Did you know? As we are moving toward a society with unprecedented levels of commitment to social justice, environmental sustainability, and climate change mitigation efforts, 83 percent of consumers now strongly believe that businesses — which have decidedly more power as well as a much larger impact than the average individual — should lead the way forward.
More and more consumers “put their money where their mouth is” when they say they want companies to commit to corporate social responsibility fit for the 21st century.
That means that they are likely to assess a company’s dedication to ESG values — environmental, social, and governance issues — at least informally.
In practice, that may mean shunning a clothing retailer recently reported to have involvement with unethical labor practices somewhere within the supply chain, such as involvement with child or prisoner labor or a lack of basic health and safety standards in factories.
It may mean actively choosing to buy from fast-food chains or grocery stores that have made important strides in phasing out environmentally hazardous disposable cups, packaging, and bags instead of choosing sustainable alternatives.
It may mean choosing service providers that embrace renewable energy options.
Consumer activism may even go further when individuals don’t just assess a company’s ESG commitments more formally when they make their own choices but also sign petitions, raise awareness about boycotts on social media, and encourage people in their social circles to be socially and environmentally conscious in their spending choices.
No matter which companies may have earned your personal trust and support, there’s a crucial step in the process that some people forget about.
If you are anything like the average modern consumer, it’s likely that you “store” every cent you earn at a bank — and that you rely on that same bank whenever you spend any money, anywhere.
Banks have become so ingrained in our daily lives that we often neglect to remember that they’re there at all.
Putting your money where your mouth is — or rather, in this case, where your values lie — has an absolutely enormous impact at the level of banks, however.
To be an environmentally and socially aware consumer, or an ESG activist hoping to impact the policies of large corporations at the level of your individual spending choices, you cannot fail to consider where you bank.
- So, what are the best socially responsible banks at this point in the 21st century?
- What about the best environmentally friendly banks?
- As a consumer or small business owner, how do you even begin to assess what banks have embraced ESG values and are practicing excellent corporate citizenship?
The answer may be complicated, but taking the time to learn about sustainable banking products is worth it if you want to maximize your impact.
Table of Contents
Ethical Banks: How Can You Determine Which Banks Are Committed to ESG Principles?
Environmentally and socially responsible banks would be those banks dedicated not merely to make a profit (although that will, of course, remain an important factor) but also to creating positive change in the world.
How do you know which banks are socially responsible, though?
Let’s be honest for a moment — in the current social climate, no company will be harmed by advertising that they embrace aspects of environmental sustainability or social justice, and many will actively benefit.
As such, it’s not at all difficult to come across companies, including banks, who declare a token commitment to ESG values in a rather vocal way.
“One tree planted per email” would be one example.
If you are hoping to assess how committed your current bank is to ESG principles, with a focus on environmental sustainability and climate change mitigation.
However, there’s a more systemic way to go about that than trusting in a bank’s highly-advertised steps in the right direction, which could in some cases turn out to be little more than a publicity stunt.
The same holds if you consider switching to a new bank because you know that money talks, and you only want to work with environmentally and socially conscious banks.
Although consumers can check how committed a bank is to environmental sustainability and social equity in several ways, the reality remains that most of us lead busy and complex lives where we have little time to do the kind of research that would earn you a handsome chunk of change if you were doing it professionally.
Instead, busy consumers who do want to be environmentally conscious in their banking choices can choose to rely on some of the already established standards in this area.
Let’s take a closer look at easier ways to determine what the best ethical banks are.
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B Corp Certification
The B Corp (or B Corporation) certification, established by the international non-profit organization B Lab, is a reputable standard. Only companies with proven dedication to environmental, social, and governance principles of corporate social responsibility can receive this certification.
Once they get it, they have to become recertified every three years to ensure they still uphold the highest standards.
Those companies that are B Corp certified will be proven to have made very significant policy and practical steps toward:
- social issues in the wider community (reduced poverty and increased equity, among others),
- in the workforce (dignified and ethical working conditions for diverse workers), and
- environmental issues (waste management, renewable energy, cleaner water, pollution mitigation, among others).
As the B Corp certification by definition means that a corporation has made itself accountable to outside organizations and is eager to join the growing community of socially and environmentally responsible corporations, people looking for socially responsible banks can look for B Corp certified banks.
Over 3000 companies have become B Corp certified to date all across the globe, and some of them are banks.
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Global Alliance for Banking on Values (GABV)
The Global Alliance for Banking on Values is an ESG standard that is specific to the banking world — making it a great place to look if you are hunting for environmentally and socially responsible banks that have demonstrated that their mission stretches far beyond profits alone.
