Exploring ethical banking


what is ethical bankingFrom recycling to buying organic there’s lots of ways to make sure our behaviour aligns with our values. But how often do we check if our financial choices are lining up?


Plenty of people run the ruler over their super savings and investments to take advantage of ethical options.  What can get overlooked is the signal we are sending through our banking decisions. When we stash our money in a bank account the institution lends it to other individuals and businesses.
Those businesses may be ones you wouldn’t choose to support. Perhaps they are involved in fossil fuels, gambling, logging, tobacco, or weapons.
Research by advocacy group Market Forces shows Australia’s banks have loaned $58.78bn to the fossil fuel industry since 2016, for instance.
So what can you do to get banks to clean up their act?
Just as shareholder and investor action sends a clear message to companies and their supply chains there’s an opportunity for bank customers to vote with their feet. Ethical banking invites people look more deeply into their banking institutions and take action where they can.
In 2020 the Responsible Investment Association Australasia found 87 per cent of Australians expect the money in their bank accounts to be invested responsibly and ethically.  Its Values to Riches 2020 report showed almost three-quarters would consider moving their banking to another provider if they found out their current bank was investing in companies engaged in activities not consistent with their values.
Here’s five steps you can take to make a more ethical banking choice.

Check your bank’s policies

Search a bank’s website for its corporate and social responsibility policies; social impact statements; annual reports or sustainability reports. These will contain information on its policies on the issues that are important to you.

Ask questions

If the information is not clearly stated, don’t be shy about asking questions.

Don’t just take their word for it

There’s a growing number of organisations monitoring this kind of information. Check them out:
  • Market Forces (marketforces.org.au) – examines which banks are invested in fossil fuels;
  • Don’t Bank on the Bomb (dontbankonthebomb,com) releases information on which banks are invested in nuclear weapons; and

Seek alternatives

Some financial institutions are taking a stand and making a policy of not lending to harmful activities or industries such as those involved in fossil fuels, live animal export, gambling, the arms industry, and tobacco.
Instead, they support those businesses and not-for-profits that are intent on creating a positive social or environmental impact.
For instance, they might lend to facilitate housing for people with disabilities; renewable energy projects; and affordable housing development.

Choose ethical products

Some financial institutions are actively supporting individuals making ethical choices via preferential interest rates. They may offer a discount to home loan borrowers buying or building a home with a high energy efficiency rating or planning sustainable upgrades, for example.
If, after some research, you find that you and your current banking institution don’t see eye to eye it’s easy to make a switch.

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