Featured Guest: Martin Rohner

Martin Rohner is the Executive Director of the Global Alliance for Banking on Values (GABV). Before joining the GABV, Martin was CEO of Alternative Bank Schweiz, the leading values-based bank in Switzerland and founding member of the GABV. His earlier career in development finance and sustainable trade included stations at Fairtrade International, the Swiss State Secretariat for Economic Affairs (SECO), the World Bank and the Inter-American Development Bank. Martin holds a Masters in Environment and Development from the University of Cambridge (UK), a Masters in Business Administration from the University of St. Gallen (Switzerland) and Diploma of Advance Studies in Executive Banking from the University of Bern (Switzerland).

Episode Transcript

[MUSIC PLAYING]

Martin Rohner

The next generation of banker, I think he or she will be curious, reflective, compassionate. He or she will take a strong interest in social, political, and environmental topics.

David Reiling

Welcome to the NextGen Banker podcast, where we explore what’s next in banking and talk with the innovators responsible for creating positive change in the financial sector. I’m your host, David Reiling. And I am very excited to welcome Martin Rohner today. Martin, thank you for being with me on the NextGen Banker podcast.

Martin Rohner

It’s great to be here. Thanks, David, for inviting me.

David Reiling

So, Martin, before we get started, I just throw out a little reminder to our audience to stick around to the end of the episode because each NextGen Banker episode showcase one artist from somewhere around the globe. Always a good surprise with a wide range of genres of music. So be sure to check that out.

David Reiling

And now, Martin, I’ll just give a little of your background, so people have a context of who you are and where you’re coming from. So, Martin, you have over 30 years of experience, both in Europe and the United States. You’re currently the executive director of the Global Alliance for Banking on Values. Before joining the GABV, you were the CEO of Alternative Bank Schweiz. So, a lot going on in your world and a global one that it is.

David Reiling

And so, Martin, as we speak today– now we’ve known each other for several years as CEOs of GABV member banks, of values-based banks, but now we work together in your role as the executive director of the GABV and mine as the board chair of that organization. So, first of all, it’s great working with you. But the one question I don’t know that I’d love to hear you talk about is what was your path that drove you. What was your passion to get to values-based banking?

Martin Rohner

Well, thanks, David. That’s a good question. I sometimes also ask myself that question. As a matter of fact, becoming a banker never really was my career plan. I always wanted to work in the real economy. And my first job coming out of business school was actually in the airline industry, so a really unsustainable industry as a matter of fact. But I had a really exciting project at the time, which was starting a joint venture project in Eastern Europe.

Martin Rohner

You have to imagine this was just in the early ’90s right after the Iron Wall came down, the Iron Curtain came down. So, all of Eastern Europe was in a transition. And for me, that was a really exciting opportunity to get to know a totally different world, to see the challenges that those countries were going through. And one thing I also realized was that much of the business was really about making money. And that was maybe not really what I was looking for. It didn’t seem really that fulfilling.

Martin Rohner

So, after doing that for about three years, I decided to go back to school and get my master’s in environment and development. That was just around the time the first Earth Summit in Rio de Janeiro was held. And the term sustainable development had just been coined a few years before that. For the first time, people were talking about the nexus between business and the environment.

Martin Rohner

So, it all seemed really exciting. And that’s what kind of attracted me. And when I left school for the second time, I actually then went into development finance working with the multilateral development banks as well as with the Swiss government for quite some time and later joined the Fair Trade movement where, again, I gained a very important experience, which is actually how to build the market and demand for a sustainable product.

Martin Rohner

So, this is a bit of a roundabout way to explain my way to banking. In 2012, Alternative Bank Schweiz was looking for a new chief executive. And they seem not to have been in much luck with the previous bankers they hired so they decided to hire a non-banker. And they took me. That was really great. And I really enjoyed my eight and 1/2 years with them.

David Reiling

Oh, that’s fantastic. What a great journey of experiences. And so now as your role as the executive director of the Global Alliance for Banking on Values– now for our audience some basic questions. What is the GABV and what does it do?

Martin Rohner

So, we’re a movement of, in the meantime, almost 70 banks worldwide. And I’m talking really worldwide. This is from Canada all the way to Australia, from Bolivia all the way to Mongolia, so a really high diversity of banks, small banks that might just have maybe around $50 million US in assets to mid-size banks with maybe about $40 billion US in assets, very different credit– very different business models. So, these might be credit unions. They might be cooperative banks, retail banks, or even microfinance banks. But what kind of holds them all together is the fact that mission is at the core. So, they focus on social and environmental impact.

Martin Rohner

In their business model, they’re really grounded in the real economy. They understand their communities better than the mainstream banks because they’re so close to the clients they serve. And therefore, they also understand the risks involved in their business models better. They’re highly transparent and also in terms of their governance but also their accountability.

Martin Rohner

So, in all of this, it’s not just kind of an add on that is delegated to a CSR department but it’s really part and parcel of the culture and the strategy of the organization. And I think that’s what sets our member banks apart from kind of the more mainstream conventional way of doing banking.

