What is socially responsible banking?
Socially responsible banks consider environmental, social, corporate governance and ethical factors associated with their investments in addition to financial return. Socially responsible banks will generally have a clear stance on issues such as climate change, animal welfare, human rights and clean energy. They will be transparent about investments they avoid, such as those that support fossil fuels, weapons, tobacco, practices that have negative environmental impacts and human rights abuses. They will also be clear about companies they support, which may include those involved in clean energy, recycling, energy efficiency, education and sustainable products.
Why choose a socially responsible bank?
There are many reasons to choose a socially responsible bank, including both personal and 'bigger picture' benefits, such as:
- investing in line with your values
- competitive banking fees, home loans and financial returns
- plenty of choice, including low risk investment options
- facilitating social change as businesses alter their practices to attract your investment.
How to choose a socially responsible bank
Choosing a socially responsible bank might seem like a chore, especially if you are not particularly interested in banking. Fortunately, it doesn't need to be complicated.
Step 1: Find out whether your bank is socially responsible
When did you last look at your bank statement or your bank's website? Do you know where your bank invests its money? Do you know your bank's stance on issues such as fossil fuels and human rights abuses? If the nature of your bank's investments isn't clear, contact them for clarification or do some research. If your bank is not transparent about where it invests its money, you might prefer to choose one that is.
Step 2: Research your options
If your bank doesn't invest responsibly, there are plenty that do, and moving your money is generally straightforward. There are a number of rating systems that can help you compare banks to decide which aligns best with your personal values. The is an industry association representing the responsible investment sector and certifies its members.
Step 3: Tweak your banking
Whether you shift part or all of your money to a new option with your current provider, or a new provider altogether, a small change to your investments can have a big impact on issues you care about. There are many options when it comes to socially responsible banks, so think about the causes (environmental, social and so on) that are most important to you and find a provider with practices that align with them.