The combination of activists occupying streets across the globe, and the pull of an ever worsening economy, is brewing up the perfect storm for banking. With liquidity pricing at its highest since the fall of Lehman Brothers, it could well get a lot worse. But, despite this, the fundamental role of banks in society still isn’t receiving the attention it deserves.

Perhaps as a society we’ve become so blind to banking’s potential for good that, while we express frustration at the unacceptable behaviour of banks, we can’t actually imagine them doing anything else. But it doesn’t have to be this way. The role of banks is no longer an academic exercise, but a timely and fundamental question.

Picture society as a human body. If money is its lifeblood, then banks should act as society’s heart, pumping it around as needed. If the heart is healthy, the body will be able to access the resources it needs to remain healthy. But without a conscious approach to the flow of money, the malaise in the society will feed back to the banks and infect them. The financial crisis has proven that, when the banks fail, the whole of society suffers. And, after bringing the economy to its knees, it’s morally and practically right that banks take an active role in helping to build it back up again.

So what should the future of banking look like? We believe that banks should act as enablers of positive change, focusing more on the real economy and supporting its future, rather than short-term shareholder returns. Research commissioned by Triodos shows that five in six people believe their bank should play a role in helping society. Two thirds (64%) wanted to see more investment in communities. Just 3% of savers feel banks are transparent about what happens to their money. We can guess why. At present, only a fraction of the money lent and invested by the main banks is used to bring about positive change. Clearly the banks’ customers do not think this is good enough. It’s a call to action for policy-makers, shareholders, and bank executives: they have to ensure the banking sector gives more back to society, rather than just taking.

A compelling alternative would see a shift towards smaller banks, and more of them. This would deliver benefits to society while limiting the financial sector’s potential to harm it. These smaller banks could operate on a human scale. They could specialise, and pass expertise onto their customers. The more focused they can remain on the direct impacts of the finance they provide, the more emphasis they can place on its environmental and social advantages.

The Global Alliance for Banking on Values is an independent network of banks which aims to use finance to deliver sustainable development for people, communities and the environment. It demonstrates how a new model made up of smaller, interconnected banks can work. While they serve very different communities, from urban San Francisco to rural Mongolia, they learn from each other, sharing ideas on long-term sustainable thinking, new forms of ownership and economic cooperation.

Crucially, scaled-down banks would be small enough to fail. One of the cruellest ironies of the financial crisis has been that banks – which often act as judge, jury and executioner for struggling businesses – have not been forced to play by their own rules. Arguably, smaller banks would not benefit from the economies of scale enjoyed by today’s banking behemoths. But, while it’s questionable whether these savings are passed on to the consumer, there’s no doubt what the cost of their failure has been.

The banking industry owes an awful lot to society. A little open heart surgery is exactly what it needs to start making repayments.

Bevis Watts is Head of Business Banking, Triodos Bank.

This article originally appeared in Green Futures, the leading magazine on environmental solutions and sustainable futures published by Forum for the Future.

Triodos Bank is an active member of Ethical Junction, learn more

Part of the This Stuff Matters Campaign by ethicTrade

What is a sweatshop?

A sweatshop is a term with strong negative connotations for a place of production, usually a factory, where employees work for very low wages and for very long hours. Minimum wage laws are usually ignored and child labour often utilised.

Aren’t sweatshops a thing of the past?

Unfortunately not. Whilst there was a sharp decline in sweatshops during the 1950s, they are now more prevalent than ever and are still on the increase. This is largely because many companies – and not just the large multi-nationals – are manufacturing their products in less economically developed countries where they can ‘employ’ very cheap labour with minimal fear of reprisals. By lowering manufacturing costs they are able to market their end-products to consumers at more competitive retail prices whilst simultaneously increasing their profit margins.

Who are the workers?

According to feminist.org, 90% of people who work in sweatshops are women, and most of these are between the ages of 15 and 22. Their wages of the equivalent of 7-25 pence per hour are nowhere near enough to meet the cost of living. There has been a lot of evidence that suggests women in sweatshops are often subjected to sexual harassment and corporal punishment by their male bosses. Very often they are not even allowed to take toilet breaks few breaks during the 10, 12 or even 14 hour shift. Unpaid overtime, unsafe working conditions, no annual holiday and no maternity leave completes the picture.

