SVB Financial Group is a holding company that offers commercial banking products and services through its principal subsidiary, Silicon Valley Bank (SVB). Through other subsidiaries, SVB Financial Group also offers brokerage, investment advisory, and asset management services. SVB offers services to startup corporate clients in specific niche areas, such as life science, technology, private equity, and premium wine companies. While focused on early stage companies, SVB offers a global treasury platform designed to work for businesses as they grow. In addition, SVB can guide companies through initial public offerings, investment management, global risk management, expert valuation, and capitalization table management.
Impacts and Opportunities for Banks
A 2013 report from the International Finance Corporation (IFC) highlights up to $1 trillion of investment potential in renewable energy, resource efficiency, and climate change adaptation in Europe, Central Asia, the Middle East, and North Africa. In these areas alone, the IFC estimates the potential investment opportunity of $270 billion in renewable energy generation, rehabilitation of power infrastructure, and improved transmission and distribution. ((International Finance Corporation. “Climate-Smart Business: Investment Potential in EMENA.” November 2013. Accessed March 13, 2014. http://www.ifc.org/wps/wcm/connect/f9d1938041aa9f1f8e23bf8d8e2dafd4/Investment+Potential+in+EMENA.pdf?MOD=AJPERES))
SVB recognizes that “population growth, pollution, and limited natural resources have created an urgent need for innovative cleantech solutions…” For nearly 30 years, SVB has partnered with companies dedicated to solving the world’s problems through technological innovation, including companies supporting the development of solar and wind energy and low-emission vehicles.
Environmental, Social, and Governance (ESG) Risk Analysis
Banks that offer lending services have significant exposure to the indirect environmental risks associated with their financing activities. In an effort to analyze and minimize these risks, banks should have strong environmental and social policies and assessment tools.
SVB states that, “The environmental risks facing businesses today add a new dimension to risk management.” SVB recognizes these risks and is committed to being a well-informed partner to its clients in order to increase business opportunity and decrease environmental risk.
Banks can play a key role in the communities in which they operate. From supporting local organizations to revitalizing neighborhoods and businesses, banks can use their lending expertise and knowledge to have a lasting impact on local communities.
SVB has closed more than $460 million in loans for over 3,000 affordable housing units since 2002. For example, SVB provided a $15.3 million tax-exempt bond purchase/construction loan for apartments for formerly homeless individuals. While these efforts are driven by the Community Reinvestment Act, it provides tremendous social benefit.
Areas for Improvement
All financial institutions have a direct environmental impact stemming from their offices and headquarters. To minimize a bank’s direct environmental impact, common initiatives include efforts to minimize paper use, energy efficient buildings and data centers, and videoconferencing to minimize business travel. Portfolio 21 has asked SVB to improve its reporting on such initiatives.
Country: United States
To the best of our knowledge the above information is accurate and was obtained from sources we believe to be reliable. Neither the information presented above nor any opinion expressed shall be construed as an offer to sell or a solicitation to buy the security. The views expressed are those of portfolio management as of 6/30/2014 and may not reflect current opinions or subsequent events.