Published: July 30, 2015
Most people won’t give much consideration to how their bank uses their deposits, unless it’s a venture that puts their own money at risk. Or they may take an interest if news of controversial financing, for the likes of the arms trade, appears in the press. But for any organisation that aims to make a positive social impact, the values of the bank they use are something that always needs careful examination, in order to protect both integrity and reputation.
An association with a bank that invests in contentious projects, or a bank that encourages clients who make their money from dubious activities, can be highly detrimental to the cause of a charitable, environmentally aware or socially progressive organisation. For example, would a child protection group want an account with a bank that backs overseas companies known for using child labour?
This is where ethical, or responsible, banking comes in; it’s a way for organisations to ensure they do not indirectly profit from activities they consider wrong or harmful. Although responsible banks still have a profit incentive, they abide by responsible values while they do it. Each ethical bank will have its own specific goals and policies, but which will be clearly documented and transparent and organisations must decide if this is a good fit.
But how can you trust what the bank says? Look for people policies and business practices. For example, Real Living Wage accreditation, the Fair Tax Mark, apprenticeship schemes and an employee shared ownership scheme.
A widespread noticeable feature of responsible banking is consistency between the policies it preaches and the policies it applies to its own staff. The funding of housing and welfare projects is also a common strategy, as is involvement in community life and education as well as providing funding where some of the bigger banks simply won’t.
Ethics may just be one of many factors debated when choosing a bank, but for a socially responsible organisation it must surely be one of the most important.
