that the process of embedding these values requires deliberate effort, these banks develop human resources policies that reflect their values-based approach (including innovative incentive and evaluation systems for staff), and develop stakeholder-oriented practices to encourage values-based business models. These banks also have specific reporting frameworks to demonstrate their financial and non-financial impact.

Triple Bottom Line Approach

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Real Economy

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Client Centred

Long Term Resiliency

Transparency

Culture

II. What do we stand for? What are our principles?

Please see the list of questions in the appendix that serve as a guide to better understand and do self-assessment your organization related to the principles of values-based banking. The questions will help you better understand your individual situation and environment.

Jump to questions

II. What do we stand for? What are our principles?

The Berlin Declaration highlights three principles and, for the first time, makes clear recommendations to the banking industry and policy makers:

i. Transparency:

ii. Sustainability:

iii. Diversity:

All banks must provide full transparency on their business models and use of clientâ&#x20AC;&#x2122;s funds using common standards to be set by independent experts.

All banks must use indicators to report social and ecological impact, which should also be used within the regulatory framework.

Governments and regulators must include a diversity of banks as an important role in the process of reframing regulation for the financial sector.

II. What do we stand for? What are our principles?

The Kathmandu Pledge re-establishes the urgency of the GABV and how banks must take a lead in specific areas of Values-Based Banking. The preamble goes through a short list of evidences that we can see around and it talks indeed of why we feel that it is urgent to address those challenges. The Pledge in itself goes through the specific commitments of the banks as a response to the challenges listed in the preamble:

The Kathmandu Pledge Preamble It is urgent that we address environmental and social challenges while building positive human relationships based on respect and trust. Transformation of the economy to address these challenges, including technological innovation, will be led by individuals and enterprises around the world with support from finance. Finance is expected to deliver impact on peopleâ&#x20AC;&#x2122;s lives by building a resilient financial system that serves the needs of the real economy. Creating value in meeting societyâ&#x20AC;&#x2122;s social, environmental and economic needs must be the centre of banking with money as a transformative agent rather than an objective in itself.

II. What do we stand for? What are our principles?

It is expected that leaders of GABV member banks take time to embed these elements into their bankâ&#x20AC;&#x2122;s work, culture and public communications to support the change needed in the banking eco-system as well as internally to foster culture change and mission clarity.

The Kathmandu Pledge â&#x20AC;&#x201C; We commit to: a) Fostering long term and integrated social, environmental and economic development in the communities and wider societies that we serve b) Providing banking services to individuals and enterprises based on the Principles of Values-based Banking c) Serving a vibrant and diverse mix of individuals and enterprises and being socially, environmentally and culturally conscious to contribute to the development, happiness and well-being of our stakeholders d) Being local, regional and global leaders providing progressive and visionary models for the renewal of the banking system through our actions e) Supporting innovative and continuous renewal and development in the real economy consistent with what our planet can support whilst placing people and human-based relationships at the core 24

III. Who can be a member?

ABV membership is open to all regulated financial institutions that have business models consistent with GABV principles. The minimum requirement for membership is a balance sheet of $50 million, with a business offering that takes deposits, makes loans and processes cash payments for clients, and a genuine commitment to social or environmental change. Crucially, this balance of social, environmental and financial concerns must be embedded within the organization, not sit on its periphery. The membership criteria are the following, based on the principles of Values Based Banking:

III. Who can be a member?

The membership criteria â&#x20AC;&#x201C; how many do you fulfil? Regulated Financial Institution

Core Business Values

Leadership Commitment

Financial Model Sustainability

The proposed member is a financial institution regulated by an authority established under the government of its primary geography and it makes loans, accepts deposits and processes cash payments for clients.

The proposed memberâ&#x20AC;&#x2122;s senior management and governing boards have strong commitments to maintaining or expanding business activities consistent with the Principles of Valuesbased Banking. The CEO (or equivalent) is committed to active participation in GABV activities.

The proposed member has a business model primarily driven by the Principles of Values-based Banking with at least a double bottom line commitment but preferably a triple bottom line commitment of People, Planet, and Prosperity.

The proposed member operates a financial model (earnings, capital, risk management, etc.) sustainable over the long term and resilient for responding to business challenges and opportunities.

