Banking News Consider Ethical Finance Options During Fairtrade Fortnight 1213
Consider ethical finance options during Fairtrade fortnight
05 March 2008 / by Joy Tibbs
While these are important steps, fairinvestment.co.uk suggests consumers could also use this time to think about their ethical stance on personal finance.
“Although banking habits are not always at the forefront of people’s minds when Fair Trade is mentioned, some banks and building societies are looking to make a difference,” says director at fairivestment.co.uk, James Caldwell.
The term ‘ethical banking’ can be hard to define, as it is often interpreted in different ways. It usually refers to a certain level of transparency in terms of the company’s practices as well as involving a social or environmental aim.
‘Ethical’ banks, such as Co-operative Bank, Shared Interest and Triodos Bank must adhere to the same rules and regulations as traditional banks; however, these organisations claim to be more concerned about the ethical implications of their investment and loan portfolios than other financial organisations.
“Ethical banking has grown in popularity in recent years as consumers become more determined to make socially informed choices in terms of where they keep their cash,” Mr Caldwell says.
Like most banks, Co-operative Bank and its subsidiary Smile offer a range of financial products such as current and savings accounts, credit cards and loans. However, its attitude toward ethical investment is clearly at the heart of its operations. This includes supporting Human Rights, not investing in the arms trade or the development of genetically modified organisms and considering animal welfare and the environment.
In terms of Fair Trade, the Bank is invests in and supports “sustainable and successful businesses that serve a social purpose”. This includes community finance initiatives through which funds are placed into a central pot to be used by various social enterprises.
Meanwhile, Triodos has introduced a Fairtrade saver account which directly contributes to the Fairtrade Foundation. Savings deposited are used to support fair trade enterprises in the UK such as Cafédirect and Equal Exchange, and the bank donates the equivalent of 0.25 per cent of the average balance held in the account each year to The Fairtrade Foundation.
But its not only in buying that you can contribute – borrowing can also be ethical; focused more specifically on the environment, Abbey has introduced a Green Loan so that for every accepted application, it plants five trees in the UK in collaboration with Tree Appeal.
And building societies could also be seen as a viable alternative to ethical banking, as they can offer greater transparency. Norwich and Peterborough Building Society was the first lender to introduce a ‘green’ mortgage, back in 1998, and is involved in various community sponsorship schemes. Meanwhile, Ecology Building Society promotes sustainability through its mortgage lending and offers various ethical savings accounts.
“Ethical accounts don’t always promise to pay the highest rates of interest,” says Mr Caldwell, “and you may not get the lowest rates with a green mortgage, but they can allow people to have a direct impact on people’s lives or on the environment.”
Use fairinvestment.co.uk to get more information about ethical banking and to compare a vast range of financial products and services.