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Bank launches Green Deposits for corporate clients
A bank with a Michigan presence launched a program called Green Deposits to allow commercial clients to direct their cash reserves toward companies and projects that are expected to create a positive environmental impact.
Providence, Rhode Island-based Citizens — which has branches in Michigan and 10 other states — said the Green Deposits solution gives clients the opportunity to direct deposits to investments in sectors such as energy efficiency; renewable energy; green transport; sustainable food, agriculture and forestry; waste management; and greenhouse gas reduction.
“Recognizing the increasing desire among clients for socially responsible investing options, our new Green Deposits solution gives clients a sustainable investment vehicle that aligns with Citizens’ own commitment to help create a healthy and sustainable future for all of our stakeholders,” said Michael Cummins, executive vice president and head of treasury solutions at Citizens. Citizens developed a Green Deposits Framework to identify eligible activities within the bank’s portfolio and ensure alignment with best practices and standards. The framework was created with the support of Sustainalytics, a Morningstar company and leading provider of environmental, social and governance (ESG) research and data.
Pat Nuzzo, executive vice president, head of commercial liquidity management for Citizens Commercial Banking, said the bank brainstormed the idea for Green Deposits based on client feedback.
“We found that one, there was a lot of education that was needed around ESG, but that also, clients were keenly interested in including ESG into their corporate structure, but for most clients, specifically the clients that are at the lower end of the middle market … they don’t really have the bandwidth or the capacity internally to really stand up their own ESG programs, and so they were looking for ways that they could show to their stakeholders their commitment either to the environmental and social programs or to governance,” he said. When working with Sustainalytics to develop the project, Nuzzo said Citizens realized most of the green investment opportunities out there are around green bonds, which carry higher risk and are potentially more labor-intensive for companies to manage, or carbon credits, which can be complicated to understand. “For the client, one of the real benefits of this program is that it’s a passive investment. They’re in a portfolio, they generally have disclosure of what types of investments are in the program, but they don’t have specific information as to the individual client names … because they are not actually tied to any gains or losses associated with those names.”
Nuzzo said Citizens customers have expressed concerns that if they don’t have an ESG program, it could limit their access to capital in the future, as more firms, municipalities and states are starting to require companies’ ESG compliance — as well as compliance by their suppliers — before they will consider investing in them.