Why do they work there?

Frequently these women have been tempted in to signing working contracts with the company in return for promises of a better life in a foreign country like the USA. They are even so convinced that working for this company will improve their lives that they pay the company initial fees to be allowed to work for them! Because they earn so little money it can often take years of working for zero pay to settle this debt with the company.

What must we do?

Buy fair trade. Fair trade products are not limited to just coffee and bananas, though obviously these are good too. With a tiny bit of effort, you can buy your clothing, toys, gifts and home furnishings all from companies that have proven themselves to have an ethical supply chain. This will leave you free to boycott those companies that still use sweatshop production.

Ethictrade LLP is an active member of Ethical Junction, learn more

Fairwind is an active member of Ethical Junction, learn more

Huw Davies – The power of money

If you are one of the growing population of  ethical consumers in the UK, you will take time to make careful decisions about the sourcing and production of products you buy. You no doubt want to do your bit to make the world a better place – for now and the future?

And, along with most people, you probably find banks and financial services pretty dull, just one of life’s necessities – but hardly the most exciting topic?

But take another look… because your bank and savings provider should be top of your ethical shopping list.

Many ethical consumers have not considered how uneasily their choice of bank may sit  with their other choices and beliefs. Their money may be used to support unethical activity, and certainly not to fulfil its potential to enable positive change. The future doesn’t just happen, we’re collectively creating it every day, and your savings play a big role in that – here’s why:

How banks put your money to work

Money does not stay still, it is passed around the global system, being lent and invested. This activity seems a far cry from handing over hard-earned cash at a local bank branch for safe-keeping.  But the fact is that, once out of your hands, your money enters a system which is far from transparent. Banks’ lending and investment decisions could see your savings helping to fund businesses and organisations you do not approve of – for example, tobacco firms, arms manufacturers, undemocratic regimes, or businesses with appalling records on pollution.

Of course, these same banks also support ethical businesses, and individuals – the problem is that in today’s interconnected global financial marketplace you cannot be sure that your savings are not doing harm.

Consumer choice

Increasingly, we want to know how the products we buy are sourced and produced, from fishing to clothing to coffee. If as a consumer you take an interest in, for example, how the food you eat reaches your plate, and make purchase decisions based on this, why not also challenge and understand how the money system works – and act on it?

Recent research shows that 85% of all UK savers want more information on what banks actually do with their money, and just three per cent of savers feel banks are transparent about what happens to their savings once deposited. At Triodos Bank, we believe savers have a right to know if their hard earned cash is being used to fund industries such as weapons production or the tobacco industry, only then can they make an educated choice as to where they deposit their money.

At Triodos we show our savers all the places we lend to, and they are all businesses and organisations working for positive change in either social, cultural, or environmental sectors.

Simple really.

The role of banks?

The same research showed that three out of four savers (74%) think banks should take more responsibility and proactively do more to help society. At Triodos we believe we need to see the banking industry doing more to support and focus on the real economy and its future rather than operating with a primary mission of delivering short-term shareholder returns. The sector as a whole must acknowledge  customers’ interest in the use of money, and properly consider the role that its power and influence can play in acting for positive change.

Change banking – one account at a time

As an ethical consumer, we’d love you to join us and put your money to work for good – while earning you interest. It’s easy, and means that your other ethical consumer choices are supported automatically by what your money is doing when it’s not in your hands.

Ethical consumers have demonstrated that our purchasing decisions can have an huge impact, helping products like fair trade and organics go from niche to mainstream. If buying the right coffee and cotton can change the world for the better, just imagine how powerful it could be if we all chose the right bank.

Huw Davies is Head of Personal Banking at Triodos Bank
www.triodos.co.uk

Triodos Bank is an active member of Ethical Junction, learn more

Are ethical savings really viable?  Can you earn a good rate of interest and still save in a way that benefits society and the planet?

If you are expecting to earn 10% on your savings, then the answer is probably no.  But then, as dramatically demonstrated by the Icelandic Banking collapse in 2008, excessively high returns may not be sustainable anyway or involve risks you may not be happy to take.

If you are looking for a more reasonable rate of interest for your savings, then principles and profits can, and do, coexist.  Take the Charity Bank Ethical ISA for example, as well as being consistently listed in the Which? Best Buy table, 100% of the ISA’s depositors’ money is invested in charities and social enterprises.

