The Bank of Guam is a community bank embracing environmental action. The Bank is a leading lender to individuals and small businesses within a regional network that spans near 2,500 miles, three time zones and nearly nine primary languages, not including its San Francisco branch. It provides access to checking, savings, debit, credit, home loan and investment services to individuals, plus commercial loans and investment support to small businesses. They are a vital part of the community on the islands of Guam and across Micronesia in the Pacific, providing funding for local businesses and individuals – especially in rural and remote areas. Learn why the Bank of Guam is investing in transparency and disclosure to advance their business goals.
On the frontlines of the climate crisis
The Pacific Islands are profoundly vulnerable to climate change. The region is already feeling the impacts of environmental degradation, food shortage and extreme weather.
The islands are also located in the infamous “typhoon alley,” where wind strength can reach 180 MPH, such as during Super Typhoon Yutu in 2018. Communities in Saipan and Tinian bore the brunt of those winds and are still rebuilding three years later.
Destruction to the local environment is prevalent and pressing. Coral reefs, which serve as protective boundaries against storms and tsunamis, are being degraded, and the rising coastlines also put arable land at risk.
Food insecurity is a critical risk faced on the islands. Due to colonialism and westernization, the islands have come to depend on imports for more than 90% of their consumption, but shipping necessary food and supplies is carbon intensive and unsustainable. Disrupted global supply chains during COVID-19 launched a renaissance of farming as a way of providing homegrown nourishment to families, but farmers in Guam depend on local financing to sustain this self-sufficiency.
The Bank of Guam is one of nearly five thousand community banks in the United States. Community banks, generally defined a bank with less than US$10 billion in assets, play a critical role in connecting individuals and small businesses to capital, particularly in rural and remote areas where larger firms may not operate, which provides crucial economic support informed by nuanced understanding of local issues.
As an integral part of the community, the Bank of Guam depends on the resilience of the region as much as it supports it. Climate instability is a major risk for its business, as environmental risks threaten its ability to operate and serve the community in the future. At the same time, as a financier, the Bank provides funding for local businesses and projects which further resiliency against climate change. Enhancing the sustainability of the Bank would have cascading benefits to the entirety of Guam and the Pacific Island region.
For community banks, disclosing through CDP provides a way to bring environmental risks and opportunities to the fore. To protect against environmental threats in the future, the Bank of Guam discloses to identify, measure and track them now. Disclosing helps the Bank unveil opportunities and solutions which otherwise might go unnoticed.
Disclosure also helps community banks access capital. Investors who have a stake in the Bank of Guam value its commitment to transparency through CDP disclosure. “Proactively disclosing on environmental impact is crucial for community banks – which often have fewer resources than larger banks – as the federal landscape around environmental disclosure shifts,” said Rob McDonough, Director of ESG and Regulatory Initiatives at Angel Oak Capital Advisors, an investor in the Bank of Guam. “As an investor, we value voluntary disclosure as a way to protect our assets and ensure that our investments are aligned with our values and goals. By disclosing their environmental impact, risks and opportunities, The Bank of Guam is taking a critical step to measure and manage these variables, prepare for potential future regulation and manage their narrative in the market to attract capital.”
Ratings agencies also value the apples-to-apples comparison
that disclosure provides. “Environmental
disclosure can provide useful insight into related risks and opportunities of
community banks,” said Pat Welch, Head of ESG at KBRA. “KBRA weighs
credit-relevant environmental risks in its ratings, and believes increased
disclosure around environmental risks is a positive trend for the market writ
large. Through their disclosure, the Bank of Guam is signaling to investors
that they are actively monitoring and managing those risks and opportunities in
the face of climate change.”
Looking to the future
Community banks are an integral part of the economy, despite being often overlooked for larger capital markets players. But they have a crucial role to play in serving their communities and local businesses – and they can be a vital force in bolstering regional resiliency in the face of the climate crisis, especially in rural and remote parts of the globe. The Bank of Guam faces many risks – but they also have an opportunity to experiment with innovation, learn from past challenges and progress toward a safer, secure future. By disclosing through CDP, the Bank of Guam has taken a necessary but important first step toward climate action and resiliency – for its business, but also for the benefit of the entire region.