[MUSIC] I'm here at the head office of Rabobank in Utrecht, in the Netherlands. I'm here with Bas de Ruiter, director of sustainability. Rabobank is one of the first banks to embrace sustainability. And Bas, can you explain how you incorporate sustainability in day-to-day banking? >> Sure. Thanks for being here Dirk. Nice to have you. Rabobank, of course is a cooperative bank and a bank with the large history in agriculture, and that also still is our approach. So our mission today is what we call growing a better world together, in which we see a direct link to our roots. We are directly focusing on our farming finance globally, and we are also servicing the communities in the Netherlands. In both parts of the strategy, we want to help sustainable development speed up. So in farming, we intend to help our clients to move from their current practices into more circular practices, of more regional practices. And in our banking in the Netherlands, we try to offer solutions to make it interesting for people to do the right sustainable thing. So it's integrated in the mission, it's part of our identity as a cooperative bank, and we intend to use it in our day-to-day client servicing. We've got five steps coming up for the next five years. One of which is very crucial also in our culture shift within the organization. We used to have trend analysis as the starting point. So we indicate what is happening in the world or ready for it in. If we move that to vision development, which says that we take a stance, where should it go? How do we think that the sector should develop? And on the basis of that, we help our clients. Second step is then, that we know what the performance is over client. So we invest a lot in monitoring performance. We need transparency of the client, of course that. And the third step is, that we want to not just only change the behavior, improve the performance per client, but we also want to help a sector whether it's dairy farming or it's the mortgage of our private clients. We want to move the whole system towards a more sustainable way of working, that's transition banking as we call it. And fourth step is then, that we do so in offering products that are better and more favorable for our best clients, and can actually win from the competition. So we operate in a competitive environment. And the last step is that, we try to hire the right people, train them properly, and incentivize them to help clients to make that transition. So an average employee of Rabobank that serves his clients, will as part of performance management have an indicator where we measure the sustainability performance of his or her clients, and they be seen as part of the performance of the employee itself. >> But you mentioned that all your account managers discussed sustainability with the clients, how do you train all your account managers? >> Yeah, let me first of all identify that, of course, in the way our staff is trained when they were educated, often they have a bachelor's degree or a master's degree, they usually do not get sustainability knowledge as part of their curriculum. So what we really strive for is to compensate that for the short term. But what we hope for is that, in moves like this, we are actually able to help people understand sustainability issues better as part of their education. Because we think banking is shifting rapidly from providing money to providing knowledge and networks. So our clients need to be better capable of making those transitions. And our people need to be able to explain it to them, not to be the specialist and no better than a farmer, how a dairy farm should be managed sustainably, but they need to have the information of the performance, and they need to be able to understand what that means, and how we can help that client to make the next step. Now in order to do so, we do train them on content or knowledge. We help them and we improve day by day the measurement of the performance of the client, and also the benchmarking to other clients in the same sector, in the same country. And once we have that knowledge in place and we have explained it to them, we also literally trained them, how can you have such a dialogue in a constructive manner. Because of course, the last thing a client wants is that the bank comes along to tell them how to run their business, that's their responsibility, and that is why they have become entrepreneur. And our bankers need to be able to show how the next step can be both productive and efficient for the entrepreneur, and how they can actually themselves benefit as a banker through a lower risk and through a long-term performance of the client. We do so in training on knowledge, we do so in training on techniques of having a dialogue. But it's also about our senior management making a clear stance that being a banker today simply involves and incorporates a dialogue on strategic issues, including sustainability as part of their regular work. So it's about message at the top, it's about training programs, and it's about practicing and discussing between colleagues. >> Rabobank is a leading bank in food and agri, the environmental standards for food, for agriculture, and for land use are changing. Where do you see the opportunities for Rabobank? And also, what do you do with legacy loans to old practices? >> I think it's a tremendous shift what is happening in agriculture these days. Of course, we all know the climate problem. But for reasons of having a lot of people in a tiny little country in the Netherlands, we also have problems on the intensity of our farming system. So what we try to support is a transition towards