–> This is a pre-event interview in the run-up to the Leaders in Sustainable Finance Event on 26 January 2023
Jeroen (interviewer): Thank you, Richard, I’m very glad you are taking the time to talk to us. First of all, could you introduce yourself?
Richard: Yes, my name is Richard Kooloos. I am the head of Social Impact at ABN AMRO’s Sustainability Centre of Excellence. I’ve been active in the sustainability field for about fifteen years.
Jeroen: Have you always worked for ABN AMRO or did you work for other organizations before?
Richard: I’ve worked for a number of financial institutions, but I left ABN AMRO to join Fortis back in the day and then Fortis became ABN AMRO again. So I was absorbed and that’s why I have quite a number of years at ABN AMRO by now.
Jeroen: It’s probably hard to summarize, but if you would try, what do you like so much and what is so interesting about your current role?
Richard: First of all, it’s not that obvious why a bank should focus on social impact and human rights. But once you explain that banking is about people, it becomes clearer. With our organization we already have 20,000 people working at the bank, but we have 4,5 million retail clients. And through the 400,000 companies we serve, we already reach another couple of million people. So, by changing the way decisions are made within this bank, you can have an impact of ten to fifteen million people. And if you look further down the value chain of the companies we serve, you can actually influence the lives of maybe tens or hundreds of millions of people. So the lever that we have in our hands, to change the lives of people by changing the policies and the actions of a bank, are tremendous.
Jeroen: Yes, so it’s really about impact for you, is that the correct summary?
Richard: Yes, it is really the impact. The other thing that makes it very interesting is that every day, there is something in the newspaper about carbon and about the climate plan. That is all very much defined and it’s still a lot of work and still a lot of work needs to be done, but the path is clear. For social impact and human rights, the path is not clear nor obvious. That’s when I like it, when things are not obvious or clear and where you can actually create new things.
Jeroen: How is it to work within a larger organization, like yours, with 20,000 people? Is it easy or hard to get everyone aligned?
Richard: The story is a story of change. It’s about changing behavior, changing your role, changing the way we look at our role. So per definition it is difficult, because change is hard. I myself find it very hard to change the things I do or the structures I am in. So I’m also aware that it’s hard. But the reward you get if you have changed something is tremendous, at least to me.
Jeroen: If you zoom out to the whole financial services industry, what would you think is the biggest challenge or task at hand? What is for this industry particularly the thing that everyone should or is focused on?
Richard: If you really zoom out, the key role for the financial sector is to turn what we are calling externalities into internalities. So basically, what has happened in the economy in the last 200 years is that we have created in our industrial productive activities all kinds of problems. Whether it’s pollution or labor issues or what have you. But those are often not taken into account in the price of a product or a service. You can often pollute the air for free or you can abuse labor rights for free in large parts of the world. But if you take into account all the negative impacts in your value chain, not only your own production, but in your value chain and give the true price to products and services, it’s a different story. And if we, as a financial sector, take that fully into account in both the risk appetite – what you are willing to accept – but also the price of money, that’s not going to solve all problems, but it’s a huge lever to make sure that basically the polluter pays. The very strong and old principle, that those parties that pollute should pay the price, that should be included in the price of money. To enable us all to do that, that we can calculate it, that we can take it into account, literally and into our accounts, I think that’s the biggest challenge for the financial sector. Because it means changing the rules of the financial sector, changing the rules of the game of the economy.
Jeroen: And from an opportunity perspective, relatively selfishly said for financial institutions, what is the largest opportunity?
Richard: With financial data, we can predict the credit risk of the companies we finance for the next 12-18 months, the short-range radar, quite good. But ESG-data, the sustainability data, provides us a long-range radar. And that means that you have better insight upfront who’s going to prosper and who’s going to fail. And basically, who you should lend money to or not, or under which conditions you should lend money and advise your clients on that and see opportunities for them. Whether it’s M&A-opportunities, financing opportunities or valuable advice you can give. So you basically get a set of additional binoculars if you do this and that enables you to better do the core role as a banker and that’s to assess risks.
Jeroen: Recently, I interviewed Frank Elderson, who is at the European Central Bank Board. He said almost literally, “Without the financial services industry, we’re not going to make it.” So without financial services, no way it’s going to work to deal with (for example) climate change. That’s basically his statement. Do you agree with that?
Richard: I agree with that, but it’s also the other way around. We can’t do it on our own. That’s the pitfall that we see sometimes see with politicians or civil rights organizations: If only we could just push the banks or the other financing parties, then we solve the problem. That’s also not true. So he’s completely correct, you can’t do it without the financial industry, but you can’t solve it only through the financial services industry. So we really have to do this together with companies in the real economy, together with politicians, together with civil society, together with regulators. So we have to join forces and work together. The threat that we also see as a financial industry is that we’re going to be left as the party to solve everything. That’s a task that we can’t fix. But as long as we are stepping in together and have the guts to do that, really have the guts to step in because it’s a major transition we have to go through, then we can do it together and we can solve this.
Jeroen: That statement makes total sense and seems to be applicable to other actors, like lawmakers, regulators and as you said, NGOs as well. That is a great segway to the Leaders in Sustainable Finance event, on the 26th of January 2023, because it will include NGOs, big business, government regulators and of course financial institutions.Are you looking forward to this event?
Richard: Yes! I’’m looking forward to the event because it is an environment to be open instead of being defensive. To really listen and to really debate with all the different partners in the way a debate was originally designed: to learn new things. The worst thing we can do as a financial sector is to be defensive and to hold back. Generally speaking, we are finding it challenging and maybe even scary to really step into this change, because it is unknown and bankers are not particularly known for taking unknown risks.
Jeroen: Thank God they aren’t!
Richard: Very true, but equally, we really have to embrace this change, acknowledge the opportunities and really step into it, hand in hand with regulators, NGOs, corporates, society at large and really live this kind of old way of saying: we’re all on the same boat and we should all survive together and not go down together.
Jeroen: Wonderful! Thank you so much, Richard, and I’m looking forward to have you at the event. Again, thanks for this interview.
Richard: You’re welcome!
–> Richard Kooloos, is the head of Social Impact at ABN AMRO’s Sustainability Centre of Excellence and is a member of the Advisory Board of the Leaders in Sustainable Finance Event that takes place on 26 January 2023.