There are further advantages to choosing a bank with principles. At Charity Bank, these principles apply not only to the projects we fund, but the entire way the bank is run.  We genuinely value our customers – and this translates to real benefits for our savers.

We don’t only offer our latest deals to new depositors, for example.  Instead, our default account settings are favourable to all our depositors, our products and terms are simple and we ensure customers can easily transfer accounts.

If you ignore ethics and principles, then your savings options will, admittedly, be wider, but wouldn’t you rather save with a bank that delivers both, enabling you to sleep at night knowing your money is working for the good of society and the planet while offering you a fair return?

Charity Bank is an ethical bank that finances social enterprises, charities and community organisations, with the support of depositors and investors who place their money in ethical savings and ethical ISAs to facilitate real social change.

Charity Bank – Ethical Bank is an active member of Ethical Junction, learn more

Sustainable Finance: What’s your money doing behind your back?

Do you know what your bank does with the savings you entrust to it? Have you ever even wondered?

Recent research shows that 30% of bank customers admit having no idea what their bank is doing with their money. Amazingly, one in three customers believe their bank would simply add occasional interest to their savings or just lock the money away in a vault. Only four in 10 of us are aware that our money may be lent out to a range of companies and organisations, and just 45 per cent of us recognise it may be used to fund banks’ investments elsewhere.

How banks put your money to work

Money does not stay still, it is passed around the global system, being lent and invested. This activity seems a far cry from handing over hard-earned cash at a local bank branch for safe-keeping.  But the fact is that, once out of your hands, your money enters a system which is far from transparent. High Street banks’ lending and investment decisions could see your savings helping to fund businesses and organisations you do not approve of – for example, tobacco firms, arms manufacturers, undemocratic regimes, businesses with appalling records on pollution. The list goes on…

Of course, these same banks also support ethical businesses, and individuals – the problem is that in today’s interconnected global financial marketplace you cannot be sure that your savings are not doing harm.

You won’t be surprised that there aren’t a lot of ‘ethical banks’ around. Some simply screen out negative impact businesses and organisations from their lending and investments, while at Triodos we only invest in positive impact businesses and organisations.

Of course it would be naïve to expect the big banks to adopt this level of transparency any time soon;, but surely any step towards better transparency on lending and investment decisions, using your money, would be a step towards empowering savers.

Consumer choice

Increasingly, British consumers want to know how the products they buy are sourced and produced, from fishing to clothing to coffee.  If as a consumer you take an interest in, for example, how the food you eat reaches your plate, and make purchase decisions based on this, why not also challenge and understand how the money system works?

Ask your bank how they are using your savings, and ask them whether they lend to or invest in areas you may disagree with, be it arms, polluting companies, tobacco firms, or undemocratic regimes. Show that you are interested, show that you need them to be accountable to you, their savers, on ethical issues, in just the same way as many other big companies now are to their customers.

And if they can’t or won’t answer, or you don’t like what you hear, why not make your voice heard and move your savings to an ethical bank that can, and will.

Huw Davies is Head of Personal Banking at ethical and sustainable bank Triodos

You can see all the places where Triodos puts savers money at
http://www.triodos.co.uk/en/about-triodos/what-we-do/who-we-lend-to/

Triodos Bank is an active member of Ethical Junction, learn more

This Christmas the serious ethical issues surrounding the Christmas tree industry are being brought to the attention of the public in the UK. The UK campaign is being lead by Fairwind, a leading fair trade retailer and importer and there are BBC documentaries and news items being aired on TV and radio in early December 2010. MAAssist is proud to be the first UK business, outside of the fair trade community, to financially support this campaign.

Fair Trees® – fair trade real Nordmann Fir Christmas trees

About 5 million Nordmann Fir Christmas trees are sold in the UK each year. But until now, very few people in the UK have been aware of the serious ethical issues behind buying these trees at Christmas. Although they are farmed in the UK and Denmark the seeds for Nordmann Firs are sourced from natural forests, mainly in Georgia.

Harvesting of the seeds in Georgia is carried out by hand under remarkably primitive conditions. The Georgian cone pickers climb up 30 metre high fir trees in order to reach the seeds. Until now, they have worked entirely without safety equipment and in 2004 two workers fell to their death during the harvest. Several accidents happen each year, but despite working in such dangerous conditions the cone pickers are usually paid such low wages that it is difficult for them to support their families.

