Ethical Banking

Ethical banking is defined as a banking system that embraces socially and environmentally conscious practices. It is a broad concept that can encompass anything, from providing financial aid to an environmentally-friendly company to participating in a charity event for housing. Banks try to practice ethical banking while simultaneously making profits, which is their top priority. As a result, they are usually reluctant to provide their services to people with bad credit histories and low incomes. When people in low-income communities are unable to save and borrow money from financial institutions, they are stuck in a cycle of poverty. This is where profit-based policies would not be adequate enough to improve their situation.

 The key to ethical banking is sticking to a set of principles no matter what the situation is. If a company lacks a culture of ethics, organizations and people will be at risk. The U.S. Federal Sentencing Guidelines include expectations for companies to promote an ethical culture that enforces compliancy with laws. A strong culture has two defining elements: an agreement within the company to what is valued and a high level of intensity to preserve those values. When implemented, this can create a competitive advantage for any organization.

 Here are a number of steps that can reinforce company cultures and ethical values:

  • Community involvement: Take an active interest in the community’s wellbeing

  • Hold seminars in the workplace to educate employees on company values

  • Client screenings: in order to avoid working with organizations or clients that have a history of immoral practices

  • Maintain a healthy mood in the workplace: management’s ability to translate a positive tone will be crucial

  • Appoint an ethics officer: have their main role include promoting a code of conduct that will improve accountability and performance

  • Keep it interesting by finding new ways to reward ethical behaviour: encourage storytelling

  • Leaders should communicate values regularly

  • Allow workers to speak their mind: understand how people in the workplace think

  • Be consistent with internal and external ethics: practice what you preach. If a bank will not do business with a company that does not offer health insurance to their employees, then the bank cannot refuse health insurance to its own employees

 It is important to remember that banks participating in humanitarian efforts should still keep an eye on finances. Ethical practices will not keep a bank from financial weaknesses.

 Author: Yvonne Kwan


Sandford, Nicole. “Corporate Culture: The Center of Strong Ethics and Compliance”. The Wall Street Journal, 2015. Online. Internet. 22 Jun. 2017.

 “What Is Ethical Banking? – Financial Web”., n.d. Online. Internet. 20 Jun. 2017. 

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