Independent Stable Governance

The governance for the proposed member is stable ensuring ongoing ability to be committed to a business model consistent with the Principles of Values-based Banking.

Expanding Impact Commitment

The proposed member has a commitment to growing the impact of its activities over time directly or indirectly.

IV. What is the work of the GABV? The GABV takes a leading role in the debate about how to build a valuesbased financial future, and fosters joint projects between its members to help deliver it. It is both a talking and, crucially, a doing organisation. We deliver our ambitious goals through a number of the following actions, each accompanied with clear and specific goals:

• Advocacy & Engagement • Developing Human Potential in our Banking Ecosystem

• Expanding our Movement

• Measuring Values-based Focus through a Scorecard

• Raising Financial Capital • Thought Leadership in the Banking Industry and Financial Services

• Building the GABV Brand

• #BankingOnValues Campaign

• Digital Business & Innovation • The Governing Board Forum

• Advocacy & Engagement • Developing Human Potential in our Banking Ecosystem

• Expanding our Movement

• Measuring Values-based Focus through a Scorecard

• Raising Financial Capital • Thought Leadership in the Banking Industry and Financial Services

• Building the GABV Brand

Advocacy & Engagement Provide thought leadership to develop support for public policies favourable to values-based banking. For that purpose the GABV should be positioned as the primary source of how banking can impact lives on a triple bottom line basis. To this end the alliance carries out research to assess and compare GABV bank performance with the largest banking institutions in the world, and has initiated several public events and actions to raise awareness of the values-based banking model.

• #BankingOnValues Campaign

• Digital Business & Innovation • The Governing Board Forum

• Advocacy & Engagement • Developing Human Potential in our Banking Ecosystem

• Expanding our Movement

• Measuring Values-based Focus through a Scorecard

• Raising Financial Capital • Thought Leadership in the Banking Industry and Financial Services

• Building the GABV Brand

Developing Human Potential in our Banking Ecosystem Deliver global introductory and advanced learning programs and development of a robust knowledge sharing network across the GABV. This in order to educate a new generation of capable, motivated values-based bankers who can productively and efficiently use the financial capital we raise. Following the development of the Values Ambassadors program in 2010, the alliance now has a Leadership Academy with nominees and alumni from across the regions of the GABV.

• #BankingOnValues Campaign

• Digital Business & Innovation • The Governing Board Forum

• Advocacy & Engagement • Developing Human Potential in our Banking Ecosystem

• Expanding our Movement

• Measuring Values-based Focus through a Scorecard

• Raising Financial Capital

Expanding our Movement We aim to have between 65 and 75 values-based member banks with diverse representation across geographies, by 2020. This is carried out through a rigorous dialogue and selection process based on membership criteria and the principles of values-based banking mentioned above.

• Thought Leadership in the Banking Industry and Financial Services

• Building the GABV Brand

• #BankingOnValues Campaign

• Digital Business & Innovation • The Governing Board Forum

• Advocacy & Engagement • Developing Human Potential in our Banking Ecosystem

• Expanding our Movement

• Measuring Values-based Focus through a Scorecard

• Raising Financial Capital • Thought Leadership in the Banking Industry and Financial Services

• Building the GABV Brand

• #BankingOnValues Campaign

Measuring values-based focus through a scorecard Implement an assessment system (the Scorecard), focused on concrete results and impact delivered by values-based banks, to be objectively used by a broad range of stakeholders to judge banks on both financial and non-financial results. The Scorecard provides members with a tool to monitor their performance and constantly seek improvements to maximise the impact on society. As the values-based banking Scorecard develops, a wider application is foreseen across a range of financial institutions.

• Digital Business & Innovation • The Governing Board Forum

• Advocacy & Engagement • Developing Human Potential in our Banking Ecosystem

• Expanding our Movement

• Measuring Values-based Focus through a Scorecard

• Raising Financial Capital • Thought Leadership in the Banking

Raising Financial Capital Secure financial capital to allow for balance sheet growth. Capital is being raised by most member banks with an aim to provide for growth in their activities and an investment fund – Sustainable Finance Real Economies, focused on values-based banks that achieve minimum criteria on the Scorecard has been established with an initial capital of about $50 million.

