What are responsible banks?
These are credit institutions that focus on sustainable finance, adopting social and environmental criteria in their business. The first in Europe, Gls Bank, was born in 1974
On the occasion of the annual meeting of the Global Alliance for Banking on Values (18-20 April 2023) the most socially responsible banks in the world gathered in New York. Topics covered included the climate crisis, racial justice and economic inequalities.
The Global Alliance for banking on values is a network of independent banks: it has over 70 from 45 different countries, which meet every year. The volume of customers served reaches 60 million, the jobs around 800,000 people. The only Italian institution to participate is Banca Etica , one of the founding members of the network and the only Italian bank to be part of it.
Not only GABV, in Europe there are 2 other organizations of ethical finance: Febea ( European Federation of ethical and alternative banks ) and Inaise ( International association of investors in the social economy ). 3 different organizations but with common characteristics and intentions.
The goal is, first of all, to change the financial system so that it is more transparent and facilitates sustainable economic development, placing both people and the planet at the centre. Therefore, they aim to find local solutions to global problems.
"Banking based on values means being able to recognize and manage the ethical dilemmas of our time and rediscover the social functions of finance, in particular in being able to allocate resources efficiently to make a sustainable economy flourish", explains Ugo Biggeri, Chairman of the Board of Directors of ethical banking.
But what is meant by socially responsible banks? These are the institutes that focus on sustainable finance. In September 2019, the UN sanctioned 6 principles on which responsible banks must be based .
1. Alignment of corporate strategy to contribute to individual needs and company goals.
2. Impact and definition of objectives, i.e.: increase positive impacts by reducing negative ones on people and the environment.
3. Customers and Consumers: Encourage customers to engage in sustainable practices and enable economic activities that create shared prosperity for present and future generations.
4. Stakeholders: Proactively and responsibly collaborate with relevant stakeholders to achieve the company's goals.
5. Governance and culture: implementation of principles through responsible banking culture and governance.
6. Transparency and accountability: Periodically review these principles to be transparent and accountable for both positive and negative impacts, and account for contribution to company goals.
In recent years, the contribution of ethical banks to the economy has increased, especially after the pandemic which hit several sectors hard. It was precisely on this occasion that the responsible banks came into play, launching campaigns to relaunch businesses and granting loans for refinancing.
Furthermore, according to what emerges from the Fifth report on ethical and sustainable finance in Europe , ethical banks demonstrate greater support for the real economy than traditional banks. They are different from the latter: in fact, they adopt social and environmental criteria.
Looking proportionally, they grant more credit and offer more current accounts and deposits, they assist small savers and families to a greater extent, they are also less involved in activities on the financial markets. Finally, they have higher profitability, less volatile results over time and better resistance to crises.
Taking the numbers into account, in 2020 ethical banks granted credits equal to 72.98% of the total, against 36.96% of the conventional European banking system.
These results are the result of a long journey: in the 1970s (more precisely in 1974) the first ethical and sustainable bank in Europe was born, namely the Gls Bank . Since then, responsible banks have become numerous and increasingly important to our financial system.