Giving sustainable frontrunners a boost

Sustainability is key to entire SME sector

Sustainable development of the Dutch small and medium-sized enterprises starts with the frontrunners. They are the businesses that actively and innovatively increase the sustainability of their operations. These frontrunners want a boost in the form of specific financial products. Rabobank is pleased to work with its partners to meet this need.

One good turn deserves another, also in the world of sustainability. 'Businesses that are leading the way in the field of sustainability want specific financial products in order to make their businesses even more sustainable. They see the availability of these forms of financing as recognition of the role they fulfil at the forefront of sustainability', says Marcel Gerritsen, who is responsible for business financing at Rabobank in the Netherlands. He sees this need across the breadth of the small and medium-sized enterprises, from retail and recreation to healthcare and livestock farming.

'Around five percent of businesses in every sector are frontrunners in the field of sustainability. These frontrunners stick their necks out, put forward new ideas and integrate environmental care, fair trade, animal welfare and other social interests into their business operations', says Bas Rüter, Director of Sustainability at Rabobank. 'Frontrunners are a role model for the other 95 percent. We see this throughout the business community: what the frontrunners are doing now at the vanguard of sustainability will sooner or later be put into practice by many more companies. And in the end businesses that become more sustainable are better able to handle a setback. And that’s also beneficial for us as a bank.'

Demonstrably sustainable

Rabobank introduced a loan with an interest rate discount from the European Investment Bank (EIB) for sustainable frontrunners in the Dutch SME sector in November 2015. The EIB made 50 million euros available to Rabobank customers who can demonstrate that they have taken major strides forward in the field of sustainability. A list of 37 existing sustainability characteristics is used as the criterion. A business must have at least one of these characteristics in order to be eligible for an EIB loan. Examples include the 'CO2 performance ladder' (reducing CO2 emissions), the 'Better Life' quality mark (animal-friendly meat production), 'BREEAM' (sustainable building), 'Healthcare Environmental Thermometer' (sustainable operations in healthcare institutions) and the 'EKO quality mark' (organic products). 'All the selected quality marks focus on sustainability at the core of the business operations. The quality marks go beyond the legal requirements and actually carry out assessments of the business operations', says Rüter.

Large amount

Rabobank hopes this first 50 million euros for the Impact Loan is only the beginning. '50 million euros for sustainable frontrunners is clearly a large amount and the interest rate discount is substantial compared to similar schemes available to the entire SME sector. After we have allocated the first 50 million euros in EIB funding, we plan to continue providing a boost for a wide group of frontrunners. We’re now actively working on achieving that aim', says Gerritsen.

Welcome addition to green financing

Rabobank is the Netherlands’ largest provider of green financing and the Impact Loan is a welcome addition to this form of financing. While the rates for green financing are attractive, businesses must fulfil the stringent conditions set by the Dutch government. Rüter: 'We need both green financing and the Impact Loan to promote sustainable enterprise. The Impact Loan has less stringent conditions than green financing and is open to businesses in more sectors. The absolute leaders in sustainability opt for green financing and as a result enjoy attractive rates for a period of ten years. The Impact Loan comes in a close second and is an accessible form of financing for a wide group of frontrunners in more sectors.' Businesses can use the Impact Loan to finance all their business activities, while green financing is intended solely for fixed assets, such as buildings and machinery. Most green financing is consequently provided for green label greenhouses, organic farms, sustainable buildings, wind turbines and geothermal plants.'

Financing good business plans

Rabobank is working in partnership with other parties, such as the European Investment Bank and the Dutch government, for green financing and this fits in perfectly with Rabobank’s new approach to financing SMEs. Marcel Gerritsen: 'What matters to businesses is that financing is available for good business plans. We assist customers to obtain that financing in our role as financial linking pin. This means Rabobank might either provide bank financing or find a financing solution via partners in our network for good business plans. We’ve been doing this for some time now through the Dutch government's green scheme and are now doing the same with the European Investment Bank for a wide range of sustainable frontrunners. This enables these customers to move forward and it is good for the entire Dutch SME sector.'