Greenback Bank: Environmental Policy Analysis. Greenback Bank: Environmental Policy Analysis

1. One-sided forms will be taken to a local printing company to be made into notepads for internal use (i.e. scrap paper or note-taking).  
2. Double-sided forms remaining will be recycled.

6. All new customers opening an account with Greenback Bank will be encouraged to sign up for 24-hour online access to Greenback’s website in lieu of receiving a monthly paper statement.  Each branch will have on hand an abbreviated version of Greenback’s environmental policy to offer the customer when suggesting the online-access-only option.

Purpose

1. To reduce or eliminate the destruction of forests
2. To reduce or eliminate paper from landfills
3. To promote recycling and recycled materials to employees, customers, and the community 

Procedure Guidelines

All Greenback Bank branches, both new and existing, will be provided with the following guidelines for establishing a successful recycling program.

1. Select a “recycling coordinator” – This will often be the office manager of the branch.  The coordinator will locate a recycling company, organize the in-house collection procedures, and encourage employees to follow these procedures.
2. Select a recycling company – Individual branches must choose either a company that comes to collect the recyclable material or one that will accept recyclable material taken by the branch to the recycling facility.
3. Be aware of all recycling opportunities – Although office paper will always be the main source of recyclable material at a bank, branches should also remember to recycle cardboard boxes and aluminum cans.
4. Designate collection procedures – All containers should be well labeled and near employees’ desks, as well as in areas where paper is heavily used (i.e. copiers and printers).
5. Promote the recycling program – Choose an official day to begin the program.  Provide the employees with written guidelines, and post reminders near collection containers.

E-WASTE POLICY

The third plank of Greenback Bank’s environmental policy is focused on reducing electronic waste (E-waste).  E-waste includes a growing range of electronic devices including: fax machines, computers, cell phones, household appliances, stereos, etc.  These items, once built with an extended life philosophy through repair, are now designed to be discarded and replaced on a routine basis.  As a result, e-waste represents the fastest growing and most toxic waste stream in the US.  

E-waste poses environmental and health hazards to the public due to its toxic chemical composition.   For example, discarded computers generate massive amounts of hazardous waste due to the materials that make up the Cathode Ray Tubes (CRT) in the monitors.  The CRTs contain significant contributions of lead, approximately 3 – 8 lbs each13.  There will be 315 million computers becoming obsolete between 1997 and 2004 contributing to 1.2 billion lbs of lead13.  When these discarded computers are placed into landfills and crushed the lead, as well as other toxins, leach into the ground and water supply.  This pollution of the water supply is dangerous for the environment and society because lead is a leading cause of damage to the central and peripheral nervous systems.

Recycling electronic materials and removing hazardous waste components will conserve resources, reduce environmental and public health threats, and protect worker safety.  This in turn will promote the well-being of current and future generations in this advanced technological world.  Greenback Bank is committed to doing our part in securing the safety of customers and the general public.

Objectives

1. To establish procedures for Greenback Bank employees to dispose or recycle e-waste in accordance and beyond the approved Environmental Protection Agency guidelines.

Purpose

1. To reduce or eliminate e-waste from landfills
2. To reduce or eliminate human exposure to toxins from e-waste
3. To make the environment safer

Procedure Guidelines

1. All electronic equipment (including computers, fax machines, cell phones, printers, etc.) will be used to its maximum life barring any significant changes in technology that would hinder Greenback Bank’s market competitiveness.
2. All electronic equipment determined obsolete, if still functional, will be donated to local charities, churches, or schools.
3. Any electronic equipment determined obsolete, and not donated to charities, will be sent to an approved Environmental Protection Agency recycling facility for environmentally safe handling.

