In many parts of life, we deal with the issue of sustainability almost as a matter of course. Whether it's a minimalist lifestyle, a low-waste mentality or regional grocery shopping – yet the topic of sustainable or ethical banking is still unknown to many.
Ethical bank: sustainable living across the board
Much of what contributes to a sustainable life has to do with habits. For example, taking a jute bag shopping to avoid the plastic bag for the way home. Small benefit: if you save a few cents each time, you may have a little more left over in your account at the end of the month. So far so good.
But what actually happens to your money while it waits in your account to be used and gradually grows?? For most people, the sustainability concept stops when it comes to banking. The money is safely in the account and will one day finance a house, a trip around the world, or perhaps a start-up – what's the problem??
Right here: Your money isn't static in the bank like a big personal vault, it's in flux. Banks take money from savers and lend it to companies or individuals who need a loan. These borrowers* pay fees, savers* benefit from them. Through this practice your money increases even more. Good for your future, but bad if the money is put into unethical hands.
Problem: How do you know?
Banking systems – Which bank lets you participate in the decision-making process??
A look at the different banking systems already provides initial information about the whereabouts of your money. Is your bank a sustainable bank? Here's how to find out:
- Cooperative banks: These include the Volks- and Raiffeisenbanken as well as the Sparda. In this type of bank, half of the bank's company is made up of customers. As a shareholder* you have a vote in which areas the bank invests in. However, they have to make use of this if they want to influence the bank's orientation.
- Public banks: Shareholders of these banks, such as the savings bank, are the federal states, districts and municipalities. They are required to act in the public interest and are not allowed to make a profit. The focus is therefore mostly regional, but this can of course also include coal-fired power plants or oil companies.
- Private banks: this type of bank (well-known examples are Deutsche Bank and Commerzbank) are only beholden to their shareholders*, not the general public. They are in competition with each other and therefore entice customers* with a low, to no cost account. However, the mostly international orientation of private banks makes it unclear for savers in which areas investments are made and quasi impossible to influence them. Risky credit transactions of private banks have led, among other things, to the financial crisis of 2008.
Conflict of conscience: the silent participation in the banking business
In everyday life, we face many ethical and financial choices when we want to eat or dress sustainably. For most questions of conscience, we have developed clear principles in this regard. Maybe we would never wear real fur jackets or eat eggs from caged hens – but nevertheless both are available for purchase in large quantities. Now imagine that the money you have saved in the bank is used by borrowers to buy real fur or caged eggs. Figuratively speaking, your money may be invested in, for example, belligerent arms deals or companies that use child labor. Whether or not it is really happening cannot be traced in detail, since most banks not only finance individual companies, but also fill large investment pots. You can find out what business your bank is involved in in this finance guide.
Ethical Bank: What you can do
If you want to decouple your savings from this flow of money and prefer to specifically support sustainable companies and projects, there is a relatively simple solution to this: switch to an ethical bank. So-called sustainable banks take social, environmental or ethical standards into account in their investments. They are also often cooperative banks, which means that all savers* have a say in investments when they secure a bank share. In Germany, there are currently 14 banks that can be described as sustainable. The best scores in the ethical ranking of the "Geld bewegt" initiative are achieved by these five:
- Ethical Bank
- GLS Community Bank
- Triodos Bank
- Environmental Bank
- Procredit Bank
For a bank to be considered sustainable in this ranking, it must exclude certain investment areas such as the arms industry or child labor from the outset and make its financial transactions as transparent as possible. Details about the five biggest ethical banks and other alternatives can be found at these bank portraits.
Cost factor: Are ethical banks a matter of price??
Ethical banks cannot offer their services free of charge, because, as with organic food, sustainable banking also incurs additional costs. However, these are not covered by risky transactions, but fixed customer contributions and monthly account maintenance fees. We speak here however not of astronomical costs, but fees, which are quite comparable with most public banks and cooperative banks. Many ethical banks are also cooperative and significantly reduce their fees once you become a shareholder or waive credit card fees once you reach a certain account turnover.
You want concrete numbers? Here you will find a cost overview of the three largest ethical banks.
If you are interested in ethical banks, a current account is really just the beginning. Likewise, with ethical-ecological savings you can invest your money for meaningful projects or invest in so-called green funds. In any case, you'll want to make sure that while your money is waiting for a special use in your life, it doesn't go to messy deals. A clear contribution to making tomorrow's world a little bit better.