What is ethical banking? In this post we’ll be exploring the world of ethical banking. We’ll look at what ethical banking is and how it differs from regular banking. Plus, why you should re-evaluate who you bank with and some of the top ethical banking providers.
What Does Ethical Banking Mean?
Ethical banking is when a bank is concerned with it’s impact on the environment and society. An ethical bank will uphold it’s principles and seek to provide a positive impact on society. Put simply they aim to do good in the world, upholding their principles at the expense of large profits.
Ethical banking is quite a broad term that can include banks concerned with; the environment, responsible investment or helping local communities or people from disadvantaged backgrounds.
For example, some financial providers are concerned with;
- Providing investment aimed specifically at helping small businesses to grow.
- Investing profits back into the local communities in which they operate.
- Only lending money to green companies.
Investors are becoming increasingly conscious about the ethical credentials of the companies they invest in. It is easy to make these informed choices. For instance, those that are concerned about the environment can avoid holding fossil fuel companies in their portfolios. And instead invest in those producing green energy.
But have you ever thought about what your bank does with the money you deposit with it? This money is used to fund the banks own investments and loans in order for them to make a profit. Most banks have little consideration as to the impacts of their investments, often being highly unethical. Their main aim is to simply make as much money as possible. It’s highly likely your bank is funding many projects you don’t agree with.
However there are some alternative banking and financial providers that operate to their own high principles. These ethical banks can be more limited with where they can invest money or the clients that they can accept. This can make them a lot less profitable than other banks.
What Are The Best Ethical Banking And Financial Service Providers?
There are many alternative banks and financial providers offering ethical products and services. Each usually focuses on one particular ethical element – whether that is helping under-served communities and businesses or the environment.
Stilt for instance is a company with a focus on helping provide loans to immigrants and the under-served. This is a service helping those who may otherwise struggle to get finance at traditional banks.
Then there is Quontic, a leading digital community bank helping provide mortgage financing through Community Development Loans. These can help people such as immigrants and low income families of achieving their dream of home ownership.
There are even financial providers dedicated to helping small businesses to grow. For example, Fundera provides business loans and financial resources only to small businesses to help them thrive.
But when it comes to banking, we have found Aspiration to be one of the top ethical banks. This is for their; focus on local communities, charities and helping the planet.
Aspiration Bank is the best solution for green, ethical everyday banking, saving and credit cards. But what makes Aspiration different from the other big banks?
Well their mission is to help the whole community, not just the wealthy few. It is not run solely to make a profit. In fact they give back at least 10% of their profit to charities, making them an industry leader.
It is a bank with a conscience for the environment and society. No deposits are used to fund things like oil pipelines, coal mining or arctic drilling. In addition to this there is carbon-offsetting through tree planting every time you spend. So every time you shop you could be helping the planet.
On top of their focus on helping the environment, they also have leading products to help make the most of your finances. From checking accounts with 10% cashback on debit card purchases to savings accounts paying up to 83 times higher interest than traditional banks.
But the feature we really love is that there are no fixed service or account management fees. You pay what you feel is fair for the service you receive. For instance, the Aspiration Spend & Save Account, there is an optional monthly fee ranging from $0 – $20. You pay what you want.
How many banks are confident enough in the quality they provide to do that? Not many.
We love how Aspiration helps customers to both save money and help the planet.
Find more information on Aspiration Bank.
Conclusion – What Is Ethical Banking?
To recap, ethical banking refers to banks with a focus on doing good for society. They have moral principles which they seek to uphold when doing business.
Ethical banking is quite a broad term used to describe many alternative banks. It can include those wanting to help the environment or simply to help an under-served community such as low-income families.
Many of the traditional large banks have little focus on ethical banking. This is because it may come at the expense of profits. Money deposited with banks is used by the bank to lend to businesses which may not align with your values.
There are some alternative banks offering more ethical services that have stricter controls over who they do business with.
Aspiration is one of our top picks for ethical banking. With a focus on helping the environment through; tree planting and avoiding funding fossil fuels to donating 10% of profits to charity, they are a bank with principle.
View our blog and please join our newsletter to ensure you don’t miss all our latest content. Other related financial posts you might like to read;