Concerning ethical behavior and financial performance, the following topics: fair trade, financial fraud, corporate social responsibilities, ethical investments and ethical consumerism have been explained, illustrated and discussed. Another topic within this movement towards social responsibility is ethical banking.
An ethical bank takes interest in the welfare of the community, serves the disadvantaged, and supports progress in the sustainability of the society. It also tries to avoid doing business with corporate entities who act unethically and immoral. Furthermore, there is not only a commitment to internal ethics, but also to the wider external ethics. This is what separates ethical banks from conventional banks. External ethics means that the bank is concerned with the environmental and social impact of its business practices such as the loans they provide or who they invest in, whereas internal ethics has to do with codes of conduct within the company such as customer satisfaction, wages, the well-being of employees,…Some of the wide range of ethical banks are Triodos Bank ( The Netherlands ), Reliance Bank ( United kingdom ) and Cultura bank ( USA ).
The most effective way for an ethical bank to fulfill its social goals is to adopt the ‘carrot-and-stick’ approach. This approach is based on interest differentiation: companies who cause more environmental and social damage have to pay higher interest rates in order to borrow capital than ethical responsible corporations. Another way is to develop ethical investment funds. The social banks can also encourage its borrowers to reduce emissions and save energy.
As banks play a major role in our economy, I believe ethical banking is the most effective way to implement financial ethics in our society, only on condition that practically all banks follow the socially accepted rules. This could be achieved by more governmental regulation.
The most effective way for an ethical bank to fulfill its social goals is to adopt the ‘carrot-and-stick’ approach. This approach is based on interest differentiation: companies who cause more environmental and social damage have to pay higher interest rates in order to borrow capital than ethical responsible corporations. Another way is to develop ethical investment funds. The social banks can also encourage its borrowers to reduce emissions and save energy.
As banks play a major role in our economy, I believe ethical banking is the most effective way to implement financial ethics in our society, only on condition that practically all banks follow the socially accepted rules. This could be achieved by more governmental regulation.
Kenn Crombé
http://en.wikipedia.org/wiki/Ethical_banking
http://en.wikipedia.org/wiki/Ethical_banking
Jeucken, M. "Banking and sustainability—slow Starters are Gaining Pace." Ethical Corporation Magazine 11 (2002): 44–48.
http://www.ethicalinvestment.co.uk/Ethical_banking.htm
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