Writer: Joey Garrand
2 min read January 2022 — Home to the world’s first climate-focused commercial bank and a young population, Tampa Bay is poised to lead the United States in an era defined by ESG.
According to Bloomberg Intelligence, ESG assets globally are expected to reach $50 trillion by 2025, or one-third of the projected total assets under management globally. While Europe accounts for half of global ESG assets, the United States has experienced more than 40% growth in the past two years and is forecast to exceed $20 trillion in 2022.
Based in St. Petersburg, Climate First Bank is the world’s first climate-focused commercial bank. In an interview with Invest:, Founder, Chairman and CEO Ken LaRoe shared his perspective on the rapid acceleration of ESG adoption. “It took time for green banking to become a topic of conversation in the industry. It wasn’t until 2017 that the term ESG (environmental, social and governance) entered the common vernacular.”
As exemplified by the over 40% growth experienced in the ESG asset category over the past two years, the pandemic was not only a crisis of health and economics but of inequality, shining a greater focus on social and environmental factors. According to Senior Managing Director of Bernstein Private Wealth Management Joel Stevens, ESG is no longer a topic that can be ignored. “ESG is here to stay and investors, and even more so fiduciaries overseeing endowments and foundations, can no longer dismiss companies’ environmental and social decisions,” Stevens told Invest: “Before the pandemic, traditional investing viewed economic and social issues as largely distinct spheres where companies existed to enrich their owners and shareholders. Now, you can’t fully understand the economics of a business without understanding how a company interacts with customers and society.”
Top of mind for every investor is the bottom-line impact of incorporating ESG into their portfolio and the possibility of lower returns than usual as a result. Climate First Bank’s experience — and strong results — suggests those fears are unfounded. “I believe that if we don’t deliver financial performance in the Top 10% of all banks, no one will take us seriously,” LaRoe said.
Climate First’s portfolio is largely centered on commercial real estate. “About 30% of the energy consumed in the United States is through buildings, so we have a clearly defined program that relates to sustainable buildings,” said LaRoe, with solar panels among the significant items it addresses.
Looking ahead, Tampa Bay will be a leader in the charge toward the $50 trillion global ESG asset milestone. LaRoe noted how, after many discussions and analyses, the St. Petersburg area in particular was ideal for Climate First’s mission. “The community has the perfect ethos and culture for what we desire to accomplish, which are the primary reasons why we chose the area.”
The benefits for customers are also noteworthy. Establishing ESG as a priority and supporting positive change helps to ”deliver better outcomes for clients,” noted Bernstein’s Stevens.