Industry and Financial Services

• Building the GABV Brand

• #BankingOnValues Campaign

• Digital Business & Innovation • The Governing Board Forum

• Advocacy & Engagement • Developing Human Potential in our Banking Ecosystem

• Expanding our Movement

• Measuring Values-based Focus through a Scorecard

• Raising Financial Capital • Thought Leadership in the Banking Industry and Financial Services

• Building the GABV Brand

hought Leadership in T the Banking Industry and Financial Services The GABV fosters knowledge development, research, action learning and assessment processes with leading institutions who wish to be thought leaders in sustainable finance and values based banking. Academics and research teams from MIT, and from universities in the UK, Spain, Germany and the Netherlands contribute to the GABV knowledge base and participate in our internship and research associate projects.

• #BankingOnValues Campaign

• Digital Business & Innovation • The Governing Board Forum

• Advocacy & Engagement • Developing Human Potential in our Banking Ecosystem

• Expanding our Movement

• Measuring Values-based Focus through a Scorecard

• Raising Financial Capital • Thought Leadership in the Banking Industry and Financial Services

• Building the GABV Brand

• #BankingOnValues Campaign

• Digital Business & Innovation • The Governing Board Forum

Building the GABV Brand Creating a global branding and communication strategy —for the GABV and amongst GABV banks— is an important aspect of the GABV 2020 strategy. Global branding would serve as a multiplier for our visibility and support for each bank’s positioning in its local market. Far beyond brands, logos, and communication vehicles, it is a way to use our collective experience, leadership and impact to shape a better future for the world of finance and the people it serves. To this end, a group of marketing and communications executives from the network is working together to come up with strategies, actions and better alignment amongst members —including opportunities to improve the position of each local brand from a values-based banking perspective while raising the voice of the GABV brand globally.

• Advocacy & Engagement • Developing Human Potential in our Banking Ecosystem

• Expanding our Movement

• Measuring Values-based Focus through a Scorecard

• Raising Financial Capital • Thought Leadership in the Banking Industry and Financial Services

• Building the GABV Brand

• #BankingOnValues Campaign

#BankingOnValues Campaign #BankingOnValues Campaign is a public initiative that calls on all Global Alliance for Banking on Values (GABV) members, partners, customers, and interested, passionate, policy makers, regulators and public, to get involved in celebrating the growing, global, values-based banking movement. #BankingOnValues Campaign is about creating positive change in the world’s banking system, and driving positive economic, social and environmental impact by influencing how banks and banking cooperatives serve human needs and the real economy.

• Digital Business & Innovation • The Governing Board Forum

• Advocacy & Engagement • Developing Human Potential in our Banking Ecosystem

• Expanding our Movement

• Measuring Values-based Focus through a Scorecard

• Raising Financial Capital • Thought Leadership in the Banking Industry and Financial Services

• Building the GABV Brand

• #BankingOnValues Campaign

• Digital Business & Innovation • The Governing Board Forum

Digital Business and Innovation GABV recognized the importance of addressing the topic of digital business and innovation structurally and protect values-based banks from competition from outside the banking industry and to take the lead in digital business applied to values-based banking. The work will focus on establishing knowledge repository to support our member and partners in making advancements in this area, and to draft holistic solutions for different profiles of GABV banks and co-develop values based common products, services that could be hosted on any banking platform.

• Advocacy & Engagement • Developing Human Potential in our Banking Ecosystem

• Expanding our Movement

• Measuring Values-based Focus through a Scorecard

• Raising Financial Capital • Thought Leadership in the Banking Industry and Financial Services

• Building the GABV Brand

• #BankingOnValues Campaign

• Digital Business & Innovation • The Governing Board Forum

The Governing Board Forum The Governing Board Forum serves as a network for Chairs and other Governing Board representatives. It identifies opportunities for Chairs and other Governing Board members to share information on best practices related to strengthening governance practices including crisis management, capital structuring, strategy, CEO compensation, succession for Board and CEOs, and the unique nature of management/Board relationships in values-based banking. In addition, the GBF acts as a bridge to build relationships within the GABV among the Boards of their own financial institutions, CEOs, employees, other banks, and the public.