Martin Rohner

And what we do is really bring these banks together. We offer the opportunity to share knowledge, to share experiences. We create the CEO level network. Very often, quite personal relationships develop out of these networks, which then leads to maybe further reach and collaboration.

Martin Rohner

I’ve seen everything. I mean I’ve seen banks that are engaging together in co-financing and loan syndication. Some banks might have taken shareholdings from other banks in our membership, all the way to mergers that have happened because these relationships were built.

Martin Rohner

Now more recently, as sustainable finance has become a bit of the talk of the town also in the mainstream banking sector, the Global Alliance is being increasingly solicited as a speaker or also contributor to the dialogue around sustainable finance because, in a way, because we’re values-based, we share the traits of almost like an advocacy organization. But at the same time, we’re actually building on tried and tested policies and practices of our member banks. So, I think what we have to say is really relevant in that context.

David Reiling

Yeah. And I can speak from firsthand experience, as you can, that when what we call when CEOs are knee to knee, and they’re having these conversations at that level, whether they’re from South America and Europe or from North America and Asia, there are similarities in terms of some of the problems and the issues. But the fact is the business models range greatly. But it’s so interesting how it can become so personal and effective so quickly because it generally is the same industry. But it’s rare that you run into someone with the same values alignment. So, you really start to speak that same language.

David Reiling

Now you and I, I know have had this topic. And you’ve touched on this before. But I really want to highlight it for our audience from the standpoint of what is the difference between a values-based bank and a GABV member, let’s say, and a traditional bank. You touched on some of those similarities but one thing that keeps coming back– and maybe you can comment on this– is the intentionality around it, that it’s part of the business model. And maybe you could give a few examples of GABV member banks that– how they express both their maybe social and/or environmental values.

Martin Rohner

Yeah. Exactly. And maybe it’s also important to stress at this point that every bank actually is values-based but it matters maybe what kind of values are driving it. Is it profit or is it maybe more about social or environmental impact and sustainability? And I think that’s where the members of the Global Alliance for Banking and Values really come from.

Martin Rohner

So, I think, like I said, the banks come in different shapes and sizes. Just recently, I ran into one of our CEOs who is running very successfully 3Bank, a bank in Serbia, which, by the way in the meantime, is majority owned by three other GABV members, which I think is in itself a wonderful story.

Martin Rohner

But 3Bank is really playing an exceptional role in Serbia because it’s almost the only bank nowadays that is serving the small-scale rural market in Serbia. So, you have to imagine, in Serbia, there are still people who are having challenges getting access to finance. It’s a relatively poor country in certain parts of the country.

Martin Rohner

And Vladimir Vucotic, the CEO, just told me about this great product that he launched, which is called My First Loan. And it’s targeted at refugees or at people working in the gig economy that can barely survive in a very harsh economic environment. And he’s managed to fully digitize this product based on his knowledge of how these people– what their personal circumstances, their social circumstances are. He doesn’t need any securities or anything like that.

Martin Rohner

And it turns out it’s extremely successful and really having an immense social impact because people no longer have to go through loan sharks where not only might they pay an arm and a leg in terms of interest rates but, more importantly, if they’re not able to pay back, they might be subject to serious aggression.

Martin Rohner

So, I think these are the kind of examples that really make a difference. What I found so exciting about this story, Vladimir shared this with a group of other European CEOs that are operating in Western Europe. And they realized, well actually, this product, now that we’re having this influx of refugees coming to Western Europe because of the Ukraine War, but also because of the economic situation, the challenges that are happening that we’re facing in Europe more generally, this product actually has relevance also in other places in Europe and might be replicated. So, I think these are the kind of success stories I think that really make a difference in our movement.

David Reiling

So that that’s fantastic. Obviously, that social impact for particularly refugees, so vulnerable in that time of their life. Maybe let’s switch it a little bit. Is there an example that comes to mind relative to an environmental focus GABV member bank?

Martin Rohner

Yeah. Absolutely. I mean, first of all, when you look at how typically sustainable finance works is that you have to be clear what you want to support and finance or invest in. But you also have to be very clear what you don’t want to invest in. And I can say that many of our members have the strictest exclusion criteria. And they’re very strict in what kind of projects they would actually finance. So, it starts with that.

Martin Rohner

More recently, there’s been a lot of momentum not just in the Global Alliance but more generally in the financial industry around climate finance and the impact of the financial industry on the climate. As a first step, banks are analyzing their portfolios, their investment portfolios, their loans, to see what actually is the carbon footprint, the greenhouse gas emissions of not just the carbon footprint but, more generally, the greenhouse gas emissions of the portfolio.

Martin Rohner

And then in the next step, well, how can they reduce that? And what I find again telling, many of the mainstream banks have committed to reduce or to achieve a net zero footprint by 2050. Several of our members have set targets as ambitious as 2035 or 2040 to achieve that.

Martin Rohner

For example, Vancity in Vancouver, they want to achieve that by 2040. They are still struggling like all the banks how to achieve this. But I think what’s great is that all our members are really sticking together and sharing all their experiences, how they can do it because they’ll have to work very closely with their clients to get that done.

