Santander Tops Goldman as Green Bank on Deals From Cool Offices

The Banco Santander SA symbol is displayed outside the company's headquarters in Madrid, Spain, 2009. Photographer: Denis Doyle/Bloomberg

Attachment: World's Greenest Banks

Attachment: How We Crunched the Numbers

At Banco Santander SA (SAN) headquarters on the outskirts of Madrid, Joaquin de Ena says he’s gotten used to wearing his sweater vest indoors after the bank turned down the heat to trim power use and greenhouse-gas emissions.

“This is OK,” de Ena, director of corporate social responsibility, says with a laugh as he looks at a conference room thermostat as a chilly wind blows through the capital on an early March day. “I’m not sure if it should go any lower.”

Elsewhere on Santander’s 395-acre (160-hectare) campus, Antonio Garcia Mendez is adapting the green philosophy to investments. Spain’s biggest bank arranged a $324 million loan for a U.S. wind farm developed by BP Plc and Sempra Energy (SRE) last year, Bloomberg Markets reports in its May issue.

Mendez, 39, global head of power project and acquisition finance, says his team has closed 40 deals already this year, 90 percent involving renewable energy. Investment in clean-energy companies and projects rose 30 percent to a record $243 billion in 2010, according to Bloomberg New Energy Finance.

Santander’s in-house conservation and ecominded investments won it top billing in Bloomberg Markets’ inaugural ranking of the world’s greenest banks.

The data were compiled by Bloomberg from company filings, websites, social responsibility reports and other public documents. The ranking covers 188 banks with market capitalizations of $10 billion or more in 49 countries, assessing them in two areas: Investments in clean-energy projects from 2004 through 2010 make up 70 percent of the final score. The banks’ efforts to reduce their own carbon footprints account for 30 percent.

Tesla IPO

Goldman Sachs Group Inc. (GS) was second overall and topped the list for green investing. New York-based Goldman, along with No. 4 bank Credit Suisse Group AG (CSGN), managed the $3 billion initial public offering of Enel Green Power SpA (EGPW), Rome-based operator of wind, geothermal and hydropower plants. Goldman also co-led the IPO of Tesla Motors Inc. (TSLA), the Palo Alto, California, maker of the $109,000 all-electric Roadster.

Milan-based UniCredit SpA (UCG) was No. 3. It arranged $1.4 billion of loans for wind farms, solar plants and waste-to- energy generators last year, according to BNEF.

Eight of the top 10 banks are based in Europe, mirroring the European Union’s commitment to curbing emissions through such efforts as the world’s biggest carbon-trading market. The EU plans to get 20 percent of its energy from wind, wave, tidal and solar power and to cut carbon pollution by 20 percent from 1990 levels by 2020.

Environmental Awareness

The only other U.S. bank among the top 10, No. 5 Citigroup Inc. (C), is building on a 2007 pledge by former Chief Executive Officer Charles Prince to invest $50 billion to fight climate change. Spain’s Banco Bilbao Vizcaya Argentaria SA (BBVA) was sixth, followed by Edinburgh’s Royal Bank of Scotland Group Plc, Societe Generale (GLE) SA in Paris, London-based HSBC Holdings Plc (HSBA) and another Paris bank, BNP Paribas (BNP) SA.

Santander measured its global environmental footprint for the first time in 2009 -- and aimed to improve. De Ena, 42, says that raising awareness of environmental issues will help the bank increase its overall operating efficiency and detect financial risks for project loans.

Santander consumed 1,200 gigawatt-hours of electricity that year, equal to 0.5 percent of Spain’s power demand, and emitted the equivalent of 626,505 tons of carbon dioxide. It plans to decrease those numbers by 3 percent a year during the next three years. De Ena says it looks like Santander likely met the first- year goal.

Recycling Batteries

The bank is also parlaying its ties with Spain’s low-carbon companies to make headway in Latin America. It arranged a $149 million loan for a 102-megawatt wind farm in Oaxaca, Mexico. In its Brazilian branches, customers can leave batteries in white bins for recycling. The bank collected 172 tons last year.

“There are markets that have done a lot, like Brazil and Mexico,” Mendez says. “Others are yet to start but are very concerned with carbon emissions and compliance. There is great potential.”

Citigroup, Credit Suisse and Goldman Sachs are also chasing carbon-free investments as they put their buildings on energy- saving diets. Deep in the Madison Avenue basement of Zurich- based Credit Suisse’s 30-story U.S. headquarters, an 800-ton steel chiller produces ice during the evening when electricity is cheaper. The ice is stored in 64 giant tanks to supplement air conditioning.

Credit Suisse says it cut carbon emissions to zero last year. It got about 208 million kilowatt-hours of electricity from renewable sources, accounting for 34 percent of its global energy consumption.

Zero Footprint

The bank uses renewable energy exclusively for electricity in all offices in Switzerland, says Andrew Aulisi, head of sustainability for the Americas. The bank purchased carbon offsets through sources including Europe’s emissions-trading system to offset the 366,000 metric tons of CO2 the bank’s 50,100 employees were still emitting last year, Aulisi says.

Some conservationists aren’t buying corporations’ green assertions.

“As environmental issues become more popular, companies are ready to make any sort of claim to show their green credentials,” says Brant Olson, a campaign director at Rainforest Action Network in San Francisco. He points out that banks also have big-spending clients from carbon-spewing industries like coal and petroleum.

In a troubling sign for Europe’s banks, countries are rolling back renewable-energy subsidies, making investments in clean technologies potentially less lucrative.

Financial Pressures

In the U.S., where the Senate voted last December to extend tax credits for solar and wind producers for another year, clean-energy projects face a different challenge. A glut of shale natural gas, and prices that have tumbled 42 percent in the past five years, are making alternative energy uneconomical.

“Global momentum for clean energy is not abating,” Aulisi says. “But if subsidies are withdrawn, then you’ll see significant declines.”

Citigroup gained its No. 5 ranking thanks in part to two of the biggest U.S. wind deals. It led banks that raised $1.43 billion in loans for Caithness Energy LLC to build the 845- megawatt Shepherds Flat wind park in eastern Oregon, the world’s largest. Citigroup also arranged $1.2 billion in financing for Terra-Gen Power LLC’s Alta Wind Energy Center near Tehachapi, California.

“These are elephant-size deals,” says Sandip Sen, global head of Citigroup’s Alternative Energy Group. The bank had planned to trim its greenhouse-gas emissions by 10 percent from 2005 by 2011. It now bets it can cut 25 percent by 2015.

For Santander’s de Ena, the future means using less and recycling more. He’s sure Santander can meet its goals.

“Efficiency is one of the strengths of this bank,” he says. “Energy savings is an area that we haven’t focused on until now.”

To contact the reporters on this story: Kambiz Foroohar in New York at kforoohar@bloomberg.net

Ben Sills in Madrid at bsills@bloomberg.net

To contact the editor responsible for this story: Michael Serrill at mserrill@bloomberg.net or Reed Landberg at landberg@bloomberg.net