What are Banking Ethics?


Banking ethics are the moral or ethical principles that certain banks chose to abide by. There isn’t an ethics ombudsman or a universal code of ethical conduct, but the banks that vaunt their ethical credentials vet the ethical standing of potential investors and partners and also choose the companies that they in turn invest in with their ethical policy in mind. This means that a typical ethical bank will require potential investors to complete an Ethical Policy questionnaire. Should the nature of the investor’s business run counter or in some way compromise the bank’s ethical policy, they will refuse to accept the investment. Similarly, an ethical bank will often seek out investment opportunities that encourage environmental or social enterprises.

Banks must maintain accurate records of a depositor's account.
Banks must maintain accurate records of a depositor's account.

The number of ethical questions that the banking industry faces are many and multifaceted, but in broad brush strokes an ethical bank must have a policy that takes into consideration those questions that twenty first century globalization and the social and environmental issues attendant thereon pose. For example, the banking ethics that the Co-operative bank (UK) adopted in 1992 mean that it refuses to invest in companies involved in the arms trade, companies contributing to climate change, animal testing, genetic engineering and those companies who exploit sweat shop labor.

Generally speaking, banking ethics and profitability are not mutually exclusive concepts.
Generally speaking, banking ethics and profitability are not mutually exclusive concepts.

Banking ethics and profitability are not mutually exclusive, but being an ethical bank does sometimes mean that they maintain their moral rigor at the cost of profitability. This was the case with the Co-operative bank who in 2005, turned away investments totaling $20 million US Dollars (USD) because the investors were involved in what they considered unethical enterprises. These included a company who made traditional Scottish sporrans from fox pelts and a shoe-making company that decorated its footwear with sable.

In the United States ethical banks such as ShoreBank, Wainwright and RSF have sought out investment opportunities in those under developed areas and communities that are perhaps unattractive to banks with fewer ethical imperatives. ShoreBank has prospered within this moral framework and has seen its assets grow to $2.1 billion (USD). Equally, RSF has loaned in excess of $100 million (USD) and has reaped profits of over $50 million (USD), with an annual growth rate of 60%.

Banks that are known to have functioning ethical policies are found all over the world, and include the following: Triodos Bank (UK), the Co-operative Bank (UK), ShoreBank (USA), RSF Social Finance (San Francisco and New York, USA), Shared Interest (UK) based in the United Kingdom, Wainwright Bank (USA), La Nef (France), GLS Bank (Germany), Banca Popolare Etica (Italy and Spain).

Banking ethics are the moral or ethical principles that certain banks chose to abide by.
Banking ethics are the moral or ethical principles that certain banks chose to abide by.

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Discussion Comments


How about a bank that gives an employee a final warning for depositing a dollar of the employee's own money into a visually handicapped customer's account so the visually handicapped customer did not have to ride the bus back down to the bank? That happened at a large US bank. The bank said the employee's action was an ethics violation. Makes you wonder what kind of ethics that bank has.


I have a comment on the way banks now have made it very difficult to get a home loan and hold you for months to be able to secure money to have a home reconstructed. I have been waiting since March 2011 and yet I do not have a guarantee of a small construction loan. They keep making excuses that it is because of the strict laws from the government. It has been so long it would even more prolonged if I change to another bank.


Environmental banking, environmental discrimination, and other forms of environmentalism, are all becoming serious studies and endeavors. People who respect themselves and respect planet earth must necessarily be careful that they do not invest in companies and practices which harm the environments and cause the living conditions of the poor to decrease due to pollutants.



I think that this points out the fact that banking ethics, and much of the newer, more liberal human ethics, are not humane. They focus a lot on the environment and preservation, seeking to replace the old morality with science. The issues of the world are blamed on religion. I think that protecting the environment is important, but not at the expense of protecting human rights, the unborn, and women.



I think the issues of the environment are scientifically based and therefore may be more credible than the older "moral" foundations of human ethics and ethics of monetary investment. Supporting vaccinations and abortions in third world countries is actually doing societies and environments there a favor. In many ways, the extinction of an animal species is sadder than human tragedies of war.


It is sad to see that ethical issues in banks and in European cultures have become based strictly on environmental issues, and are slowly turning away from the more important social issues. Shouldn't banks refuse to invest in companies which support abortion or human trafficking? The pornography industry is doing great, why is this? While it is good that banks will not invest in people who support sweat shop work- is that really the best we can do?

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