Everyone hates banks. Nothing new here. Unfortunately, we all need banks, and so do our businesses. How else are you going to cash your clients’ cheque? You are based in London, but your suppliers are in Singapore. You need your bank to transfer the cash from your account to theirs. Also, your website accepts credit card, debit card, PayPal and more – are made possible by the technologies the banks provide.
Why do we hate banks? One reason is because of what they do with our money. When they are holding our cash, it does not just sit there doing nothing. Your bank will take this money, and invest it. They then keep the profits made from the investments. Although this is slightly annoying, this practice doesn’t make banks immoral.
No. What makes banks the hateful, immoral entities they are, are the projects they invest in.
In 2012 for example, HSBC had been named in a US report, of knowingly helping Drug Cartels in Mexico, among other crimes against humanity. The top 5 banks in the UK are in fact guilty of a lot more.
Are There Ethical Banks?
Thankfully, there are a few banks that fall under the unofficial term ‘Ethical Banks’. They will make it a priority to invest responsibly. They screen their investment opportunities. They outright refuse to invest in Nuclear Arms, Fossil Fuels, Military Regimes, and more.
In fact, a lot of these banks will use ‘Impact Investing’. This means that they will use your money to finance companies and projects that promote sustainable energy, or enforce Human rights, and other projects that are seen as positive causes.
Should I Join an Ethical Bank?
There are some things you need to consider when looking to open an ethical business account.
- Firstly, it’s important to understand – Ethics is in-cased in blurry lines. What is considered right to you, may be unethical to someone else.
- Is it even ‘ethical’ for a financial institution to pass judgement? You will find, that some of these banks will want your company to meet their criteria. Do you want your bank to decide whether what your company is doing, is right or not?
- Unfortunately, we are talking about your hard-earned money. So be honest when judging these banks. Do they offer you what you need for your business? For example, Tridos doesn’t offer debit card facilities.
Which ethical banks operate in the UK?
Here is a list of examples. Consider these as a starting point, when doing your research. Some of you may well even dispute the validity of some of these banks being called Ethical. As mentioned earlier, Ethics is an un-quantifiable subject.
The Co-operative bank was the first in the UK to get the ethical label, publicly focusing on withholding investments from certain companies they deemed unethical or immoral.
Triodos in their own words” We think banking can be a powerful catalyst for achieving positive and lasting change. We only finance projects and organisations that have a positive impact on society, culture and the environment.”
Handelsbanken is all about sustainability and corporate social responsibility. They are a decentralised bank with a strong local presence. They contribute positively to the sustainable development of the communities they work in.
Monzo is an Internet based Bank. It is still very small, on their website, it says that they employ only 33 staff. Too small to make a strong commitments. However, they do intend to follow in the footsteps of Coop and Tridos. As a start, they are completely transparent in what they are using your money for.
Nationwide in their own words “At Nationwide, we value people, ethical behavior, and diversity and inclusion. We incorporate these values in each transaction we conduct, each interaction we have, and in each relationship we build, everywhere we do business.”
Cumberland Building Society in their website about policies “The key objective of The Cumberland’s Environmental Policy is to manage and reduce our environmental impacts through ongoing energy conservation, recycling and waste reduction.”
Yorkshire Bank is a trading name of Clydesdale Bank.
Clydesdale Bank On their website it says “To always think about the services and products we provide and how they affect you. To always find ways to improve, to add value and do the right thing for our customers, our employees and the environment.”
This isn’t an exhaustive list, and thankfully, it seems to keep growing. It’s good to know that by making money from your business, you can do your bit to creating a better world, by banking with a better bank.