'Banks are realising that there needs to be responsible selection of clients and allocation of capital,' said Joel Posters, head of sustainability for Asia-Pacific at ABN Amro. 'A lot of financial institutions are building up staff internally to identify and manage social, environmental and ethical risks within a client portfolio.'

Some banks have departments that specifically handle environmental, social and ethical issues. ABN Amro, for example, has a team of eight staff working entirely in this field, one of the biggest sustainability departments in any bank.

Financial institutions without a dedicated department usually still employ staff to deal with how to integrate attitudes, structures and products that support sustainability into business practice.

'We offer a normal range of banking products, but some of them focus on a particular segment, such as the renewable-energy segment,' said Mr Posters. 'However, our business has also changed as we now offer microfinancing to different clients. We structure products around ecological themes such as solar, wind and water energy and broker carbon credits.'

Sustainable banking has a wide reach and includes a diverse spectrum of customers, from corporate to commercial to community clients. Affluent individuals can invest in funds that support environmental initiatives, while the poor can benefit from microcredit deals.

Products such as HSBC's Green Card, which will launch in April and is the first of its kind on the Hong Kong market, reach a wide range of consumers. The card is made of chlorine-free material and customers will receive statements by e-mail to help cut down on paper consumption. HSBC will donate an equivalent sum of 0.1 per cent of cardholder spending to a programme that funds building roof gardens in local schools.

'We expect a very positive response to the card from our customers,' said Louisa Cheang, head of personal financial services for Hong Kong. 'If we can mobilise customers to participate in environmentally friendly initiatives we can make a much stronger impact in the community. Banks can definitely do more in green initiatives.'

HSBC said that while profitability was not its No1 consideration in developing its green card, it was good business.

'We mainly want to use this product as an indicator of our commitment to green initiatives,' said Ms Cheang, 'but customers' positive response and take-up rate means we can get good returns, too.'

ABN Amro has also had success with its initiatives, from corporate investment indexes in the environmental sector to private investor products centred on climate change and water which gave returns better than the market average.

With these results, it comes as no surprise that the market is growing. According to the World Bank, the corporate market for climate change initiatives tripled in 2006. Mr Posters said that while the market was affected by a variety of things, the future looked bright.

'The price of oil, government policy on renewable energy and subsidies, the follow-up to Kyoto and what happens to the climate all affect sustainable banking, but as a whole the market will continue to grow,' he said.

A recent report published by Ceres, a US network of investors and public interest groups seeking to address challenges due to climate change, found that progress was being made by banks, with European banks at the forefront and US banks following closely behind.

However, it also found significant room for improvement. Of the 40 banks surveyed, only a dozen had board-level involvement in climate change. Only 14 adopted

risk-management policies or lending procedures that address climate change in

a systemic way, and only six said they were formally calculating carbon risk in loan portfolios.

Developing markets are now showing signs of getting in on the act. Brazil and India are active, and mainland China is dabbling in green lending.

The products offered in different regions are often tailor-made to suit the needs of different clients.

But sustainable banking does not only please clients. For employees, it makes satisfying work.

Ms Cheang said: 'In our recent survey, staff involved in environmentally friendly or community activities have higher scores in terms of job satisfaction. This is great encouragement.'

Employees working in sustainable banking often have personal interest in, or a background in, the various issues.

Financial institutions employ environmental engineers and lawyers, for example, but especially on the commercial side, knowledge and experience of banking itself is key as the application of products require the basic rules of banking.

While some jobs involve full-time work in the field, others allow staff to incorporate sustainability into their usual routine.

Staff working in human resources, communications, services, waste removal, information technology and building management all deal with sustainability issues - if their organisation does.