SUSTAINABILITY REPORTING

In following its Environmental Vision, Greenback Bank has instituted a policy of publishing a yearly sustainability report.  It covers what is often called the ‘Triple bottom Line’—economic, social, and environmental well-being.  In the past, companies focused only on the income statement and balance sheet, but Greenback is striving to be a business leader in taking a more holistic approach.  We believe that more emphasis should be placed on the two other components to a company’s overall health—social and environmental.  It is this new philosophy that many high profile, well-respected companies are now beginning to embrace.  Coca Cola, McDonald’s, Ford, and even competitors of Greenback’s, such as Citigroup, are already adhering to the guidelines set by the Global Reporting Initiative (GRI) in 2002.  We see sustainability reporting as the future of business disclosure, and Greenback Bank does not want to be the last to react when the market changes.

     This Global Reporting Initiative was created in order to set a standard for all companies to follow—a way to measure the complete impact a business has on all stakeholders involved.  In regards to the environment, almost everyone is a stakeholder, whether now or the future generations who will inherit this earth.  To look at the social and environmental effects a company creates sounds like a simple idea, but one that has really never been addressed until more recently.  At the present, many businesses doing sustainability reports are using ad hoc approaches that make comparability very difficult.  GRI has created a standard for all to follow, and it enables Greenback to see how it stacks up against other companies when it comes to environmental and social issues.  The public, when surveyed, now more than ever wants to know what corporations are doing, other than trying to make money.  Also, we believe that there are ways to doing business that not only help the environment, but also become profitable business practices.  Often times, businesses find more efficient processes by analyzing the way resources are consumed.  It is one of the many benefits to this type of reporting.

     One will often hear the word ‘transparent’ used in discussions on sustainability reporting.  After recent scandals such as those with Enron and WorldCom, the general public’s skepticism on large corporations has soured, and it needs reasons to trust them again.  This is why Greenback wants to go above and beyond the minimum requirements.  We feel it is Greenback’s responsibility to keep all stakeholders involved and educated about our actions.  It is our responsibility to the communities we serve.

     The guidelines set forth by the GRI will allow us to track the flow of natural, human, and financial capital.  In staying with the focus of this report, we will speak more on the environmental aspects; however, this does not mean that the other areas take a secondary role with Greenback.   We have already discussed some of our programs with e-waste, increased recycling, and environmentally friendly buildings.  The sustainability report will be a tool to track our progress.

     Under the sustainability report, Greenback will broaden its view on tracking its resources.  First of all, energy consumption will be monitored.  It is obvious that Greenback needs a constant flow of electricity to keep its branches up and running, but this energy comes from non-renewable sources like coal, natural gas, and oil. These resources, when burned, emit pollutants that effect local communities and contribute to the many environmental concerns, like acid rain and global warming. Greenback will measure the amount of carbon dioxide (CO2) emissions released during the production of the energy we use.  It is information that is readily available by doing some simple calculations.  In tracking this number, we will be able to make better decisions for our stakeholders in seeking more cost-competitive, reliable, and safe energy sources.  The sustainability will also track the number of branches using renewable energy, such as windmill farms, solar plants, hydroelectric projects, and landfill gas recovery stations.  We will now be able to monitor our progress in minimizing our environmental footprint.

     Another issue discussed earlier is that of paper waste.  One of the metrics we plan to include in the sustainability report is that of revenue per pound of paper used.  It is a goal of Greenback’s to reduce the use of virgin fiber paper and replace it with recycled paper.  We will report the percentages of these types we have used every year, striving to reduce the use of forest-based resources, while still attending to the needs of our stakeholders. Other statistics that will be shown are the number of branches who participate in the recycling of inkjet toner cartridges.  Also, the report will track the branches’ involvement in donations of retired computer assets, as well as environmentally sound disposals of electronic equipment.

     Mostly, a sustainability report will give the stakeholders a chance to view how Greenback Bank is ever creating a more equitable, profitable, and environmentally friendly company.  The report will not only give several metrics to track progress, but it will also give success stories and anecdotes of the company’s performance from the last year.  As we mentioned earlier, we believe this is the way of the future.  We will be limited in what information we can attain, but we will constantly work to improve our understanding of the ‘Triple Bottom Line’.  It will be an honest look into how the company is meeting the needs of all the stakeholders. We plan on being able to add to it year after year, becoming a leader in transparent reporting.

