Meet the Bank We Don't Hate

I've never claimed to know much about investing or making money. My forte is saving money, spending and consuming less. I've always believed that the easiest way to double your money is to fold it in half and put it back in your wallet.

But I'm at least astute enough about banking and the money-making side of personal finance to recognize a good idea when I see one, particularly when it makes both economic and environmental sense. Just as dozens of major U.S. banks are struggling to stay afloat, there's a growing group of seasoned business folks who think now is the perfect time to start a new bank, particularly if it's a "green bank."

One of the latest entries into the relatively new field of green banking is e3bank, which recently announced that it has received conditional approval of a state charter from the Pennsylvania Department of Banking to launch its flagship branch in the Philadelphia area. e3bank joins a small but growing number of green banks, including ShoreBank Pacific, First Green Bank of Florida, and New Resource Bank in San Francisco.

Sandy Wiggins is the chairman of e3bank and is a former chairman of the U.S. Green Building Council (USGBC). In the interest of full disclosure, Sandy also happens to be a good friend of mine and is one of the smartest people I know (although in the interest of fuller disclosure, most people I know are smarter than me). I interviewed Sandy recently about his latest Earth-friendly business enterprise, asking him to explain green banking in language even a simple cheapskate like me can understand.

"The name e3bank refers to the fact that our bank is founded on the 'principles of the triple bottom line' of Environment, Economy and Social Equity," Wiggins explained.

Sensing that I was already lost, Sandy backed up to remind me that "the triple bottom line" or "TBL" refers to a method for assessing the merits and performance of a project -- in this case a bank -- on the basis of more than just its economic returns. The concept was developed by sustainability-guru John Elkington fifteen years ago, and is sometimes referred to as "People, Planet, Profit," since under the TBL model, a project's performance is considered and measured in each of those three areas.

"Oh yeah," I said, carefully copying down every word Wiggins said. "I think I was out sick the day they covered that in school."

"We want our customers to know how we're putting their money to work. We want them to support and be proud of the fact that the capital we deploy -- their money -- is having a positive impact on the environment and on people, as well as generating a positive economic return," Wiggins said. "Everything we do, every decision we make, needs to have a positive impact in each area...a positive economic impact is just not enough."

Wiggins then provided what he called a "simple example," which truly was, and since we're friends I was not offended by his thoughtfulness to keep it "simple" for me. He said e3bank will specialize in real estate loans for LEED-certified buildings (Leadership in Energy and Environmental Design -- a program of the USGBC), for example, and will offer lower interest rates based on the level of LEED certification a building achieves. The higher the level of sustainability, the lower the interest rate.

Wiggins says that e3bank understands that such projects can be both good investments and good for the environment, but upfront costs can be higher. Traditional banks often don't understand the cost savings over time, and so are sometimes reluctant to make loans for green building projects. Similarly, some green banks offer discounted loan rates on car loans for more energy efficient vehicles, recognizing the higher upfront costs, but the financial and environmental savings over time.

"Sounds great, Sandy," I said, finally getting up the nerve to ask the question I'd been wanting to ask from the beginning, "but how can e3bank be economically competitive with traditional banks, those that are just focused on profit? Won't the other two missions of the bank -- environment and social equity -- detract from its economic performance?"

"Time and again, whenever TBL is applied to a business venture or other project, the economic return is actually better than traditional business or project models. All of our services, rates of return, interest rates...will be at least competitive with other banks, if not superior," Wiggins said.

And then I'm reminded just how smart this guy is. "One of the ways we'll do this is by walking the walk, operating as a green business ourselves, which will dramatically reduce our operating costs. For example, as chair of the USGBC, I always said, 'The most sustainable building you can build is the one you don't build.' Traditional banks with a branch office on every corner are wasting resources and wasting people's money." Now that I can understand. Wiggins says that e3bank will have a small facility in major metropolitan areas where it does business, but most services will be delivered and business transacted online.

"We're trying to redefine financial services as the grease that will help drive positive environmental and social change in America. We think the time is right for that...with the country crying for credit, traditional banks having so many problems and legacy issues...people are sick of the traditional banking system. They want something different. They want a place to invest their money where it will do some good, and not just for them, but some greater good," Wiggins said.

Sounds like a smart idea, from a smart guy.

Jeff Yeager is the author of the book The Ultimate Cheapskate's Road Map to True Riches. His website is www.UltimateCheapskate.com.