A Danish Christmas tree grower called Bols Forstplanteskole is changing all of that. Bols source their own seeds from Georgia using fair trade principles, and in 2007 was awarded fair trade accreditation by Fair Trade Danmark – Bols is the only Christmas tree grower in the world with fair trade accreditation. In 2011 Bols will have full accreditation by the World Fair Trade Organisation (WFTO). Not only does Bols pay a fair wage and provide health insurance to the cone pickers but proceeds from the sale of Fair Seeds and Fair Trees® are donated to the Bols Xmas Tree Fund, a charitable fund based in Georgia.

The Bols Xmas Tree Fund aims to create awareness about and improve the terrible conditions under which the Georgian cone pickers live and work. The Fund provides the cone pickers with Danish-made safety equipment and ensures that the workers are instructed on safety. In addition, the Fund works towards creating proper conditions for workers and their families through financial support for hospitals, schools, books and health care.

MAAssist fundraising

MAAssist will set aside £1 for every claim with value received from 1^st January 2011 for the Fair Trees® project.

MAAssist will also welcome support from any insurance clients who are willing to make a donation to the Fund. In return for such a donation, the insurance client will be able to use the Fair Trees® name in any corporate social responsibility and marketing promotional material.

MAAssist staff will also be carrying out various fund raising activities in 2011.

A team of tradesmen will go to Georgia in August/September 2011 to renovate the local school in the cone picking region of Ambrolauri.

Contacts – further information

If you would like to be involved in the Fair Trees® fundraising activities for 2011, or would like more information, please contact:

Teresa Owen, Fairwind

Email: t.owen@fairwindonline.com

Tel: 0845 196 0256

 or

 Paul Hayman, MAAssist

Email: Paul.Hayman@maassist.com

Tel: 01296 678100

Fairwind

This innovative company is owned and run by Teresa Owen. Fairwind is a thriving online business that is passionate about fair trade and providing affordable, quality fair trade gifts and accessories from around the world.

In 2007, Fairwind was shortlisted for an Observer Ethical Award and is a member of the British Association for Fair Trade Shops (BAFTS) – visit www.bafts.org.uk for more information.

Fairwind sells gifts, home accessories and textiles, jewellery, children’s toys, candles and garden accessories. To see Fairwind’s full range, or for further information, visit www.fairwindonline.com or phone 0845 196 0256.

High-resolution images of all products are available and in most cases also cut-out images – they can be downloaded from http://www.fairwindonline.com/resources.asp.

MAAssist

MAAssist Limited specialises in domestic building repairs on behalf of some of the UK’s largest insurers and property related markets, using its in-house construction company MABuild Limited, supported by a nationwide network of trade professional companies, creating an established Building Repair Network (BRN) and Control Centre function for its clients.

With its niche range of products and services MAAssist has consistently helped insurers and property portfolio managers to materially reduce their claims management, claims settlement and budgeted spend and expenditure, through correct building claims validation and delivery of quality building works.

And MAAssist’s ability to settle and fulfill buildings claims, and offer customers and clients a real choice in their preferred method of claims settlement, enables them to consistently deliver a positive claims experience. For more information please go to www.magroupltd.co.uk

Bols Forstplanteskole

Established in 1989 by Marianne and Lars H. Bols, Bols Forstplanteskole has always been an innovator in the Christmas tree industry. Although both Marianne and Lars were studying at the time, they were excited by the forestry industry and by the challenges of supplying top quality products with the right provenances.

Their first business trip was to Georgia, in 1989, to buy 8 tons of Nordmann Fir seeds. As Georgia was then still part of the USSR, it was a long, tough battle to get the seeds and have them shipped to Denmark. But it was the start of a minor revolution in raising the quality of the Christmas trees coming onto the market. Marianne and Lars were moved by the generosity and warmth shown to them by the Georgian farmers: “Even though they were poor, they invited us in and many of them remain close friends. They were also one of the main reasons why we continue to collect seeds from Georgia.” Another reason for continuing to do business in Georgia, despite the many obstacles, is that the Nordmann Fir seeds obtainable there are simply the best in the world.