STAKEHOLDERS

Greenback recognizes that stakeholders play an important role in our business strategies.  Before implementing our environmental policy, we will first examine the policy’s effects on our stakeholders.

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Stakeholder Diagram

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Greenback Bank

The Greenback Bank supports the environmental policy for a number of reasons.  We recognize the tremendous threats that energy consumption, e-waste, and paper waste pose on the community.  Greenback wants to be seen as a leader and environmentally conscious business by addressing the issue early.   Greenback also acknowledges that, although our primary responsibility is to generate profit for stockholders in the spirit of the free market theory, there is still a social responsibility that must be adhered to.

Investors

Greenback’s investors are supportive of management’s decision to implement an environmental policy.  As Greenback Bank is a publicly traded company, it has numerous investors that are interested in the management and operations of the company.  Greenback’s waste reduction policies should ultimately reduce costs, thereby increasing profits.  These profits would be returned to the investors in the form of dividends.  Additionally, the more successful a company is, there is greater potential for an increase in the market price.  

Government

The government supports our environmental policy.  By companies, such as Greenback, voluntarily helping the environment, the government will feel less pressure from environmentalists and consumer safety groups to protect the health and safety rights of the environment and its people.  This would decrease the need for government intervention, and increase their focus on other issues.  

Environmental policies would also ease governmental budgetary constraints.  Currently, many local and state governments assume the burden of high recycling costs.  In many cases they are now pushing that burden onto corporations.  For example, the California Legislature recently passed regulations mandating manufacturers to take responsibility for recycling e-waste products at no costs to the government or the consumers.   By corporations assuming the burden of recycling costs, the government will have more funding to support other problems in our society.

Customers

The initial thought would be that Greenback’s customers maintain a neutral position concerning this environmental policy because the average bank customer does not choose a bank based on friendliness to the environment.  However, through public education the customers would learn that the long-term reduction in costs and competitive advantage for Greenback would ultimately reduce their banking fees and possibly provide them with higher yield interest accounts.  At the same time their health and safety is being promoted.  

Many consumers in the U.S. already make educated decisions to patron environmentally friendly institutions.  In 1995 the green market in the U.S. was estimated to be 52 million households.  These households and the households that would be more educated through our environmental policy and sustainability reporting will have a harmful impact on other industries by choosing to purchase products and services from green companies.  Therefore; in the long-run more customers would support Greenback’s environmental policy.

Employees

Nationwide, the employees of Greenback Bank will be affected by this environmental policy.  Although the effort they will have to exert to comply with the recycling program is actually quite minimal, it will require a conscious effort on their part to deviate slightly from their normal activities.  

The greatest impact of the environmental policy on the employees is from the use of green architecture.  The EPA classifies indoor air quality as one of the top five environmental health risks today.  The newly constructed facilities will provide them with cleaner, fresher indoor air, thus improving their health and safety.  The use of natural light will also improve the health condition of the employees.  Studies show that sunlight causes the human body to produce Vitamin D which helps extract calcium from food.  The National Multiple Sclerosis Society has evidence that links Vitamin D and calcium multiple sclerosis prevention.

The cleaner, safer, and healthier work conditions that green architecture provides will lead employees to support the policy.

Society

Society supports making the environment a safer place to live; hence, society will be supportive of Greenback’s environmental policy.  However, at this point, the general public at large is not fully aware of the serious dangers of energy consumption, indoor air pollution, paper waste, and e-waste.  Therefore, our vision to educate the public about environmental issues and communicate to them the efforts that Greenback is making to resolve these issues will help create awareness among society.  This type of public education will help environmental groups, taxpayers, and local governments that are currently funding environmental education programs.

The result of an environmentally educated society will be the creation of corporate awareness.  More companies that realize the long-term benefits of saving the environment and adopt policies like these will benefit society and future generations as a whole.

