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“Championing good causes” may not be the first thing that comes to mind when thinking of a bank’s philosophy, but some walk the talk.
Banks make money by lending money from your checking, savings, and other accounts to businesses, home buyers, and other customers. However, you have no say over your bank’s support with those dollars. They could be operations you oppose, such as deforestation projects or new oil pipelines.
Some banks in Singapore ensure that their client’s money in bank accounts is not used to benefit industries that hurt people or the environment. Third-party certifications aid in demonstrating their commitments.
What does it mean to be a socially responsible bank?
A socially responsible bank is devoted to doing social or environmental good without focusing solely on profit and without sponsoring projects that are harmful to people or the environment. These banks offer Environmental, Social, and Governance or ESG products. These banking institutions typically use external certifications or affiliations that reflect their lending practices and community investments to demonstrate their impact.
According to Ivan Frishberg, chief sustainability officer at Amalgamated Bank, this sort of bank “works to enhance economic, social, racial, and environmental justice through its voice, resources, and every facet of how it functions.” “Our mission areas are our core competencies.”
Other socially responsible banks (and banking) include values-based and ethical banks, all of which can allude to an emphasis on social and environmental justice. According to various banks, NerdWallet spoke with, and the term “sustainable banks” tends to highlight them in their ESG products if you’re looking to invest.
Why are certificates important?
Certifications confirm that a bank is committed to making a positive difference and limiting harm to people and the environment. Not every certification needs the same level of effort to obtain, so pay close attention to those a bank promotes on its website.
Third-party certifications, according to Monique Johnson, senior vice president, and director of client and community relations at Beneficial State Bank in Oakland, California, “enable values-aligned consumers to discover our bank.” Certifications “legitimize our influence and efforts through objective and consistent measurement.” A certification demonstrates accountability.
As a signatory to the Principles, banks promise to “use our goods, services, and partnerships to support and accelerate the fundamental changes in our economies and lifestyles required to create shared prosperity for both current and future generations”:
- Alignment: We will align our business strategy and contribute to the needs of individuals and the society’s aims, as reflected in the Sustainable Development Goals, the Paris Climate Agreement, and applicable national and regional frameworks. We shall concentrate our efforts where we can have the greatest impact.
- Impact: We will consistently expand our positive impacts while decreasing and controlling the dangers to people and the environment due to our actions, goods, and services.
- Clients and Consumers: We shall work responsibly with our clients and customers to encourage sustainable behaviors and enable economic activities that create shared prosperity for current and future generations.
- Stakeholders: To achieve society’s goals, we shall consult, engage, and collaborate with important stakeholders proactively and responsibly.
- Governance and Target Setting: We will implement these Principles through effective governance and a culture of responsible banking, displaying ambition and accountability by establishing public targets for our most significant impacts.
- Transparency and Accountability: We will regularly examine our individual and collective application of these Principles. We will be transparent about and accountable for our positive and negative impacts and our contribution to societal goals.
Check out a top bank’s responsible financing philosophies and ESG products to learn more about their efforts before you commit.
