Ethical banking ( Eng. Ethical banking [1] ) - banking activities that are deliberately limited by the selected criteria, positively assessed in society [2] .
Most often, such criteria are principles based on ethics , morality , ecology , social responsibility, sustainability, and sometimes religion [2] [3] .
Although the additional conditions for conducting business, in addition to economic feasibility, in general lead to a decrease in efficiency, however, in communities that attach great importance to these principles, such self-restrictions can have the opposite effect - lead to its growth. For example, socially oriented investors may refuse high returns on deposits in favor of the realization that their funds will be placed / managed in the “right” way.
It should be borne in mind that banking as a whole is at risk and following good intentions does not protect depositors and counterparties of such institutions from bankruptcy and the inability to fulfill their obligations.
Content
Terminology
In English, ethical banks, in addition to the main one, are most often known under the names “social” ( English social bank ), “alternative” ( English alternative bank ), “civil” ( English civic bank ), “development” ( English development bank ), “solidarity” ( eng. solidarity bank ) and “sustainable” / “stable” / “supportive” ( eng. sustainable bank ) [2] .
The characteristic “social”, in relation to financial activity, has become widespread in investment activity (see: Social investment ).
At the beginning of 2015, there were no established terms in the Russian language equivalent to the English “ethical banking” / “ethical bank”, as well as classical examples of this activity in Russia .
Most often, this term is translated as “ethical banking” / “ethical bank” (rarely - “ethical banking” / “ethical bank”), however, there are other names that are exact translations of the English synonyms of this activity or even its own terminology characterizing it in that to some extent, it is often incorrect, for example, “charity bank”, “green bank”, etc.
Features
Typically, ethical banks are guided in their work [2] :
- “The Collective Declaration of Social Organizations to Financial Institutions” ( The Collevecchio Declaration on Financial Institutions and Sustainability ) - six principles: sustainability, “do no harm”, responsibility, accountability, transparency, support for the sustainability of markets and public policies aimed at this [4] .
- “The Principles of Responsible Investment” ( Eng. The Principles for Responsible Investment ) based on the account of “environmental, social and management” ( Eng. Environmental, social and corporate governance, ESG ) rules at all stages of activity [5] .
- "The Equator Principles" ( Eng. The Equator Principles ) - risk management, in relation to environmental and social risks [6] .
The principles of ethical banking apply both to internal business processes and to work with contractors.
Ethical banks may limit their activities to additional conditions - "expand the scope of responsibility" [2] .
For example, some ethical banks and their supporters consider issues of poverty alleviation, environmental protection, awareness of the human impact on climate change, renewable energy, fair trade, human rights, political lobbying, proper tax policy, sustainability, stability, and customer relations as the most important , policies in the payment of bonuses to management, etc. [2] [7]
Since ideas about ethics, morality, morality, relevant social policy, etc., are subjective and vary depending on a specific individual, community, social group, territory, country, stage of the historical development of society, etc., the set additional restrictions on specific ethical banks differs markedly [8] [2] [9] .
The criteria used can be either positive - “do this” / “choose these” (screening / selection are positive), and negative - “do not do this” / “refuse this” (negative screening / selection) [2] .
Often, among the goals of ethical banking, there are provisions on financing , supporting and servicing socially responsible individuals and legal entities , or addressing environmental or social problems of initiatives [2] .
In any case, ethical financial institutions should [2] :
- Understand and accept the limits of your responsibility (identify limitations).
- Establish internal rules and systems that will meet specified criteria.
- Include social / environmental impact in evaluating your performance.
Trends
There are several separate branches of the development of ethical banking, with their individual history, approaches and prominent representatives [2] :
- Cooperative banks and credit unions (see credit cooperative ).
- "New" ethical banks.
- Microfinance credit institutions .
Islamic banking stands out, which is currently considered to be classified as ethical banking [7] . Ethical banking includes the recently introduced Tengrian banking .
Ethical banking can be implemented both through individual organizations, and by providing customers with specially structured products.
In addition to traditional ethical banking, the movement of classical banks towards the adoption of certain ethical principles is developing [7] . In particular, this is expressed in the adoption of “ethical codes”, which are declared to be followed at all stages of banking activities [7] .
Notes
- ↑ See terminology .
- ↑ Ethical Banks (inaccessible link) . Move your money. Date of treatment May 10, 2015. Archived May 18, 2015.
- ↑ The Collevecchio Declaration on Financial Institutions and Sustainability (English) (2003). Date of treatment May 9, 2015.
- ↑ PRI (English) . unpri.org. Date of treatment May 9, 2015.
- ↑ The Equator Principles . The Equator Principles. Date of treatment May 9, 2015.
- ↑ 1 2 3 4 Steph McGovern, David Campbell. Can banking ever be ethical? (eng.) . BBC Date of treatment May 10, 2015.
- ↑ Rupert Jones. Ethical alternatives to the Co-operative Bank . The Guardian (October 23, 2013). Date of treatment May 9, 2015.
- ↑ Rob Harrison. The Move Your Money ranking of banks . Ethical Consumer (Move Your Money) (June 2013). Date of treatment May 10, 2015.