ECONOMICS AND TRADE | Achieving growth through open markets
24 March 2008
Taiwan-born Entrepreneur Finances "Green" Business Development
Says energy conservation generates profits while saving environment
Washington -- Peter Liu started his career in chemical engineering. But he moved on, parlaying his interest in environmental issues into founding the first “green” bank in the United States.
It sounds like a real stretch to go from a job with a big oil company to starting a bank that specializes in making loans for environmentally sustainable construction projects. But Liu had a good idea at a great time.
He founded the New Resource Bank in San Francisco in November 2006 with $24.7 million in assets. It has been growing since then. It now has $180 million in assets and more than 1,000 customers, both individuals and companies.
“I think the focus in the world on the climate change issue raised green consciousness,” Liu said. “We have become the preferred bank for green businesses because we understand it.”
In the past, environmental consciousness was a social issue, not a business one. Today, he said, it means saving energy and represents good business.
“People are realizing that green makes sense economically and creates new jobs. The old mischaracterizations have gone away,” he said.
It is unusual to start a niche bank, said Mark Tenhundfeld, senior vice president in the Office of Regulatory Policy at the American Bankers Association in Washington.
But, Tenhundfeld added, “Banks are realizing there are a lot of opportunities to be the solutions to the problems that our economy is having and our environment is having.”
Liu, 42, immigrated with his family to the United States from Taiwan when he was 12 years old.
After high school, he earned an engineering degree from the University of California at Berkeley and started his career at oil giant Chevron.
“When I first got out of college, I wanted to get a job with the biggest company that paid me the most,” he said.
But over time, his passion for the environment grew, as he saw that refineries in Japan, for example, were far cleaner than the ones on the U.S. Gulf Coast.
“While Chevron and many of these companies have great people, it’s often hard to turn around a big ship. It needs government leadership or entrepreneurial innovation,” Liu said.
After a stop at Princeton University where he received a master’s degree in public policy, he spent time working for two financial institutions – Credit Suisse and Chase Manhattan. Then he had the idea for a green bank.
It took Liu and his partners more than a year to make it through the regulatory system, get backing from the Federal Deposit Insurance Corporation (FDIC) and find investors to get the bank off the ground. His partners include a wide array of investors – including Bob Epstein, founder of computer software company Sybase, and Mitch Kapor of Lotus Development.
Epstein said that he and Liu started by exploring whether a commercial and chartered bank could support green businesses and consumers.
“Businesses that pay attention to environmental performance do better than businesses that don’t. That seems to be the case in every industry,” said Epstein, founder of E2, a firm that helps governments and companies develop green policies.
There is no shortage of green projects seeking financing, especially in California. The bank is financing a housing development in Martinez, California. It has provided loans to construct commuter drop-off points connected to the public transportation systems in Berkeley and Oakland, California, and City-Car Share, a business involving sharing rental cars for short periods.
Environmental protection is not the bank’s only interest. It also launched itself as a bank that makes a variety of loans available to anyone in the community. When a person applies for a loan, the bank makes two offers -- one for a traditional loan and one that is discounted for green construction.
Its loans are creative. For instance, the bank introduced a new solar financial program that helps homeowners finance solar energy projects with no money down. It also provides a discount on loans for green projects in the commercial real estate or multiunit residential sectors.
“It’s becoming something where a blend of good options for the consumer work just as well as conventional ones, but it also is much more sustainable,” Liu said.
With his early success, Liu has plans to expand his green bank to other parts of the country.
“We don’t intend to be everything to everyone. We are looking to go to communities where the belief is that sustainability can be a real market option,” Liu said.
For information about how entrepreneurs put their vision to work in a new business, see “Creating a Business Plan,” from the Bureau of International Information Programs publication Principles of Entrepreneurship.