Apart from providing a full-spectrum catalogue of plant and trees to a broad multinational market, Bols’ more recent initiatives include organic and fair trade products: www.fairtrees.co.uk

Fairwind is an active member of Ethical Junction, learn more

We have laws, regulations and organisation policies, but they don’t guarantee ethical behaviour. Ethics is personal and rarely simple; it’s about individuals finding, and refining, their sense of responsibility to others.

The public’s perception of what is ethical and responsible is constantly evolving, and not necessarily related to whether the current rules are followed, as many of our politicians discovered to their cost. That’s why Quakers and Business have launched a new development programme, which focuses on the unchanging fundamentals of ethics, not constantly changing rules and regulations.

A deeper consideration of ethical responsibilities helps in various ways;

• To clarify an organisation’s ethical responsibilities
• To establish what it means to lead and manage responsibly
• To embed a sense of ethical responsibility throughout an organisation
• To clarify your personal sense of ethics

The programme provides the tools to consider any aspect of ethics in your professional and personal lives. More information at www.qandb.org/ethicsprog.

Quakers and Business is an active member of Ethical Junction, learn more

But charity financial advisers could do more to help ensure charities invest in line with their mission, survey finds.  
 
Latest research from the EIRIS Foundation Charity Project and the Charity Finance Directors Group (CFDG) finds that 87% of UK charities with an ethical investment policy said that their financial adviser has asked them about incorporating ethical issues within their investments. However, for those charities without an ethical investment policy, only 43% of charities said their adviser has asked about ethical investment.
 
Socially responsible investment (SRI) enables charities to invest in line with their mission, avoiding conflicts with their work and risks to their reputation. Over 90% of the general public believe that charities should invest ethically, but practice still falls a long way short of this.

Investment advisers and consultants can play a crucial role in the
decisions that charities make about their investments and whether to
consider social, environmental, ethical or governance factors. However,
some advisers have been criticised for discouraging charities from
considering ethical or socially responsible investment (SRI) and
linking their investments with mission.

Are Charity Consultants
Helping or Hindering the Development of SRI probes charity advisers’
current thinking on SRI, how they see their role in the evolving SRI
market and what would increase the take up of SRI by charity investors.
It compares the views of charities and evidence from the wider SRI
sector to explore the real and perceived barriers to change.

Key findings

§        
15% of charities without an ethical policy said that advisers were
discouraging or very discouraging. This compares to 4% of charities
with an ethical policy.
§         Some advisers do not see it as
their role to ask charity investors about SRI particularly if it is a
charity with broad aims and objectives.
§         Advisers are less
likely to ask charities about SRI if they don’t already have an ethical
investment policy – and may be more likely to be discouraging where no
such policy is in place.
§         Advisers agree that the
consideration of social and environmental risks should not harm returns
in the long-term, and could improve them. But many focus charity
clients’ attention more on short-term potential risks of
under-performance and volatility, even though studies repeatedly show
that investing ethically does not mean that financial performance has
to be sacrificed.  
§         Advisers identified a lack of
appropriate products as a key limiting factor to the promotion and
take-up of SRI.       

Advisers also feel that some trustees
are uncertain about their role in ‘imposing ethical considerations’.
But as one adviser commented, ‘Trustees need to change their view of
their obligations – they are not in a moral vacuum and they can go
beyond their governing documents.’

Report author Sam Collin
said ‘Many of the challenges raised by advisers could be easily
overcome. The intermediary role of advisers means that they could be
doing more to breakdown the perceived barriers, provide clear and up to
date information to trustees and communicate gaps in unmet demand to
service providers.’

‘Issues such as corporate governance and
climate change are more high profile than ever before in the investment
community. As the significance of ESG issues is increasingly recognised
by mainstream investors the market for advice on responsible investment
is also set to grow. Being at the forefront of new developments could
help advisers take advantage of this growth’ she concluded. 

The report recommends that advisers could do more to:

§         Raise SRI issues with all charities
§         Provide information and training to trustees
§         Include environmental, social and governance (ESG) issues in standard reviews of investment managers
§         Keep informed of the latest developments
§         Communicate market gaps to fund managers

Click here (http://www.charitysri.org/homearea/documents/charityadviserdiscussionpaper.pdf) to download a copy of the research.