David Reiling

Yeah. Fantastic. It’s one thing that I think where the GABV members I get so much out of the conversations that we have is that you learn of all the innovative things that are going on, whether it’s social and environmental. And it’s inspiring that the leaders of these organizations are really taking positions. Like 2035 is not that far away.

David Reiling

And so there really has to be things done and executed on today in order to hit those targets in that time frame. And it’s bold. It takes courage. And so that I think is some of the– I don’t know. It’s the juice. It’s the mojo that I get from the standpoint of being in this organization and seeing the positive change that can actually happen.

David Reiling

Now Martin, you mentioned the GABV as a movement. And so how are you feeling that this movement is happening? Is it is it growing? Is it staying the same? Is it shrinking? Where’s the trend or trajectory of values-based banking?

Martin Rohner

So, our movement started now about 13 years ago in 2009. It was just nine founding members. And at the time, of course, it was not clear is it going to make it. Is it going to survive? And right now, I’m amazed. We’re up at 70 member banks. Of course, we have quite strict criteria to become a member. It’s not open to anyone. You have to be clearly mission driven.

Martin Rohner

You have to have a certain size. You have to meet certain criteria. And we have a scorecard with which we check that. But I’m always surprised that, once in a while, we are approached by these really fascinating banks that have found their own way of changing the world and having an impact. And so, we keep growing.

Martin Rohner

We had a bit of a slowdown during the pandemic for understandable reasons. But I’m quite amazed to see how quickly this has picked up since the pandemic, actually especially also in North America. So, we’re seeing the North American region clearly growing.

Martin Rohner

I think what is so great to see is also that we’re having increasingly also an impact beyond our movement. Just to go back to the example I made with climate change, so in 2015, this initiative was launched called the Partnership for Carbon Accounting Financials. And that partnership was actually– it started outside of the Global Alliance. It was a Dutch bank that initiated it for the Dutch market. But through the Global Alliance and through the members in the Global Alliance, we carried that initiative out to the wider world.

Martin Rohner

This partnership basically is a standardized methodology to assess your greenhouse gas emissions. And based on that, you are then able and also required to set clear targets and milestones to reduce your carbon emissions in alignment with the Paris Climate Agreement. Now in the meantime, over 300 institutions, and some of them major banks like JPMorgan, or BlackRock, or other financial sector players, have signed up, representing more than $70 trillion in assets. That’s almost one third of the assets under management in the world.

Martin Rohner

So, if you think about it, a lot of this was also because of the support of the Global Alliance carrying this initiative out into the wider world to Asia, to Australia, to North America, even to Latin America and Africa. So, I think that’s how our movement is having an impact far beyond its own membership.

David Reiling

Yeah. That’s fantastic. And I can tell you from a bank who we did our first disclosure this past quarter in June, and again for those who may be– PCAF is a new term. Again, it’s the Partnership for Carbon Accounting Financials. You can google it very easily. I would encourage you if you’re a banker that is not participating to really look it up and encourage your organization to do so.

David Reiling

Everything begins with the truth. And so, you need to know where your institution is from a carbon footprint in greenhouse gas emissions in which to then move forward to improve it. So really put a little emphasis on that because my opinion, the sense of urgency is there for our planet.

David Reiling

And so, we really do need to make some progress quickly. And it’s going to take the likes of not just the leaders of financial institutions. It’s going to take the likes of everybody inside, as well as the board of directors, but the employees with inside these organizations to really push change forward as well as the customers of the institution.

David Reiling

Well, Martin, it certainly has been a pleasure talking with you today. But there is one last question that I have for you as we want to transform the banking system. As we look into the future, what do you think the next generation of banker looks like?

Martin Rohner

The next generation of banker– I think he or she will be curious, reflective, compassionate. He or she will take a strong interest in social, political, and environmental topics, strive to apply his or her banking skills to making this world a better place. I think that probably sums it up. And I think all this will require that that banker is guided by very strong and reflected values which you don’t just get taught at a school, but you have to learn them through life experience and through thinking about life.

David Reiling

Wow. So very insightful. Thank you for that. And one to take to heart in terms of what the future of the NextGen banker looks like. Well, Martin, thank you for taking the time to sit down with us today and for changing the banking system to serve both the people and the planet. You have some big shoulders and big duties, but we really appreciate all the efforts. And thanks for being with us today.

Martin Rohner

Thanks a lot for having me, David. It’s been a pleasure.

Becca Hoeft

For this episode’s musical feature, we’re showcasing Emorie. Emorie is all things organic, alternative, and cinematic from sound stripe artist Jessie Villa. Here is Golden Age by Emorie.

[MUSIC – EMORIE, “GOLDEN AGE”]

Becca Hoeft

That was “Golden Age” by Emorie. You can find more of Emorie’s music on Spotify. If you would like your music featured on the NextGen Banker podcast, just email David at NextGen-banker.com with a link to your music and website. Thanks for listening to the NextGen Banker podcast. We’ll see you next time.