What if banks saw finance as a vehicle for benefiting our society?

Posted on Posted in Economics, Finance

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What if banks only financed organisations, ventures and businesses that benefited society and the environment?

Triodos Bank has funded wind energy farms, alternative schools, organic farming, microfinance, community living projects and arts initiatives. Ecology Building Society has joined crowd funding platform Abundance to provide finance for the installation of solar panels on the roofs of a social housing.  Projects not funded by conventional banks but contribute uniquely to our society.

Why? These are value based banks, with customers who expect all funded projects to live up to high standards of green and social innovation.

We have had banks combine profit with social mission, measuring success by financial, social and environmental performance.  But other banks have gone further, deciding to become vehicles for financing societal solutions.  These are value based banks.  Value based banking is done through the business model,  a deliberate business strategy, not corporate social responsibility, sustainability programmes, public relations or philanthropy.

The Global Alliance for Banking on Values (GABV) is made up of the world’s leading sustainable banks with a shared commitment to finding global solutions to international problems.  Value based banks are different because they focus on:

  • Investing in local services, facilities and businesses that contribute to the health and economic welling of communities
  • Supporting social enterprises that create jobs, enhance skills and deliver essential goods and services
  • Increasing the financial well-being and economic self-reliance of disadvantaged populations

Some value based banks are also bridging spaces, connecting people with similar values. These banks are enablers, connectors and advisors beyond pure financial relationships.  These arrangements enable relationships to develop so that banks become partners, not just vehicles for financial transactions.

One of the biggest problems with our economy today is that most of the money circulates in the speculative part of the system which is toxic and corrupt – the financial economy.  The financial economy is concerned with financial markets.  It does not exit to serve the real economy, (i.e. economic activity that generates goods and services).  The problems with banking are deeply entrenched within the financial system. Fundamental change is needed. Value based banking commits assets to the real economy not to the financial economy.

Many banks have Corporate Social Responsibility departments, ethical policies, codes of conduct and even grant making foundations.  Yet, they still engage in irresponsible behaviour.  To change, so they can genuinely support what is most important to us all – our wellbeing and nature whilst ensuring a sustainable economy, they need a mind set and values that challenge all they stand for – their purpose, power structure, rules and culture. There is very little evidence that conventional banks are changing their mind sets or values.

There are people questioning whether we even need banks in the digital age. But that’s for another post.

 

It is time to change the system and demonstrate a model for sustainable banking that uses the intermediary power of finance to benefit people and the planet.” Bevis Watts, Managing Director, Triodos Bank UK

 

What can I do?

  • Embrace the idea of financing ‘societal returns’, using the money in our banks to create and support solutions to society’s problems.
  • Set up an account with a value based bank.  In the UK we have Triodos and Ecology Building Society
  • Tell other people about value based banking
  • Move Your Money UK provides information to help you  make informed decisions about the types of financial institutions that you want to support
  • Use All Street –  to gather independent research about crowd funding ventures
  • Join Share Action who influences companies and their investors to make decisions that make people’s lives better and protect the environment.
  • Write to your bank asking them what is stopping them from joining the Global Alliance for Banking on Values

This short video introduces the Global Alliance for Banking on Values.