With their brethren parading to Capitol Hill to explain themselves and their industry to skeptical lawmakers and an angry public, three bankers at last week’s CERES Conference in Boston may revive faith in a profession that is sorely in need of respect.
I had the privilege of chairing a plenary discussion of innovative financial solutions that, with a little luck, may create a path to low-carbon prosperity. These days, seeing the word “innovation” paired with “financial products” is a good way to clear the room (or spur a call to the Feds). But the three very different bankers on my panel are, in fact, pioneering new ways to invest in forest preservation, invent disruptive technologies that may create a clean-energy system, and create a price on carbon.
Despite his elegant banker’s suit, Abyd Karmali is somewhat of an accidental financier. After two decades consulting for private firms and the United Nations, Karmali was recruited two years ago (interesting timing) to head Bank of America’s carbon markets division. His vision is to spread carbon pricing throughout BofA’s products. As he points out, carbon trading will only do so much if we don’t find ways to incorporate coverage of environmental improvements into all financial services. He proposes, for example, that banks use mortgages not only to help people pay off their houses, but also to encourage clean-energy investments that would otherwise require capital beyond the reach of most homeowners.
If Karmali is aiming to green today’s economy, Macquarie Capital’s Bill Green is trying to build tomorrow’s economy. Green’s impatience with doom-and-gloom scenarios is exactly what you would expect from a Silicon Valley veteran who previously led investments in the solar power company Bright Source and Shai Agassi’s electric car system for the venture capital powerhouse VantagePoint. His contrarian nature is best revealed by the kind words he had for Lehman Brothers, which he credited with providing financing for tax-equity deals that stoked clean-technology investments before the financial crisis hit in 2008. He sees this week’s investment by Google in two North Dakota wind farms as evidence that Lehman’s strategy was sound, and is poised to be revived.
But the most theatrical member of this trio was Australian Dorjee Sun, hailed by Time magazine as a “Hero of the Earth” in 2009. Sun has built a business, Carbon Conservation, by arranging financing to avoid deforestation across Asia. His efforts are credited with saving a sizeable amount of forest, which he’s done by buttonholing forestry executives, smallholders in Borneo, and the president of Mongolia.
These three clearly showed that innovation in the financial services sector is not always a dirty word. In fact, focused properly, it’s exactly what we need if we are going to marry healthy financial returns with a healthy planet. With due respect to Lloyd Blankfein, Goldman Sachs may not be doing “God’s work,” but these three bankers can plausibly make that claim.