top of page
Working from a Cafe

Impact Blog

A place for the latest news about the Impact Investing World

The State of Sustainable Banking: A Report by FaithInvest


A recent report by FaithInvest's Membership Team highlights the current state of sustainable banking. In a world increasingly conscious of environmental issues, recent headlines have highlighted a concerning trend: major banks continue to fund fossil fuel projects, even those committed to the UN Principles for Responsible Banking. This contradiction presents a challenge for faith-based organizations striving to align their financial practices with their values, particularly in combating climate change.

FaithInvest's Membership Team has addressed this issue in their updated report, exploring how values-driven faith asset owners can find banking partners that share their ethical standards. This report delves into the concept of sustainable banking, offering insights into its commercial perspective, criteria, and the role of advocacy in promoting sustainability within the banking sector.

What is Sustainable Banking?

Sustainable banking, also known as ethical or social banking, focuses on supporting activities with social and environmental benefits. Key traits include:

  1. Values-Profitability: Funding socially beneficial projects and avoiding harmful industries.

  2. Transparency: Clear disclosure of operations and loan portfolios.

  3. Faith-Specific Services: Catering to religious requirements, such as Islamic banking.

Why It Matters: Faith-based organizations manage significant financial resources. For instance, in the U.S., religious contributions reached $128.2 billion in one year. Choosing a values-aligned bank ensures these funds support ethical initiatives.

Advocacy in Banking: Even if traditional banks are necessary for some services, faith-based groups can still push for sustainability. Advocacy can be done as customers or shareholders, influencing bank policies and practices to better align with their values.

Finding Sustainable Banks: Networks like the Global Alliance for Banking on Values (GABV) and the European Federation of Ethical and Alternative Banks (FEBEA) help identify sustainable banks. These banks may offer fewer services than large commercial banks but are more aligned with ethical and environmental goals.

Challenges and Considerations

When choosing a sustainable bank, consider:

  1. Suitability: Finding a bank that aligns with your values and meets your needs.

  2. Measurement: Assessing the impact of sustainable banking.

  3. Indirect Relationships: Managing banking services selected by asset managers.

  4. Support: Using sustainable banks for specific deposits or investments.

Conclusion:

Sustainable banking allows faith-based organizations to align their finances with their values, supporting ethical and environmental causes. As this sector grows, it's important for these organizations to consider sustainable banking options.



Disclaimer: Informartion is based on "The State of Sustainable Banking" report by Paul Goldwhite and Mathew Jensen, FaithInvest, September 2021. For more information, visit FaithInvest.

 

11 views0 comments

Comentários


bottom of page
<