V. How do we accomplish our work?

he GABV acts at an individual level within banks, bilaterally between organizations (e.g. senior executive teams sharing their strategic plans), multilaterally through the development of joint action (BRAC Africa Fund, SFRE), and collectively across the network of the GABV. A critical element for the GABV is the active participation of the CEOs of its member banks. The GABV provides a forum for these CEOs to discuss specific issues facing banks with business models based on the Principles of Values Based Banking. Through global and regional meetings, CEOs and their co-workers are invited to discuss new ideas, common projects and current

challenges with their peers. In this way, the GABV creates a broad global and multi-local network for bankers working in Values Based Banking. The strategy of the GABV is steered by a Board, supported by a lean secretariat, led by the Executive Director to carry out the day-to-day work of supporting the members of the GABV. Secretariat co-workers are centrally and regionally based to provide member services. See the appendix list of the Secretariat Team See the appendix list of the Board Members

VI. A Regional Approach to complement a global movement

s a global alliance, the GABV aims to be present in all regions of the world, and include members with different business models who share the GABV values and principles. For that purpose the GABV currently has Regional Chapters in Europe, North America, Latin America and Asia–Pacific. A Regional Chapter in the Middle East and Africa is expected to be open soon.

Chapters: • Strengthen connections between members’ progress as Values Based Banks. • Share agendas of relevance to a specific region, e.g., governance, regulatory challenges, reconciling mission with economic interests. • Support recruitment of new GABV members. • Participate in major regional and global forums and institutions

VII. Summary

ithin a few short years, the Global Alliance for Banking on Values has strengthened the collective and individual voice of banks that are committed to accelerated social, cultural, environmental and economic transformation. This brand of banks achieve renewal in their communities and the real economy, while achieving profitable growth for their stakeholders and members. In this way, individuals, companies and communities across the world have become more aware that they have a wider choice of banking services available and that if they choose for a GABV bank they know that their money will be invested in ways that aspire, as a first priority, to improve their quality of life and wellbeing of people everywhere on Earth. 40

VIII. Appendix

1. List of GABV members 2. List of GABV Affiliated Institutions 3. List of GABV Board Members 4. Contact details of GABV Secretariat, including regional and part-time Senior Associates 5. Principles of Values-based Banking CEO focused questions 6. P rinciples of Values-based Banking general focused questions

List of GABV members *As of end of January 2019 Alternative Bank Switzerland (Switzerland) Amalgamated Bank (USA) Banca Etica (Italy) Banco Ademi (Dominican Republic) Banco FIE (Bolivia) Banco Mundo Mujer (Colombia) Banco Popular (Honduras) Banco Solidario (Ecuador) BancoSol (Bolivia) Bancompartir (Colombia) Bank Australia (Australia) Muamalat Bank (Malaysia) Bank of Palestine (Palestine) BANFONDESA (Dominican Republic) BRAC Bank (Bangladesh) Caisse d’économie solidaire Desjardins (Canada) Caja Arequipa (Peru) CARD Bank, Inc. (Philippines) Centenary Bank (Uganda) Charity Bank (UK)

City First Bank of DC (USA) Cooperativa Abaco (Peru) Cooperative Bank of Karditsa (CBK) (Greece) Crédit Coopératif (France) Cultura Bank (Norway) DAI-ICHI KANGYO Credit Cooperative (DKC) (Japan) Ecology Building Society (United Kingdom) Ekobanken (Sweden) ESAF Small Finance Bank (India) Freie Gemeinschaftsbank Genossenschaft (Switzerland) Kindred Credit Union (Canada) GLS Bank (Germany) LAPO Microfinance Bank (Nigeria) MagNet Bank (Hungary) Merkur Resource Bank (Denmark) Missoula FCU (USA) National Cooperative Bank (USA) NMB Bank Limited (Nepal) Opportunity Bank (Serbia)

SAC Apoyo Integral, S.A. (El Salvador) Southern Bancorp (USA) Sunrise Banks (USA) Teachers Mutual Bank (Australia) The First Microfinance Bank Tajikistan (Tajikistan) The First Microfinance Bank Afghanistan (FMFB-A) (Afghanistan) Triodos Bank (The Netherlands) UmweltBank (Germany) Vancity (Canada) Verity CU (USA) Vision Banco (Paraguay) VSECU (Vermont State Employees Credit Union) (USA) XacBank (Mongolia)