Environmental Groups

Environmental groups support our energy conservation and recycling programs.  These programs aim to reduce and eliminate energy waste, e-waste, and hazardous materials from the environment.  By Greenback leading the way for environmentally friendly business, other corporations will be soon to follow on a voluntary basis.  The ripple effect would limit the amount of time and effort that environmental groups would have to spend lobbying the government to pass protective legislation.  This means less charitable funding would be needed by these groups.

Environmental groups, specifically those concerned about the continuous destruction of trees in the U.S., such as the group Save America’s Forests, are pleased when a company in any industry acknowledges the need to be more environmentally friendly.  The environmental groups tend to speak highly of and promote those companies that are friendly to the environment, while those that are not often receive a liberal tongue-lashing, which could ultimately affect their reputation.  The environmental groups will be quite satisfied with Greenback Bank’s policy and support our efforts.

Health Organizations

Health organizations play an important role in our society today.  Healthcare issues have become a tremendous burden on our lives economically, politically, and socially.  First, the rise in healthcare costs, and ultimately its un-affordability, is leading health organizations to lobby the government to provide assistance to low-income families and older persons.  Vulnerable groups, such as these, are the first to feel the impact of poor environmental conditions on their health.  A study by the American Cancer Society collected information from 1.2 million adults in 151 US cities and found that those living in the most polluted cities had a 17% greater mortality risk than people living in the least polluted city.  The EPA estimates that 40,000 people die annually from respiratory illness and heart attacks linked to particle matter (PM) exposure17.

Health organizations have an important influence over the general public regarding these health concerns.  They have the capabilities to reach society through the media and government to make the public aware of health issues that corporations may be causing.  By initiating our environmental policy the health and environmental organizations will advertise our bank to their constituents.

 

Charitable Organizations

By implementing the e-waste policy, many charitable organizations will benefit from the donation of Greenback’s discarded computers and electronic equipment.  Many of these organizations do not have the funding to purchase these materials new, so they rely on socially responsible companies, like Greenback, to donate their used equipment.

Builders

Green

As Greenback Bank embarks on the construction of its new branches, many environmentally friendly architects and builders will reap the benefits of our policy.  The U.S. Green Building Council estimates that the integration of our high-performance green features will increase our initial building costs by an average of 2% to 7%15.  This means more money in the pockets of green suppliers.

Non-Green

The use of green builders for our new branches will take business away from current builders.  As more companies realize the benefits of green building, the general construction industry will take a severe hit.  Builders will have to gain education on green building and re-train their employees to coordinate green features into their projects.

Competitors

Competitors are riding the fence between a neutral view on our policy and an opposing view.  While Greenback is experiencing high cash outflows from the construction of new green banks, competitors may see a short-term surge in business.  However, in the long run Greenback’s environmental policy will give it a competitive advantage over the competitors because of the long-term savings that green architecture will provide.  Competitors will also see a disadvantage as their “green” customers choose to transfer accounts to a more environmentally friendly bank.  Competing banks will feel pressure from environmentalists, health organizations, and government to follow our footsteps.  They will not be a leader in the socially responsible market.

Other Industries

Electric Companies

Electric companies would oppose Greenback’s implementation of green architecture because as more companies follow our lead, electric sales will be drastically reduced.  Several federal buildings have implemented green architecture, including the U.S. Department of Defense, Department of Energy, General Services Administration, and the EPA.  For these buildings alone, their energy costs have dropped 23% since 1985; this calculates to a savings of $1.4 billion over the past 17 years15.  This is money directly out of the electric company’s pockets.

Cell Phone Industry

The cell phone industry opposes the e-waste policy.  Current legislation petitions are calling for a program that would make the manufacturer responsible for recycling any products sold to consumers.  There would be a high cost associated with this program for the cell phone industry.  With technological advances, the average life of a cell phone is 18 months making this a high turnover product that generates high profits for the manufacturers13.  Cell phone usage has soared from 340,000 subscribers in 1985 to 150,000,000 subscribers in last year 13.  The large number of subscribers combined with the low product life due to upgrades in technology will result in 100 million cell phones becoming obsolete by 2005.  This would cost the cell phone industry millions of dollars to recycle this large amount of phones each year.

