Issue 03 of our print magazine is available to buy now

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CEO Insight: Peter Flavel of Coutts Bank

CEO Insight: Peter Flavel of Coutts Bank

Peter Flavel is the Chief Executive of Coutts, one of the oldest banks in the world. He discusses being the driving force behind achieving their B Corp status in July 2021.
By Hannah Finch
16th Mar 2022

You are the UK’s largest private bank to become a B Corporation. What inspired you to take that step?

Five years ago when we were thinking about our ESG investing, we asked ourselves: should we set up a new set of green funds alongside our existing funds, or should we put ESG filters through all of our funds? Our conclusion was that all of our funds should be green, not just a subset of them. So it started there. Then we questioned how we would hold ourselves accountable. We knew about B Lab because several of our clients are B Corps. At first, we thought it was mainly for smaller businesses and that perhaps it would be a bridge too far. But as we got into the business impact assessment, we realised it was possible.

“I think the penny has dropped for business that the cost of inaction is now greater than the cost of action.”

How has the process of becoming a B Corp impacted your relationship with clients?

The process broadened our view about what the path to net zero actually meant. Previously, we’d been focused only on our funds, but we quickly began to consider our impact across other areas of our company.

Pre-Covid, we had a wonderful event that David Attenborough attended. He said that one of his greatest skills was his ability to communicate: to harness the power of holding people’s attention in a room. That was a lightning bolt moment for me – I realised that it’s not about us. We have to keep the house in order, but actually, the leverage is found in the clients in the room. So we want to encourage as many of our 20,000 entrepreneurs to join us on the journey of becoming a B Corp.

When people think of Coutts, they tend to think of the history, the inherited wealth and the fact that we are over 300 years old and the eighth oldest bank in the world. And we are all of that, but we’re also a lot more: modern, contemporary, relevant – and now, a B Corp.

You were one of many business leaders to attend COP for the first time last year. What was your experience of the conference from a finance perspective?

I think the penny has dropped for business that the cost of inaction is now greater than the cost of action. Business was finally in the room. I think that’s due in no small part to the convening power of His Royal Highness Prince of Wales through his Sustainable Markets Initiative. At that event, I was one of five very senior people in commerce and banking – none of whom had been to a COP before.

John Kerry, also at the event, had been to most COPs and said he felt all COPs had been failures except for Paris 2015 and Glasgow 2021. Paris because of the Agreement, and Glasgow because business was there.

There was also a network effect. When you’re in the room with your peers, all talking about the same thing, you leave thinking: this is what the best people in the world are saying needs to be done.

Regulators and governments have got a role to play to set the rules and to have transparency. But then the private sector, and particularly the finance sector, needs to play a role in funding the green transition.

Prince Charles said that the road to net zero is like the Marshall Plan, which was the rebuilding plan after the second world war.

It was a wake-up call for me; infrastructure must be rebuilt, and the funding has to come from somewhere. Banks, asset managers, insurance, pension funds – they all need to get on board.

But redesigning infrastructure on a global scale is only half of the issue. The other 50% is going to come from SmAs. The hair-dresser, the butcher – all those businesses on the high street are going to have to change the way that they operate as well.

People recognise that this is systemic and that everyone has a role to play; governments and regulators are not going to be enough. There’s a broad consensus in the business community that businesses now need to lead this. We need to recognise that thinking it’s a government problem isn’t an option anymore.

“It’s easy to say it’s all greenwashing. The only way you get around that is by providing metrics.”

Have you always been passionate about climate and environmental action?

It has evolved over time. I hadn’t really recognised the speed with which action needs to be taken. Growing up, I spent a lot of time on my grandfather’s farm so I’ve always had an affinity to the land. When I was 14, I remember visiting the Franz Josef Glacier in New Zealand and my grandfather saying, “When I was your age, the glacier finished all the way over there,” and pointing 150 metres away.

So from a young age, I was aware of the issues of climate change, but it’s only in the last five years that I’ve become more aware of the urgency that is needed.

What you’re doing at Coutts is pioneering. Which other leaders do you find inspiring?

Someone who I like and who has a very hard job is Bernard Looney. He has an honest de- sire to get BP on the route to net zero. It’s a really difficult equation, but he’s up for it. It’s way too easy to say that the big energy companies caused this problem and therefore we should shun them. Actually, they can be a big part of the solution.

The big energy companies need to get on the path to net zero, and to do that, they need to be funded over the right period of time and held accountable for the progress that they make. I’m enormously impressed by Bernard’s personal commitment to get BP into shape. It’s a tough gig.

What do you want your legacy to be?

I’m towards the end of my career. I want my legacy to be that Coutts is firmly on the path to net zero. We’ve set ourselves a target to reduce the carbon intensity of all of our funds by 50% by 2030. And I want to make sure that we’re more than achieving that trajectory by the time I leave the bank.

You could sit back and say, ‘it’s all too hard’. But with that approach, we’re never going to get there. You’ve got to start the journey with one small step, and then it will get better and better as time goes on. It’s easy to say it’s all greenwashing. The only way you get around that is by providing metrics. If they show you’re not improving – then OK, take the criticism. But if you are improving, it’s proof it’s not just greenwashing.

It’s easy to complain about something. It’s much harder to determine what needs to be done to fix it. I think that’s what I’d like my legacy to be: action.