What Is Ethical Banking?
A New Way of Banking
The banking industry is powerful, and like other powerful industries, it can contribute to worsening global problems, or it can help solve them. The choice is up to us—the people who put our money into banks. As a new wave of ethical banking gains momentum around the world, you can turn your money into a force for good.
How Harmful Banking Practices Impact People and the Planet
Harmful banking models prioritize profit above all else. Often, in the pursuit of these profits, banks cause harm to people and the planet.
Banks make money by lending out our deposit dollars. Today, many banks are pulling in profits by lending to harmful industries like fossil fuels, private prisons, factory farms, and weapons manufacturing, allowing these industries to continue expanding. Other discriminatory practices like redlining, biased underwriting, and predatory lending have taken wealth out of communities of color and other marginalized populations, concentrating it in the hands of powerful business owners, megabanks, and their shareholders.
We don’t think this is an inclusive or sustainable model. But there’s good news: ethical banking alternatives exist, and they are paving the way for a brighter future for all.
Funding Fossil Fuels
The world’s 60 biggest banks poured $6.9 trillion into the fossil fuel industry from 2015 through 2023.
1Carbon-Intensive Industries
On average, the 11 largest banks in the U.S. lend over 19% of their portfolios to carbon-intensive industries.
2Predatory Lending
Payday lenders in California are 2.4 times more concentrated in Black and Latino communities, after controlling for income and other factors.
3Take action with your deposits.
Banks are powerful, but so are you. When pooled together, our deposits can finance affordable housing, renewable energy, and business cooperatives – a new, inclusive economy. Whether you are an individual or an organization, where you put your money matters.
What Is Conventional Banking?
We define a “conventional bank” as an institution that follows traditional capitalist practices, aiming to grow revenue to maximize profits for its shareholders. These endeavors can cause harm to our environment and people, particularly communities of color and other marginalized communities. We believe that it is vital for our world to transition to a more ethical banking model as we continue to see problems like wealth inequality, poverty, racism, and environmental degradation worsen.
What Is Ethical Banking?
There isn’t a universal standard for what it means to be an “ethical bank.” We think of ethical banking as a highly responsible, impact-led banking model that seeks fairness and sustainability. It considers the welfare of—and potential impacts on—all stakeholders, including clients, employees, the communities they serve, and the planet on which we all live. Profit is not prioritized above all else. Ethical banks have green and inclusive lending portfolios and restrict lending that creates negative environmental and social impacts. Some may follow Environmental, Social, and Governance (ESG) criteria, and may have net-zero goals and carbon footprint initiatives that they follow, measure, disclose publicly, and improve upon.
Ethical banking is a step in the right direction, and we consider it to be the new minimum baseline for banking models if we are to build a future-proof and just economy.
Beneficial State Bank Is Leading the Ethical Banking Movement
We strive to be the gold standard for ethical banking, proving that a bank can not only avoid harmful practices but can also restore our communities and planet while remaining profitable. We avoid lending to harmful industries and aim for at least 75% of our lending portfolio to go towards having a positive impact on people and the planet. To hold ourselves accountable to the highest standards, we participate in several third-party certifications and memberships. We...
- Are a certified Community Development Financial Institution (CDFI)
- Are Fossil-Free certified
- Are Just certified
- Are a member of the Global Alliance for Banking on Values (GABV)
- Have received two consecutive CRA ratings of “Outstanding”
- Are one of the top-rated B Corporations in the world
Read more about our certifications and memberships in our Impact Report.
Embrace Your Financial Agency
Start by asking your bank these questions:
- What percentage of your lending portfolio goes towards harmful industries? And what goes towards regenerative industries?
- Are you a certified B Corp or a CDFI?
- Are you Fossil-Free certified?
- Are you a member of the Global Alliance for Banking on Values (GABV)?
- How do you report on your impact every year?
Banking is the ultimate form of crowdfunding. We all have the power to take back our agency and accountability by choosing where we bank. As ethical banking practices gain momentum around the world, you can join the growing coalition of people who are aligning their money with their values. It’s one way you can cast an influential vote for a brighter tomorrow. See how your money can make an impact.
Spotlight on Ethical Banking
We envision a more equitable economy and a banking industry that prioritizes a triple-bottom-line: people, planet, and prosperity for all.
Choose a Bank that Invests in Tomorrow
Beneficial State Bank serves the triple-bottom-line of people, planet, and prosperity for all. That means prioritizing social justice and environmental sustainability. Change your bank and help change the world.