Ethical banking, ethical saving & ethical investing

There is a bank. Its name is Triodos. It is a new high street bank with a huge difference. There is a customer. Her name is Alice. She has chosen to take her money out of a normal high street bank and invest her savings in Triodos. Let’s ask her why:

“I want my money to also be part of my value system, I want to be able to invest in the things I believe in, like renewable energy, companies that are trying to change the way we do business in the world and trying to make a difference in our society.”

Alice is not the only person that feels this way. Since July there has been an over 70% increase in customers taking an interest in Triodos, most of those interested are primarily looking to open a savings account. Money coming into the bank has doubled in the last year.

Another ethical bank

Another ethical bank on the high street is the Co-Operative Bank and they have also seen an unprecedented 43% of customers leaving conventional banks and opening accounts with them.

This leads to the next big question. Ethics? Whose ethics? What constitutes an ethical fund? Who decides this, and under what criteria? This is where the question becomes complicated.

It is far from clear and there is definitely no rule book as far as which company counts as ‘ethical’ and which doesn’t. Which stocks do the ‘ethical’ banks buy into? For example it is very clear that all business pertaining to tobacco, the production and the sale thereof do not fall under the ethical heading, but what about nuclear power plants? Are they good or bad? The potential of nuclear power is awesome if used in an ethical way.

Sustainable Investment & Finance

Another ethical financial institution is Sustainable Investment & Finance. The Chief Executive Officer of this institution, Penny Shepherd, was quoted as saying “In particular it’s very much about making a positive choice. We describe it as making money and making a difference in the world.” However, that same institution came under fire lately for sinking 1.6% of its growth fund into Burberry. Burberry is a one of the giant fashion houses and has come under fire from animal activists for its use of fur. Evidently the line is drawn at 1% of revenue coming from something as unethical as fur. Burberry thankfully falls under this criteria at 0.2%. Still it seems to be quite a fine line, and they are still using fur.

Advice if you are planning to invest in an ethical bank

Some advice if you are planning to invest in an ethically sound bank account is that there are several things to consider. As with any other bank you need to look at how long you want to invest for and what kind of return you are expecting. Most importantly you need to look at the risks involved. Just because the title contains the word ‘ethical’ does not mean that you should assume that you will get what you expect. Like any other financial transaction it is important to read the fine print, and go into the deal with your eyes wide open.

The ethical banking market has yet to see the same achievements as mainstream banking but over time the prospects are looking up. It really seems like a good idea to help out the planet while banking your money, and maybe if enough of us follow ethical banking, we can make the world a better place!