a more sustainable agricultural system in which our current clients that get older as well have the possibility to either handed over to their family, the next generation while changing the farming practices. Or we help them and that's also to a significant degree of the case to stop their farm at a natural moment in time, in which they still have a pension, in which they still have a place to live either in the village or in the existing farmhouse. And where we can actually focus more on the knowledge we have in this country on farming practices and less so on the direct primary production. And to give you an example, we are for instance a very active member of the Delta Plum, which is a typical word for the Netherlands in fighting the water on biodiversity recovery, where we look for ways to actually create a earning model for farmers to operate in a sustainable way. While at the same time, changing their farming practice to one that actually helps to preserve and to protect biodiversity. So we are then, the linking pin between the retail, the supermarket, the farmer but for instance, also the dairy companies that actually take the milk from the farmer to the retailer. And we try to negotiate a way in which that farmer will get a better price if he incorporates sustainability and biodiversity performance in its day-to-day operations. It's a multi-stakeholder process. It's one where we take a wider responsibilities than just financing, but it's the only way I think to actually make that important and rapid transition that is needed in the Dutch countryside. >> Rabobank is based in the Netherlands but isn't large international player in food and agri, where do you see the biggest changes in opportunities? And also, how can Rabobank contribute to the global sustainable development goals? >> Yes, agreed. Farming practices on a global level need to change as well. Be one of the biggest banks in food and agriculture financing globally. We also feel the responsibility to contribute to solutions. But it needs to be said that, in the Netherlands, this pressure cooker on sustainability and farming is much at a higher temperature than in many of our other countries in which we operate. So we are usually the only or the first bank to discuss it in society there, for instance, in Brazil, in the United States, in Australia, and New Zealand. But we want to help our clients also there to make the shift towards a smaller footprint both in climate terms, but also in nitrogen, phosphorus, biodiversity, wate. And the way we do it is to actually design products that help them incentivize them to do the right thing. So for instance, in our Brazilian business that we've set up from the mid-1990s, we avoid all regions in which deforestation is a big problem. But at the same time, we provide a lower interest rate on the loan if they are a front runner in sustainability performance. So we measured that on annual basis, and we incentivize them. Next to that, we work in public-private partnerships. So for instance, with UNEP, United Nations Environment Programme, World Wide Fund For Nature, but also the World Business Council for Sustainable Development. We design public-private partnerships in which we finance transitions that have a much higher risk and require a longer term financing, partly derisked for instance by the government. So we have a large fund called AGRI3, food, farm, forest, the three Fs in which we try to help our farmers to stop deforestation, to start reforestation, to sequester carbon, but to also get a long, long to make that possible such a transition that is then partially derisked by the government. So, innovative partnerships, knowledge, networks, and then making it profitable to do the right thing. >> Thanks for the very interesting examples of Rabobank. What do you see as the biggest challenge to incorporate sustainability across the entire banking system? >> I think what is needed is a generation switch. As I indicated earlier, the people who work here now have had two little education on holistic solutions, holistic finance solutions, in this case. So we need people with the right knowledge that is moralistic, and that requires training of the people that currently working here, but it also requires a more holistic education system for the people in the generation to come. But in addition to that, fortunately, we see a generation that has much more interests and is much more aware of our societal problems of today. Look at the climate crisis, but we also see it among young farmers, our clients when it comes to the direct problems of their farming future, the nitrogen, the crisis around water, and about fertility of soil. So the next generation is more aware of these topics. And the interesting thing is, they have more jobs to choose between. So what we see is that, also within the organization, people are increasingly aware that if we do not integrate this purpose in a very visible way in our strategy, the new generation will simply choose another employer. And that is also shifting the mindset of senior management and people of my generation, slightly older. In changing the purpose, the mission of strategy of the bank as a whole, so I'm convinced we're making the transition. What I would hope is that we are fast enough. And as Karl Popper already said, we have the moral obligation to be an optimist, so let us hope we're in time. >> Okay, now I hope this MOOC will help speed up the training and the transmission of mindsets. And thank you for contributing Bas. >> Nicely put Dirk, and I look forward to cooperate on the education side in order to make that work together. Thank you. [MUSIC]
