Today, Wells Fargo announced a major environmental commitment consisting of three 2020 goals: $30 billion in loans and investments in clean technologies, energy-efficient buildings, environmental innovation; $100 million in community grants and increased volunteerism for grassroots environmental initiatives; and energy-efficiency, waste-diversion, green building, and greenhouse gas targets.
What does it take for a major bank to make such a commitment? Why would it do that? In search of answers, I recently talked with Patricia Callahan, senior executive vice president and chief administrative officer at Wells Fargo, and Mary Wenzel, the banks' director of environmental affairs. Following is an edited version of that conversation.
Joel Makower: One of the things that’s interesting about this announcement is that there is so much else going on in your world: the Wachovia integration, foreclosures, Occupy. How does sustainability fit in?
Patricia Callahan: The Wachovia merger is actually finished, and I would say that having the merger done has given us a little more brain space to focus in this area. I’m not sure we could have gotten through the work 12-18 months ago because everybody was so focused on the merger. We continue to focus on foreclosure problems and working in our communities to get things back on track as much as we can influence that.
But we have to look to the future. And we believe that both the business opportunities on the environmental finance side, as well as the opportunities to reduce waste in our business environment, are things that are going to help us be in better condition as a company in the future. And our team members are interested and want this. So we think it all aligns well. We haven't had trouble getting the attention that we need from management to make this happen.
Makower: What’s the business opportunity in sustainability for Wells?
Callahan: There is a big opportunity in environmentally appropriate development. We have an environmental finance group that is very active in alternative energy. We do a lot of LEED building development. If you ask our commercial real estate people, they will tell that you that anybody building a new building today is trying to meet LEED standards, which was not true only a handful of years ago. So we think there’s opportunity in building, in alternative power, in the way farming is done and in other industries.
We also believe strongly that if we’re working with a customer who is not paying attention to the environmental impact that the company has, that it creates more risk for them and for us. It’s consistent with us wanting to do business with companies that are doing things the right way, to do environmental due diligence on operations of our customers. I’m talking about business customers now, not consumers.
Makower: While you’re on that, do consumers care?
Callahan: When we go out to our consumers and we ask them the kinds of things they care about, they tell us that they care. Now, whether people walk away from someone who isn't environmentally sensitive, or whether they change banks because we’re doing things better than someone else, I don't know. But they say they care.
Mary Wenzel: We took this commitment to an online forum of our customers and asked them what resonated with them. It was an interesting response. The whole commitment resonated very strongly. Over 80 percent of our customers said it was important to them that we have an environmental commitment. The operational aspects of the commitment tested very well because they felt like in order to be credible in your stance that you cared about the environment, you had to have your own house in order. So, not only are there all the right business reasons to focus on our operations, but our customers want to see us focused on those areas as well. And we know our team members are incredibly passionate about that aspect of our environment commitment.
Makower: Tell me about what it took to get to this commitment. How did it start? Talk a little bit about the process.
Wenzel: We announced our first public commitment in July of 2005, so I would say this is just a natural progression of that journey. We met and exceeded the goals we laid out in that first commitment, so it was time to think about what we wanted to publicly communicate around our environmental values as a company a second time in a comprehensive way.
We began this journey about a year ago and engaged an external stakeholder group to help us think about what appropriate environmental leadership and commitments would look like for us as a company. We engaged customers around what they thought would be important for us to commit to, and we engaged a number of internal partners and leaders about their views on environment leadership for us as a company.
From that process we developed the three focus areas where we would have the opportunity to demonstrate material leadership. We then went back to the relevant lines of business that would have to own those commitments, and we spent a long time working with them, and the leadership of those different lines of businesses and organizations, to make sure that this commitment was really owned enterprise-wide.
This wasn’t Environmental Affairs just kind of sitting in a room picking numbers. This is really a commitment that is owned by the enterprise. And so multiple lines of business and organizations within Wells Fargo worked with us over the last year to develop the goals and the language within the commitment.
Makower: Can you give me an example of one of the lines of business that that you had to get the buy-in from?