Computer Industry

The Computer Industry opposes the e-waste policies.  Similar to the cell phone industry, it would cost millions of dollars for the computer industry to take responsibility for recycle computers.  However, industry leaders IBM and Hewlett Packard have established “pay as you go” recycle programs that cost consumers between $10 and $35 dollars to send the computer back.  The relatively high cost has discouraged consumers and participation remains low.  Current statistics show that 50% of US households have computers 13.  The National Safety Council reports that 11% of discarded computers are recycled compared to 28% overall municipal waste 13.  The computer industry will have to find alternatives such as using less toxic materials to make the computers.  

International Labor Groups

International groups in under-developed countries would oppose e-waste programs.  Currently, some discarded e-waste is exported to underdeveloped countries in Asian, India, and Pakistan.  Here, family owned businesses employ laborers to dispose of the waste.  These actions have resulted in badly polluted water and serious health problems in this area13.  These family-owned businesses would lose profit if the e-waste were not exported to their countries.

STAKEHOLDER COALITIONS

Threats and Opportunities in the Firm’s Environment

Many circumstances will arise that are out of the company’s control.  These uncontrollable occurrences will effect the stated environmental objectives and they will have a direct impact on the bank’s everyday operations and financial performance.  Common environmental segments are analyzed below and the specific threats and opportunities are discussed for each.  

Economy –  An existing threat that banks are dealing with today is the threat of rising interest rates.  This threat impacts the profit margin that the bank receives on a loan.  For example, if a loan is based on a fixed rate of 4.5% and the cost of funds for the bank increases from 1.00% to 1.25%, than this reduces the spread that the bank would receive.  Earnings will be impacted by this change if banks have not hedged this risk.  Also as rates rise it is more expensive for companies to borrow money, so they are not as willing to use banks as a method of raising capital.

 

An opportunity can be obtained if the economy is expanding and there is increased spending, companies are likely to increase budgets for capital expenditures, research and development, and salary expense.  Often these increases are funded through financing provided by banks.

 

Greenback’s environmental initiative is highly dependent on the performance of the economy.  If the bank is profitable than it will be able to address the stated initiatives and improve the banks impact on the environment.  But, if the economy is not performing well, than the bank will be looking for ways to cut costs.  Initiatives such as these are typically the first to go.

Technology –  There are several threats due to changes and updates in technology.  First, new technology costs money.  Long run gains through the use of new technology require upfront costs.  Another threat is that there could be unknown environmental issues with the technology that is being produced.  Earlier there were issues identified with the disposal of e-waste.  As new technology is produced, it is unknown what the potential environmental concerns will be.  This is a threat of the unknown and the potential problems we will face down the road that we are unaware of today.  Finally, if new technology is implemented corporate wide, than the entire company will be impacted if there is a problem with the technology.  

As communication equipment continues to improve, it could eventually lead to a less paper intensive corporate culture.  This represents a benefit and an opportunity to the company.  To date, this has not changed with the usage of email, but the opportunity is there to be taken advantage of.  Also, technology changes could be made with building materials that help create more efficient buildings.  This is another opportunity that the bank would be able to take immediate advantage of since the branch network is currently expanding.

Demographics - The most significant threat with the existing status of the bank and the aging population is that we are still in the process of establishing ourselves in new communities.  Greenback is trying to position itself as taking a proactive approach towards the environment.  If older consumers are not concerned with this, than it could hinder the financial status of the bank.

However, the fact that the general population is now aging in the U.S. represents a great opportunity.  Greenback Bank will benefit if the bank is able to establish strong customer loyalty and brand recognition.  Older customers typically have more surplus income and deposits are extremely important to banks.  Banks are required to maintain a certain percentage of deposits in proportion to the loans that they have outstanding.  With more deposits the bank will be able to make more loans.  If Greenback can establish loyalty with these customers than they will continue to grow as time goes on.

