ArtsAutosBooksBusinessEducationEntertainmentFamilyFashionFoodGamesGenderHealthHolidaysHomeHubPagesPersonal FinancePetsPoliticsReligionSportsTechnologyTravel

What are ethical banks?

Updated on July 10, 2014

How is ethical banking different from traditional banking.

In simple terms, an ethical bank is exactly that - a bank with ethics. This is not the same as the mission statement often emphasised by traditional world banks. Most big banks have those and they are usually high-faluting sentences about being open at convenient times and listening more to their customers.

That is just so much hot air ... and about as measurable.

Ethical banking is not the same thing. By way of contrast an ethical bank thinks long and hard about the businesses it invests in and how these companies impact on the planet … and on other people.

Source

Ethical banks are usually smaller … and so safer.

The mainstream banks’ no-longer-so-hidden ethos of 'greed is good' is not for ethical banks, so they are usually smaller institutions, smaller, but more importantly, safer.

The dubious and secretive financial dealings of the over-powerful and greedy worldwide banking sector that continues to force the planet to its knees, causing untold misery to thousands, does not apply to ethical banks.

When the ambitions of investment bankers in the traditional sector got out of hand many of us were financially hurt and the ripple effect from this is still at the forefront of economic debate at the current time.

The most worrying factor is that the world economy seems totally unable to lift itself out of this malaise as it has done in the past. This can only be down to the unwise, high risk investments made by those in the traditional banking sector.

The ethics of ethical banking.

Quite apart from not lending money to the obviously morally suspect businesses, i.e those involving child labour or trading in armaments for example, many ethical banks also support initiatives to improve many aspects of modern life such as community projects or in the areas of sustainability and the environment.

This can mean that they will not approve a loan to any business that pollutes the environment unless that business agrees to clean up its act and, until the company does actually does that, it must pay a higher rate of interest on any loans taken out. This higher rate will then subsidise the lower rate of interest that a more compliant company would be paying.

The only safe bank?
The only safe bank? | Source
Source

The economic carrot principle.

In this way an ethical bank does not simply ignore such companies as those that are, say, environmentally defective, but by lending with judicious clauses it has the leverage (the future promise of a lower interest rate) to encourage them to change their ways for the better. A case of the carrot rather than the stick.

This means that the bank can be acting as a force for beneficial change and how many banks run on traditional lines can say that?

As traditional banks have had to rein in much of their further investment to so many businesses and projects in order to survive and build up their own collateral again, it has been left to the ethical banks to step into the breach. This can only ever be a good thing.

Why have ethical banks stayed safe in the banking crisis?

As ethical banks have never indulged in the wild speculations of sub-prime mortgages, hedge funds, insane ‘virtuals’ and all the other dubious high-risk banking strategies aimed at boosting banker’s bonuses, they have not only remained solvent but relatively well funded, even if not in the ludicrous monopoly money figures of the big four. This in turn has helped them to continue to support companies throughout the whole of the economic meltdown.

The catch is, and there is always a catch, that ethical banks have been limited in their lending capabilities as they do not have those same fiscal reserves as the major global banks had.

This however has worked out in their favour when the major player banks became exposed to all the bad debts they had incurred by injudicious lending and their strategy of taking high risk opportunities.

Opportunities whose risk of failure has been demonstrated so spectacularly in the last few years.

Ethical banking: putting morality before money.

Most of us like to think we are good people. More importantly than that, most of us are good people, innately. We donate, many of us, to disaster funds, charities and street buskers, we help out the neighbour in need and sign petitions to support others bravely taking it upon themselves to fight, on our behalf, the inequities and injustices in life.

In Britain we do our best for the environment by recycling our waste and installing solar panels, private wind turbines and water meters to reduce our usage of natural resources. But we could easily do more for the planet and the global community, and help ourselves at the same time.

By putting what money we manage to save into an ethical bank for it to use on worthwhile projects as we earn interest, we would not only protect our own investments but also give ourselves the satisfaction of also doing good, however passively.

Our efforts to build a fairer, more sustainable world could be as simple as moving our money to an ethical bank.

And, for ourselves, simply allowing the everyday ebb and flow of a basic current account with an ethical bank should ensure that we are never one of those poor people who has to queue outside a failing mainstream bank in order to wrest what is left of our money out of it.

Source

The reason for this hub.

This hub was written in response to a headline that read 'Financial Services: business almost back to normal'.

But do we want normal when what is conjured up is the frightening spectre of Ferrari driving fat cat wide boys (excuse my metaphors) playing with the world's money? A hugely self-regarding sector that threatens to take its ball home if it doesn't get million pound bonuses annually.

Now, more than ever, is the time to move our money to bankers with integrity, because we now know all too well what the alternative is.

The Co-operative Bank in the UK has always been an ethical bank which consulted its customers on new ethical initiatives. Most western countries now have at least one bank running on these principles but even this long-standing bank has now sadly fallen into its own decline of double-dealing and corruption.

For a full list of current ethical banks go to see: http://en.wikipedia.org/wiki/Ethical_banking

or the Triodos Ethical Bank on

http://www.triodos.co.uk/en/personal/?gclid=COWcyr6hkqgCFYFB4Qod3kyWBg

Comments

    0 of 8192 characters used
    Post Comment

    • Angie Jardine profile imageAUTHOR

      Angie Jardine 

      7 years ago from Cornwall, land of the eternally youthful mind ...

