ETHICAL BANKING
Definition
1. ethical bank, also known as a social, alternative, civic, or sustainable bank, is a bank
concerned with the social and environmental impacts of its investments and loans.
Ethical banks are part of a larger societal movement toward more social and
environmental responsibility in the financial sector. This movement includes: ethical
investment, socially responsible investment, corporate social responsibility, and is also
related to such movements as the fair trade movement, ethical consumerism,
2. Banking ethics are the moral or ethical principles that certain banks chose to abide by.
There isn’t an ethics ombudsman or a universal code of ethical conduct
3. Ethical banks guide their behavior by a value system that is sensitive to social
problems, such as equilibrium with nature, respect of human rights, and the
equality of opportunities.
Ethics & Banking
Businesses have social and ecological consequences. Therefore, to answer to the new social
demands, many banking institutions apply Ethical policies_ that have to do with the bank
working inside and then, with bank investments. A business can take financing from the bank
only when no conflict with the ethical policy is identified (so that, some investment
opportunities shall be declined by the bank).
Some banking institutions have done research that shows that a large number of customers
prefer their money to be ethically invested. We briefly review some issues of the UK
Cooperative Bank policy of social responsibility and ecological sustainability from the end of the
1990s [Cooperative Bank, some years].
The following are examples regarding the internal organization of the bank:
1. Equal opportunities in the workplace: a broader and more comprehensive Manager
Diversity approach to achieving equality.
2. Screening suppliers along ethical and ecological lines
3. To develop staff training on ethical and ecological matters.
4. Environmental Management Systems (audited by an ecological outside audit).
5. Identify businesses that are able to demonstrate their commitment to environmental
improvement that fall within the business class standard.
6. To eliminate emissions of organ chlorine gases from the air-conditioning systems at
the banks major occupancies.
7. To identify ecologically safe printing technologies.
8. To ensure a better understanding of the bank-wide water consumption.
9. To conduct a thorough audit of all paper purchased by the bank.
10. To develop a phased plan for the removal of PVC from all plastic bankcards.
11. To develop a recycling policy for aluminum, steel, plastic cups, fluorescent tubes,
Furniture, electronics, and electrical equipment.
12. Utilizing information technology to reduce paper usage.
13. Provision of ecological financial products and services.
14. To diminish fossil fuel energy consumption and increase renewable energy
consumption.
The following are examples of how the customer’s money should or should not be
invested:
15. Human Rights: Not to invest or provide financial services to any regime or
organization that oppresses the human spirit or takes away the rights of the
individual. &
16. Armaments: to any business involved in the manufacture, sale, licensed production, or
brokerage of armaments to any country which has an oppressive regime.
17. Trade and social involvement:
To support and encourage:
18. Organizations that promote the concept of Fair Trade.
19. Businesses, customers, and suppliers to take a pro-active stance on ethical
sourcing with any Third World suppliers they may use.
20. Organizations participating in the country’s social economy (cooperatives, credit
unions,and charities).
To be sure not to finance activities,
such as: money laundering, drug trafficking, or terrorism
21. investments and currency trading in developing countries which does not support
productive purposes
22. tobacco product manufacturers
23. Ecological impact: To encourage business customers to take a proactive stance on
the environmental impact of their own activities and not to invest in businesses
involved in activities, such as:
24. The extraction of fossil fuels, which contribute to problems, such as global climate
change and acid rain.
25. The manufacture of unnatural chemicals that may contribute to problems, such as
ozone depletion.
26. The unsustainable harvest of natural resource that leads to deforestation.
27. Animal welfare: Not to invest or provide financial resources to organizations
involved in activities, such as:
28. Animal testing of cosmetic and households products or their ingredients
29. Exploitative factory farming methods
30. Blood sports that involve the use of animals or birds to catch, fight, or kill each
other.
31. Fur farming and animal fur trading
32. Customer consultation: Banks regularly appraise views of the customers on
precedent issues to develop the Ethical Policy accordingly.
Conclusion
The modern economy was founded on the utilitarist and rationalist principles.
However, there are already many authors that demonstrate that rationality, by itself, is
insufficient to explain certain human behaviors that generate economic consequences.
It is, therefore, a circular mechanism that makes societies never stop in a point. As
demonstrated in numerous studies, many of the changes taken place in the individual’s
ethical codes are related directly with economic improvements. We can see, then, in a
process of social development by stages, societies go through the same stages, in the
formation of the scale of values, as they increase their income. Economic growth would
cause social changes for the rest of the countries in the same direction.