Society and Culture - One great thing about this society is that it is made up of many different cultures and this exposes us to different ideas and ways of life.  The diverse population represents a threat to the bank and other industries.  As a result of having so many cultures, regardless of what you do, someone will be offended by the actions you take.  Each culture has a different view on different topics.  Environmental concerns are probably not as big of a concern with some cultures as they are with others.

The opportunity with today’s society is that, generally speaking, there is more of an emphasis on creating a better environment than there has been in years past.  This is an opportunity to Greenback because if we follow this pattern it will likely attract many customers who share the same belief that the environment is important.

Political - This segment can be viewed as an opportunity and a threat.  In the upcoming election we have two candidates that will likely have differing opinions regarding the level of importance our environmental policies should receive.  If the political system is more in tune with environmental issues there would likely be tax incentives that encourage companies to be environmentally responsible.  This would be an opportunity for Greenback since the bank will actively be taking steps to be an environmentally responsible company prior to any political decisions.  If there are limited restrictions on companies to be responsible, than this could counteract any contribution that Greenback makes towards the environment.  It could create the attitude of “Why should I be responsible if you are not going to be?”  

Legal – Greenback could potentially face a lawsuit as a result of a policy we currently have in place.  If a policy is implemented and it has a negative impact on the environment or harms an individual, the bank will be held responsible for its actions.

The reverse of this is also true and it represents an opportunity for the bank.  If a group or an individual attempts to file a lawsuit, the Bank can clearly identify the proactive steps taken by complying with the environmental policies in place.

Natural

As stated, Greenback Bank is planning on expanding its client base through added facilities in the DFW area.  With this, we will have more offices to maintain and more resources being used.  As there continues to be more demand for natural resources worldwide, this could create a strain on the supply and ultimately create increased prices.  Each individual property will result in more utility expenses and more paper expenses.  These costs could negatively impact the overall performance of the bank

If energy prices continue to increase and we have already implemented energy efficient building procedures, it could provide an opportunity for Greenback to have lower expenses than competitors.  The bank would benefit from lower costs related to heating, cooling, and lights.  As discussed with Green Architecture, the energy efficient buildings will benefit the company in the long run.

STAKEHOLDER STRATEGIES:

Costs and Probability for Success

PROBABILITY OF SUCCESS

Greenback’s environmental policy has a great probability of success.  This can be attributed to the timing of our initiative, the availability of green resources, and our passion to cast our vision and goals on society, but we at Greenback like to think that its success can be attributed to the policy itself.  It incorporates ideas that not only benefit the company, but benefit the majority of stakeholders involved as well.

When corporations are not taking measures to ensure a better environment, it is at the expense of all members of society, including the individuals that make up other stakeholder groups.  All individuals are the ones who are impacted by excessive paper waste, inefficient buildings, and irresponsible discarding of computers and other technological equipment.  As such, this policy is supported by the Utilitarian theory as it has the best interest of the general public in mind.  The greatest number of people will receive the greatest benefit – a cleaner, healthier environment.

The rights principle states that treatment of the environment is the right of future generations and the right to a livable environment.  This implies the present generation should incur responsibility to preserve the environment for the future generation.  So as we, Greenback Bank, plan to branch out to increase our assets, we have the right and obligation to use environmentally conscience systems while conserving energy the best way possible.  This being said, a good policy is the consideration for what we are leaving those that will follow.  The rights theory also mandates governmental law must force the protection of the environment based on human survival.  Greenback Bank, on our own, cannot clean up the environment, but with the help of other investors, rules, regulations, stringent laws, etc., we believe future generations will be able to prosper in a livable environment.

In conclusion, to sum up Greenback’s vision for environmental policy, it is critical to understand the needs of society as well as our own.  The social contract that we have with the people of our community obligates us to lookout for their welfare.  Our environmental policy will help Greenback pride itself in being one of the premier socially responsible corporations in the community.  

 

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REFERENCES

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