Sustainable Banking & Ethical Investments

When you think about sustainability and ethics in conducting a business, you are probably not thinking about banks. However, that is an outdated way of thinking as today you can, for instance, reduce your CO₂ footprint by simply switching to a different bank! The recent boom of digital-native mobile-first neobanks brought a number of new challengers with modern values to the category traditionally occupied by large corporations that put money first, no matter the costs to the Earth and society as a whole. As a result, we can now enjoy voting with our wallet to support the banks that conduct their business in an ethical and sustainable way! Sure, they might not be saints either, but at least they are not outright evil like some of the "Wall Street banks", which is already a major improvement. It is fairly hard for customers to know exactly what happens with our money when it is held by banks, hidden away from our view, but it still is a responsible consumer choice to do your due diligence prior to signing up.

In this day and age, it is increasingly important to make more consciously ethical and sustainable choices - one example of that is doing your research on how your bank's strategy coincides with your values. The way banks treat the environment, the businesses they invest their customers' funds in and their commitment to sustainability was also one of the key factors our experts used when ranking the best online banks available on the market today. And - if you have not already - make sure to visit our article on the best banks for investments and savings.

What do banks actually do with your money?

Money put into savings and (to an extent) checking bank accounts is invested in various ways. This means that although we are able to withdraw our money at any time we wish, we could be unwillingly financing something we do not agree with. For example, a majority of banks choose to invest in traditionally low-risk activities like oil drilling or coal mining, or high-margin businesses like military contractors or arms manufacturers. They will not publicly disclose this information or notify you when you open an account, so it is important to do at least some research if you do not want to be sponsoring these.

How do you know if the bank is ethical?

The first thing to investigate is what the bank does with assets under its management (simply put, all of clients' deposits). Find out what the bank you are considering invests in and where the bank pays its taxes. An ethical bank will have a statement claiming it will not invest in any of the following:

• Fossil fuels, arctic drilling, mining, coal power, tar sands, and fracking
• Funding armed conflicts or investing in military suppliers
• Businesses that use slave or child labor somewhere in their supply chain
• Promoting alcohol, tobacco consumption or gambling

Next, find out if they have any "green" initiatives, foundations and NGOs they sponsor and whether they recognize climate change and what actions they are taking to combat that.

Another thing to look into would be to search online for information on what kind of employer that bank is. Reading employee reviews might give you valuable information - after all, we can not expect a company that treats its personnel poorly to treat Earth and society as a whole well!