      Yep, something else to think about, Amanda. Thank you so much for your input ...

    • Amanda Severn profile image

      Amanda Severn 

      7 years ago from UK

      I guess if we HAVE to use the banks, then it's a good move to choose an ethical one. I think that many people, if they actually thought about these things for more than a nanosecond, would actually prefer to do their banking with either an ethical bank or a credit union. Credit unions are still small beer here in the UK, but I'm really hoping that they continue to proliferate, as they have in Australia and Eire. I recently wrote a hub about them, and it was fascinating to research.

      Thanks for posting this. Even more to think about!

    • Angie Jardine profile imageAUTHOR

      Angie Jardine 

      7 years ago from Cornwall, land of the eternally youthful mind ...

      Many thanks, Don ... as this is not an area of expertise for me I was a bit nervous about airing my views, but it is something I passionately believe in.

      All the best ...

    • donreed profile image

      donreed 

      7 years ago from Iowa

      Good job! This hub is informative and true. The video adds to the validity of this. Keep up the good work.

    working

    This website uses cookies

    As a user in the EEA, your approval is needed on a few things. To provide a better website experience, hubpages.com uses cookies (and other similar technologies) and may collect, process, and share personal data. Please choose which areas of our service you consent to our doing so.

    For more information on managing or withdrawing consents and how we handle data, visit our Privacy Policy at: https://hubpages.com/privacy-policy#gdpr

    Show Details
    Necessary
    HubPages Device IDThis is used to identify particular browsers or devices when the access the service, and is used for security reasons.
    LoginThis is necessary to sign in to the HubPages Service.
    Google RecaptchaThis is used to prevent bots and spam. (Privacy Policy)
    AkismetThis is used to detect comment spam. (Privacy Policy)
    HubPages Google AnalyticsThis is used to provide data on traffic to our website, all personally identifyable data is anonymized. (Privacy Policy)
    HubPages Traffic PixelThis is used to collect data on traffic to articles and other pages on our site. Unless you are signed in to a HubPages account, all personally identifiable information is anonymized.
    Amazon Web ServicesThis is a cloud services platform that we used to host our service. (Privacy Policy)
    CloudflareThis is a cloud CDN service that we use to efficiently deliver files required for our service to operate such as javascript, cascading style sheets, images, and videos. (Privacy Policy)
    Google Hosted LibrariesJavascript software libraries such as jQuery are loaded at endpoints on the googleapis.com or gstatic.com domains, for performance and efficiency reasons. (Privacy Policy)
    Features
    Google Custom SearchThis is feature allows you to search the site. (Privacy Policy)
    Google MapsSome articles have Google Maps embedded in them. (Privacy Policy)
    Google ChartsThis is used to display charts and graphs on articles and the author center. (Privacy Policy)
    Google AdSense Host APIThis service allows you to sign up for or associate a Google AdSense account with HubPages, so that you can earn money from ads on your articles. No data is shared unless you engage with this feature. (Privacy Policy)
    Google YouTubeSome articles have YouTube videos embedded in them. (Privacy Policy)
    VimeoSome articles have Vimeo videos embedded in them. (Privacy Policy)
    PaypalThis is used for a registered author who enrolls in the HubPages Earnings program and requests to be paid via PayPal. No data is shared with Paypal unless you engage with this feature. (Privacy Policy)
    Facebook LoginYou can use this to streamline signing up for, or signing in to your Hubpages account. No data is shared with Facebook unless you engage with this feature. (Privacy Policy)
    MavenThis supports the Maven widget and search functionality. (Privacy Policy)
    Marketing
    Google AdSenseThis is an ad network. (Privacy Policy)
    Google DoubleClickGoogle provides ad serving technology and runs an ad network. (Privacy Policy)
    Index ExchangeThis is an ad network. (Privacy Policy)
    SovrnThis is an ad network. (Privacy Policy)
    Facebook AdsThis is an ad network. (Privacy Policy)
    Amazon Unified Ad MarketplaceThis is an ad network. (Privacy Policy)
    AppNexusThis is an ad network. (Privacy Policy)
    OpenxThis is an ad network. (Privacy Policy)
    Rubicon ProjectThis is an ad network. (Privacy Policy)
    TripleLiftThis is an ad network. (Privacy Policy)
    Say MediaWe partner with Say Media to deliver ad campaigns on our sites. (Privacy Policy)
    Remarketing PixelsWe may use remarketing pixels from advertising networks such as Google AdWords, Bing Ads, and Facebook in order to advertise the HubPages Service to people that have visited our sites.
    Conversion Tracking PixelsWe may use conversion tracking pixels from advertising networks such as Google AdWords, Bing Ads, and Facebook in order to identify when an advertisement has successfully resulted in the desired action, such as signing up for the HubPages Service or publishing an article on the HubPages Service.
    Statistics
    Author Google AnalyticsThis is used to provide traffic data and reports to the authors of articles on the HubPages Service. (Privacy Policy)
    ComscoreComScore is a media measurement and analytics company providing marketing data and analytics to enterprises, media and advertising agencies, and publishers. Non-consent will result in ComScore only processing obfuscated personal data. (Privacy Policy)
    Amazon Tracking PixelSome articles display amazon products as part of the Amazon Affiliate program, this pixel provides traffic statistics for those products (Privacy Policy)