Banking is an industry where you might not expect to be able to find social or environmental conscious business practices. There are few banks where this is represented due to the longstanding traditions of banks and the fact that thinking in a social or environmentally beneficial manner from a commercial perspective is somewhat of a new thing. However, there are still some banks that fit the bill.
What is a Socially or Environmentally Conscious Bank?
Understanding what makes a bank conscious to people or the environment is key to understanding what a socially conscious bank is. The point of being socially conscious from a bank’s perspective is to carry on a sustainable way of working that benefits the people who use the bank as well as the area the bank is doing business in. The idea of sustainable banking is one that exists in certain countries more than it does others. For example, in a European country, there are local credit unions that everyone in the area is able to have an account in. Loans are made to people based on their savings and not on their creditworthiness, which is highly beneficial to low-income people and those struggling with different debts that might otherwise see them refused for a bank loan. In the US, credit unions exist but are limited to different industries and segments of society, such as a medical credit union or an automotive union workers credit union. These types of banks offer a sustainable banking option that is clearly socially conscious.
On a traditional sized banking aspect, sustainable banking can be one that has other business interests that they leverage to create the bank. An example is the Co-op bank in the United Kingdom, which also has a wing that deals in agricultural farming of animals. This allows the customers to know what the bank supports and customers feel that by banking with the Co-op bank, they are helping to improve their society, farming in particular.
Another type of benefit that a bank can offer to be considered socially conscious is to set the repayment on any loan to a predetermined amount rather than allowing interest to be compounded or the repayment sum to be increased. Through offering this type of banking, the customer does not face any nasty surprises in the future when their payment doubles or the amount of time it takes them to repay is extended from changing interest rates.
Traditional Banking Options
When considering the everyday bank account, trying to find a bank that is socially conscious can be difficult because the aspects that make a bank conscious might not be advertised very well. One thing that a person can do is to use a bank that loans to small businesses and microloans for citizens of developing countries. The ability for a bank to make the lives of much better cannot be understated and banks such as the Charity Bank that offer these services can be seen to be making a real difference.
The term green bank has been coined in the US to denote sustainable banking, particularly in California where the New Resource Bank operates. Many customers have checking accounts with the bank, including the state of California itself, and in turn, the bank uses the deposited funds to fund new businesses in the renewable or green sectors. The bank would loan to organic food companies, people wishing to go solar on their home or people wishing to open a sustainable business. In this cyclic way, the bank ensures that they are making a positive impact, which is a draw to socially and environmentally conscious consumers, which then further supports more green/sustainable projects. It’s a positive feedback loop of banking and sustainability.
Taking where you bank into consideration is hugely important if you are looking to be more conscious. Having a checking or savings account, or a mortgage is a form of shopping and one that involves a lot more cash flow. Customers must pay for the privilege of using whichever bank they do, so in turn, it should be noted what the bank does with their profits. Making a difference by choosing is at the core of socially and environmentally conscious sustainable banking solutions. It is likely the most important choice a person wishing to make an impact can have. When a bank chooses to help out small businesses that are trying to make a difference in their community as well as in their own lives, the ongoing positive result from such loans reaches much further than loans made to businesses with no social foresight. There is a global push for banks to think sustainably and act upon their corporate social responsibility.