List of GABV Supporting Partners Aga Khan Microfinance Agency Asociación de Universidades Confiadas a la Compañía de Jesús en América Latinan (AUSJAL) B Lab (Europe) CARE International CEMS FMO Fundación Avina Oikocredit SME Finance Forum The Institute for Social Banking More details about the supporting partners can be found here: http://www.gabv.org/the-community/members/partners

List of GABV Board Members

The Global Alliance was established as a Dutch not-for-profit foundation in 2009. Under its Articles of Incorporation, the Alliance is governed by a Board of Directors. Operational responsibilities are delegated to a Secretariat through the Chair of the Board. The Board has a regional structure with the Chair selected on a global basis. Current members include:

• Peter Blom, CEO, Triodos Bank (The Netherlands), Chair • Thomas Jorberg, CEO, GLS Bank (Germany), European Region • Kurt Koenigsfest, CEO, BancoSol (Bolivia), Latin American Region • Ugo Biggeri, CEO, Banca Etica (Italy), At Large • Tamara Vrooman, CEO, Vancity (Canada), North America • Shameran Abed, D irector of BRAC Microfinance Programme (Bangladesh), Asia-Pacific Region 44

Contact details of GABV Secretariat, including regional and part-time Senior Associates

GABV Staff

Regional representatives

Dr Marcos Eguiguren, Executive Director E marcos.eguiguren@gabv.org

Jasmin Panjeta, Communications and Brand Manager E jasmin.panjeta@gabv.org

Dr Adriana Kocornik-Mina, Metrics and Research Senior Manager E adriana.kocornik@gabv.org

Nichole Peatross Logistics and Support Officer E administration@gabv.org

David Korslund, Chief Economist E david.korslund@gabv.org

Rebeca Pastor, Program Advisor E rebeca.pastorberezo@gabv.org

Sonia Reinhardt, European Regional Representative, (Seconded by GLS Bank) E sonia.reinhardt@gls.de

Federica Masut Metrics and Finance Officer E federica.masut@gabv.org

Sofia Ortega, Knowledge and Network Manager E sofia.ortega@gabv.org

Rafael Llosa, Latin American Regional Representative E rafael.llosa@gabv.org

Dr Katrin KĂ¤ufer, Leadership Academy and Human Development Senior Adviser E kaeufer@mit.edu

Tom Cummings, Annual Meeting Design and Senior Adviser to the Executive Director E leadingventures@gmail.com

Upendra Poudyal, Asia Pacific Regional Representative E upendra.poudyal@gabv.org

Paula Martin, North American Regional Representative, (Senior Adviser seconded by Vancity) E paula.martin@gabv.org

Principles of Values-based Banking â&#x20AC;&#x201C; CEO focused questions

Triple Bottom Line Approach

$$$

Real Economy

Client Centred

Long Term Resiliency

Transparency

Culture

$$$

Triple Bottom Line Approach

$$$

5 6 4 3 2 Principle 1. Triple bottom line approach at the heart

Principles of Values-based Banking – CEO focused questions

Real Economy

Client Centred

of the business model

Long Term Resiliency

1. H ow does your strategy or mission statement deliver positive impact on social, environmental or economic challenges (TBL) facing society? $$$ • Do you refer to a social and/or environmental mission in your mission statement or other public statements? 2. What differentiates your bank’s activities and results from other banks relative to positively addressing social, environmental or economic challenges facing society? • Is your bank committed to contributing achieving the SDGs? 3. W hat portion of the money you intermediate has a positive impact on social, environmental or economic challenges facing society?

Transparency

Culture

• What is the percentage of your loan portfolio devoted to financial inclusion? • What is the percentage of loans invested in projects that can be considered TBL (environmentally friendly, promoting the prosperity of the community, fighting inequality, promoting inclusive culture...)? • Looking into evidences: assets of the bank, loan portfolio, how would you be able to clearly defend that your bank is behaving differently from other banks and investing in ways that are positive for society and the environment?

