In today’s world, many more people are considering the ripple effect of the choices they make and seek to inform themselves prior to making important decisions. In this guide, we aim to provide you with some of the most important things you need to know about ethical banking in the UK.
How can a bank be ethical or unethical?
There are many factors, which must be taken into account when determining how ethical a bank’s practices are. Below, we focus on human rights and the environment.
Human rights
To most people, it would seem obvious to assume that banks would be in favor of protecting everyone’s human rights. However, many stories have come to light over the years showing UK banks in a negative way regarding investments and their profiting from conflicts.
Both Barclays and HSBC have proven links with companies who provide arms for Israel. Protestors claim that having this association is in direct contravention of the human rights of Palestinians. While the banks themselves are not directly embroiled in this serious matter, doing business with those who are means they are indirectly implicit and failing to be responsible for their own actions when it comes to human rights violations.
Additionally, other human rights issues, such as the gender pay gap, have not yet been tackled effectively by a significant proportion of high street banks within the UK.
The environment
Caring for the world around us is not a new fad; for many years, campaigners have been informing us of how our actions are causing largely irreparable damage to the earth and its inhabitants. Recently, many banks have taken steps to prevent further damage and reduce their carbon footprint. Paperless banking is one way in which they have reduced the amount of paper used, with many people opting to receive monthly statements electronically.
Aside from what they do day-to-day in their branches and offices, banks also invest in other companies; it is essential to consider how ethical those investments are. For example, HSBC was found to have heavily financed fossil fuels in recent years. Despite heavy criticism, HSBC has continued to fund new coal projects in countries such as Bangladesh and Indonesia, which is in direct conflict to the Paris Agreement, signed in 2016 in an effort to reduce CO² emissions.
Triodos Bank, on the other hand, aims to only lend money to projects and businesses, which are striving to meet positive environment goals (as well as social and cultural ones too). With strong links to Friends of the Earth, this bank certainly appears to be filling a vital gap in the financial market for an ethically-responsible company. Could Triodos reflect the future of conscientious, ethical banking?
Banking needs to work for you, but responsible banking is certainly an important consideration as well. Whether you are seeking to open a savings account or perhaps to take out an offset mortgage (a great option if you do not wish to fully commit your money to your lender), having an awareness of a bank’s ethics can certainly support you in making an informed choice. Many inspiring leaders throughout history have taken steps to improve human rights and care for the environment; one carefully made decision from each of us could help us to follow their example and continue their positive work.