How One Florida Bank Is Embracing the Green Banking Agenda

People often say "the third time's the charm." Having just launched his third bank, one community banker believes he's finally got the winning blueprint: Start a net-zero emissions bank on day one and never stray from that.

How many people can say they’re starting a bank — for the third time — in their early 60s with the hopes of revolutionizing the financial industry? Kenneth LaRoe, Founder and CEO of Climate First Bank, thinks he is doing just that.

LaRoe’s big idea? Climate First is the only bank to be at net-zero emissions the day it opened, and has a goal to be net-zero for the entire lifetime of the bank. One of the promises Climate First makes is it will “never invest in extractive industries.”

Climate First Bank logo

Climate First launched on June 1, 2021, in St. Petersburg, Fla., and is currently offering a platter of consumer and business banking services, including online banking, cash management, and — what the company says it will do best — sustainable lending.

“The status quo of sustainability is no longer an option,” LaRoe tells The Financial Brand . “The only rational goal to perpetuate humanity is to actually reverse the damage done by our carbon addiction.”

To celebrate the bank’s launch, Climate First Bank held a grand opening, called “Endless Solar.” One of the prime attractions was a Tesla, filled with cash, parked inside the bank. When customers arrived, they guessed how much money was in the car. Whoever guessed it right, got to keep the cash in the electric vehicle.

Grand opening endless solar event Climate First Bank

( Dig Deeper: Is Eco-Friendly ‘Green Banking’ a Sustainable Strategy? )

The Strategies Climate First Will Bank On

Even though his strategy is unconventional for a community bank, LaRoe knows he’s up against big players in the space. Chase, Goldman, Citi have all committed major resources to ESG (environmental, social, governance) efforts, not to mention fast-growing neobanks like Aspiration. To keep up, Climate First Bank will need to perform in at least the top 10% of banks and credit unions in Florida, LaRoe estimates.

LaRoe sources most of his bank’s green strategies from “Drawdown,” a book by Paul Hawken and Katharine Wilkinson, which, he argues, is the “most comprehensive plan ever proposed to reverse global warming.”

While the book details 100 of the most proactive strategies for any organization or individual to backpedal their impact on climate change, LaRoe says Climate First will focus on 12 to create what he refers to as the “built environment.”

  • Refrigeration
  • Wind Turbines (Onshore)
  • Reduced Food Waste
  • Plant Rich Diet
  • Rooftop Solar
  • LED Lighting – Household
  • Solar water
  • Heat pumps
  • LED Lighting – Commercial
  • Building Automation
  • Smart Thermostats
  • Smart Glass

LaRoe goes on to explain that initiatives like the last seven listed above all can be easily influenced by a community bank lending policy. Products can be developed to finance retrofits or upgrades to residential and commercial projects.

“Additionally, developers and builders can be encouraged and incentivized through pricing to construct projects that attain certain measurable standards such as LEED, Green Globes or Florida Green Building Coalition,” he maintains.

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Changing What People Believe Can’t Change

LaRoe says he wants to challenge the traditional concept of lending and get customers to integrate different sustainable techniques into their physical infrastructure.

“I tell people I’m a rabid environmentalist, although, in retrospect, I really didn’t know jack about what I needed to know. I’m also a rabid capitalist. I think the two have to go together.”

— Ken LaRoe, Climate First Bank

For instance, when one ESG office told him they wouldn’t sign off an investment in the bank because LaRoe planned to lend to local convenience stores and gas stations, he decided he would try and influence his target clients.

“The [ESG office] said ‘it’s dirty energy’ and ‘why should you support something that’s perpetuating the problem?'” LaRoe explains, adding his team quickly realized they could provide funding for convenience stores under the condition that management would install solar panels and electric vehicle charging ports.

And when one convenience store owner put in a request for a $5 million loan the next week, he didn’t complain about LaRoe’s demand. The owner acknowledged he’s not going to be pumping gas 20 years from now.

LaRoe says he does not plan to work green deposits into his product lineup immediately, which has triggered most of the ESG conversation in the financial industry.

“I would definitely like to incorporate green deposits, I just don’t know what it looks like yet,” he explains. Green deposits are consumer deposits which a financial institution ensures will go toward sustainable investing and loans.

( Read More: Banking Must Take A Stand On Tough Social Issues )

A Banker’s Long Road to Green

Not every financial institution out there is going green yet — and nor do they necessarily have to. Even though consumers vocalize a desire to see social activism on behalf of their bank, it does not mean a lack of activism would be a deal-breaker for them.

J.D. Power found that “in spite of how important ESG seems to be to most consumers, they readily admit they haven’t looked very hard to find out which firms are actually delivering on these metrics.”

That may be the case at present, but LaRoe isn’t looking back now. He’s invested too much personally and financially into a cause he is passionate about.

Outside the Box:

Even if banks and credit unions must lend to non-green businesses, it’s important to think creatively, like getting convenience stores to install electric vehicle chargers.

LaRoe’s financial career began in 1999 when he founded Florida Choice Bank. He sold it in 2006, in what he considers one of his luckiest moves. And although he rewarded his investors with a chunk of cash from the sale, he wasn’t satisfied.

After a ten-week trip circumnavigating the country in a motorhome with his wife following the deal, LaRoe realized he wanted to start something new, a mission that would fulfill his desire to do something environmentally. He credits it to a book his brother gave him two weeks before he left for the trip: “Let My People Go Surfing.”

It was the genesis for First Green Bank, LaRoe’s second startup. He wanted to start a project that didn’t involve just making people money, he says. The bank launched a week before the 2008 market crash that set the financial crisis in full motion. First Green would be the last bank to secure a charter for the next nine years in Florida.

Although First Green Bank survived the crisis, it was a struggle to make the environmentally-focused strategy feasible.

LaRoe’s team tried to roll out a loan program where anyone developing sustainable projects could get discounts on interest rates. That flopped — it was 2009 and few people were intrigued by projects like that.

Then, he tried a solar loan program. It got a little interest, but not enough to keep investors happy. Eventually he once again stepped away from banking in 2018, and took yet another cross-country trip with his wife, which ultimately inspired Climate First Bank.

In 2021, the world may be ready — even eager — for Ken LaRoe’s quest for an environmentally aligned bank.

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