4. What portion of the money you intermediate has a negative impact on social, environmental or economic challenges facing society? • What is the percentage of loans invested in “non TBL” activities? Are there any harmful activities in this portfolio?

e Bottom Approach

$$$

Real Economy

$$$

5 6 4 3 Principle 2. Grounded in communities, serving the real economy

Principles of Values-based Banking – CEO focused questions

Client Centred

Long Term Resiliency

Transparency

Culture

and enabling new business models to meet the needs of both 1. W hat portion of money you intermediate for users of capital is directly related to clients active in the real economy? • What is your ratio loans / assets? • What is your ratio deposits / assets? • Do you have assets that cannot be considered investments in the real economy such as financial derivatives, investment in stock exchange shares or others? • What is the percentage of total assets? Please detail.

3. What portion of your total revenues (net interest income plus non-interest income) is derived from the direct participation of your clients in the real economy? •W hat is the percentage of income coming from interest margin plus fees coming from loans and services to productive activities compared to your total income? 4. What new business models have you developed to meet the needs of your community and the real economy?

2. What portion of money you intermediate for providers of capital comes from individuals or non-financial enterprises?

Economy

$$$

Client Centred

5 6 4 Principle 3. Long-term relationships with clients and a direct

Principles of Values-based Banking – CEO focused questions

Long Term Resiliency

Transparency

Culture

understanding of their economic activities and the risks involved 1. W hat is the qualitative framework you use in your client acceptance, sales and ongoing relationship processes? • Do your lending criteria have a qualitative framework to make sure that you understand your clients in depth? 2. W hat is the average length of your relationships with clients? 3. How do your client acceptance, sales and relationship processes prevent abuse or misuse of your clients and ensure proper use of indebtedness? • What is your sales policy? Do you have policies to incentivize sales? Can you describe those policies?

• Are you fully convinced that your sales policies do not provoke over indebtedness amongst your clients or selling of complex products that might not be adequate for your client?

4. How have you handled clients facing financial challenges? What is your policy when you have impaired loans? How do you approach the client in trouble?

lient ntred

Long Term Resiliency

5 6 Principle 4. Long-term, self-sustaining, and resilient to

Principles of Values-based Banking – CEO focused questions

Transparency

Culture

outside disruptions

1. W hat is your policy for your equity/assets and other capital ratios? 2. H ow does your equity/assets and other capital ratios compare with your peers? And how has it developed over time? • What’s the evolution of your Equity / Assets ration in the last three years? • What is the evolution of your Core Capital or Tier I ration in the last three years?

4. How do your financial returns compare with your peers? • How is your ROA compared to the average in your market? • How is your ROA compared to the one of other Values-based banks in your region? 5. How do your loan losses and low asset quality ratios compare with your peers?

3. How do you manage liquidity and how does that compare with your peers? • How are your liquidity buffers compared to the regulation in your area? • What is your Net Stable Funding Ratio? • What is your Liquidity Coverage Ratio?

ng Term siliency

Transparency

6 Principle 5. Transparent and inclusive governance

Principles of Values-based Banking – CEO focused questions

Culture

1. How have you provided clarity on executive and supervisory roles in your governance? • Do you have a Charter of the Board that clearly separates executive from supervisory roles? • Is there any Ethics and Culture committee within your Supervisory Board or Board of Management? 2. H ow do you involve stakeholders (clients, civil society, investors, co-workers, etc.) in your decision processes? • Do you have a clear reporting policy? • Do you provide stakeholders with reports on your social and environmental impact? • Do you have instruments to include co-workers in some areas of decision-making? 3. How do you report to your stakeholders your financial and non-financial results including those related to your impact on social, environmental and economic challenges facing your community? • Do you use the GABV Scorecard for selfassessment within your Board and for external reporting and benchmarking with your peers? • Do you report to stakeholders how do you use your depositors’ money?

4. What are your policies and results relative to gender balance and other forms of diversity and inclusion for co-workers at all levels of the organisation? • Do you have a clear gender balance policy at executive and board level and, also in general, do you promote gender balance amongst co-workers? 5. What are your policies and results relative to economic equality for co-workers at all levels of the organisation? 6. How do you preserve your strategic focus on meeting the social, environmental and economic challenges of your community? • Do you have provisions in your governance that protect your social en environmental mission? Please detail. 7. What tools do you use (i.e. GABV Scorecard, etc.) for assessing and reporting your strategic focus on meeting the social, environmental and economic challenges of your community?

sparency

Culture

Principles of Values-based Banking – CEO focused questions

Principle 6. All of these principles embedded in the culture of the bank 1. H ow do you engage your co-workers with your mission of being a Values-based Bank? 2. H ow do your co-worker recruitment and training processes reinforce your Valuesbased Banking culture? • Do you use Values-Based banking principles when you recruit or train co-workers? 3. How are your compensation policies and practices aligned with the long-term social, environmental and economic goals of your bank? • What is the ratio between the highest salary in the bank and the average salary? • What is the percentage of the payroll that corresponds to bonuses (including top management) compared to the whole payroll?

