Banks are proving that making money can be socially responsible and beneficial to local communities
The term ethical banking may sound like an oxymoron, but this booming industry is proving that the business of making money can be beneficial to the environment and local communities.
Ethical, or sustainable, banking involves creating and offering sustainability related products and services to clients, such as products that revolve around renewable energy. It can also involve microfinancing community developments, or the practice of providing financial services to the poor, that would usually be outside the scope of large financial institutions, or setting up socially responsible investment funds. It is also about an organisation being aware of its own social and environmental impact.
'Banks are realising that there needs to be responsible selection of clients and allocation of capital,' said Joel Posters, head of sustainability for Asia-Pacific at ABN Amro. 'A lot of financial institutions are building up staff internally to identify and manage social, environmental and ethical risks within a client portfolio.'
Some banks have departments that specifically handle environmental, social and ethical issues. ABN Amro, for example, has a team of eight staff working entirely in this field, one of the biggest sustainability departments in any bank.
Financial institutions without a dedicated department usually still employ staff to deal with how to integrate attitudes, structures and products that support sustainability into business practice.