• In case you use a bonus structure, how do you make sure that it does not promote shorttermism and that it does not attempt against the long-term social and environmental mission of the bank? • How do you make sure that your approach to sales and marketing is respectful with the principles of Values-based banking? How do you monitor this and which KPI’s you are using to be on top of that?

4. What measures of your culture to you gather and report to your stakeholders? • What is the percentage of co-workers of your bank that are aware of the mission of the bank and / or of it being a member of the GABV? 5. Has your bank adopted The Kathmandu Pledge? Does your HR Director belong to the Human Development Community of Practice within the GABV?

Principles of Values-based Banking â&#x20AC;&#x201C; general focused questions

Triple Bottom Line Approach

$$$

Real Economy

Client Centred

Long Term Resiliency

Transparency

Culture

$$$

Triple Bottom Line Approach

5 6 4 3 2 Principle 1. Triple bottom line approach at the heart

Principles of Values-based Banking â&#x20AC;&#x201C; CEO focused questions

Real Economy

Client Centred

of the business model

Long Term Resiliency

Transparency

Culture

1. Do you see your organization as environmentally friendly?

$$$

2. Does your organization support local projects?

$$$

3. Does your organization promote the prosperity of the community? 4. Does your organization fight inequality? Are you part of any such projects? 5. Does your organization have inclusive culture? 6. Does your organization have a positive effect on the society and environment? 7. Does your organization openly talk about positive effect on environment or people? 54

e Bottom Approach

$$$

Real Economy

5 6 4 3 Principle 2. Grounded in communities, serving the real economy

Principles of Values-based Banking â&#x20AC;&#x201C; CEO focused questions

Client Centred

Long Term Resiliency

Transparency

Culture

and enabling new business models to meet the needs of both 1. Is your organization focused on local community?

$$$

2. Do you have strong ties with people residing in local communities? 3. Is your organization supporting development of new business models to include local communities, local producers and service providers?

Economy

Client Centred

5 6 4 Principle 3. Long-term relationships with clients and a direct

Principles of Values-based Banking â&#x20AC;&#x201C; CEO focused questions

Long Term Resiliency

Transparency

Culture

understanding of their economic activities and the risks involved 1. Does your organization try to understand the needs of your clients and the local community?

$$$

2. Do you invest in developing and deepening relationship with your clients/local community? 3. Do you support members of the local community in overcoming potential financial troubles and investing in long term success?

lient ntred

Long Term Resiliency

5 6 Principle 4. Long-term, self-sustaining, and resilient

Principles of Values-based Banking â&#x20AC;&#x201C; CEO focused questions

Transparency

Culture

to outside disruptions

1. Do you think your organization is doing business in a stable way? 2. Knowing the past, do you see a steady progress of your organization in the past three years? 3. Does your organization suffer from external disruptions?

ng Term siliency

Transparency

6 Principle 5. Transparent and inclusive governance

Principles of Values-based Banking â&#x20AC;&#x201C; CEO focused questions

Culture

1. Does your organization promote transparency? 2. Does your organization promote inclusive governance? 3. Is it easy to get information about investments your organization is making? 4. Do the reports include social and environmental impact? 5. Does your organization promote gender balance amongst co-workers? 6. Does your organization include co-workers in some decision-making processes?

sparency

Culture

Principles of Values-based Banking â&#x20AC;&#x201C; CEO focused questions

Principle 6. All of these principles embedded in the culture of the bank 1. Do you use Values-Based banking principles when you recruit or train co-workers? 2. How do your co-worker recruitment and training processes support your Values-based Banking culture? 3. Do you think the compensation policies and practices are aligned with long term social, environmental and economic goals of your bank? 4. Do you think many of your co-workers understand the concept of values-based banking?

Connected Communities, Financing Change #BankingOnValues