Headquartered in Amsterdam, the GABV is a network of banks, banking coops, and other financial institutions that shows that self-regulation is indeed possible, to an extent at least, within industries.
The Global Alliance for Banking on Values has a mission of changing banking for the better by setting numerous sustainable banking examples to change industry standards over time.
Banks who meet the rigorous ESG standards that the Global Alliance for Banking on Values sets are aware that banking plays a crucial role in creating a sustainable economy that benefits all segments of society and being environmentally sustainable.
Its members recognize that values-based banking does not need to mean sacrificing financial returns — indeed, quite the opposite is quickly becoming true.
As membership within the GABV is both voluntary and open only to those banks who have a proven commitment to environmental sustainability and social equity, in practice as well as in theory, there is absolutely no question that consumers choosing banks that are part of the GABV network are choosing environmentally and socially responsible banks.
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Community Development Financial Institutions Fund (CDFI)
The Community Development Financial Institutions Fund, CDFI for short, is an initiative started by the US Department of the Treasury.
This set of US-only standards focuses on revitalizing and growing the most economically vulnerable communities.
This is achieved through lending for affordable homes as well as socially responsible investment to help distressed communities.
Although socially responsible banks have applied for and received CDFI certification show a commitment to the “S” in ESG values, the Community Development Financial Institutions Fund initiative’s targeted nature means that participating banking institutions do not necessarily demonstrate a commitment to environmental sustainability or climate change mitigation.
However, looking for a bank with CDFI certification does help consumers search for socially responsible banks.
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OK — What Now?
Consumers and small business owners looking for sustainable banking examples to decide where to place their trust can certainly scour banks’ own press releases, social media profiles, published ESG integration frameworks, and annual ESG disclosures.
They can also use the internet to find out more about the kind of coverage any hopefully ethical banks they are considering banking with have received in the media.
In this case, it is crucial to look for reports on serious lapses in corporate social responsibility and ESG principles, as well as for positive coverage.
When a bank has been certified by a third-party body, however, that means that the financial institution has voluntarily taken steps to hold itself accountable to the wider community and to open itself up for scrutiny.
Whether the motivation behind taking these lengthy and difficult steps was financial in nature or spurred by a genuine desire to make marked changes in worldwide corporate culture by working toward environmental sustainability and social equity matters little in practice.
These banks have walked the walk and can certainly be among the best ethical banks, best socially responsible banks, and best environmentally friendly banks.
Each of the ESG standards that banks could apply to be certified in examined briefly above is different.
These standards each have a different focus and unique requirements; if you come across a bank that has met the requirements to become part of the networks of several of these standards, you know, as a consumer or small business owner, that that bank has gone above and beyond.
These banks aren’t just in it for the cheap publicity — but are genuinely committed to changing the nature of banking to ensure that financial institutions become a force for good in the world.
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What Are the Best Environmentally and Socially Responsible Banks In the United States?
Ethical banks are emerging worldwide, and not all banks and other financial institutions committed to environmental sustainability, climate change mitigation, and economic and social equity in their workforce and the communities they serve will be certified by third-party bodies.
Some, in fact, are going to be incredibly small micro banking initiatives that operate only within their respective communities.
In the United States, however, consumers looking for socially responsible banks focusing on environmental corporate responsibility can take a look at those banks that have been certified by multiple outside bodies.
Those include, at the moment:
- The Amalgamated Bank, “America’s socially responsible bank.” This bank is based in New York and is certified as a B Corp and part of the Global Alliance for Banking on Values.
- Aspiration. This socially responsible bank, which is online-only, places a strong focus on environmental sustainability. Clients know that their funds will never be used to fund or invest in fossil fuel industries, and there is a reforestation initiative with every single transaction. This makes Aspiration one of the most environmentally friendly banks. Aspiration is B Corp Certified.
- Beneficial State Bank. With California, Oregon, and Washington locations, this bank is certified by B Corp, the GABV, and the CDFI. It is deeply committed to planet-first ESG values.
- City First Bank of DC. Likewise certified by all three bodies we looked at, City First is dedicated to small businesses and sustainable economic development.
- First Green Bank, based in Florida, carries its mission within its name. This local bank is B Corp, and GABV certified. With locations in Vermont and New Hampshire, Mascoma Savings Bank is B Corps certified and committed to volunteering.
- The Missoula Federal Credit Union, from Montana, is B Corp certified.
- Southern Bancorp, with locations in Mississippi and Arkansas, is GABV and CDFI certified.
- Sunrise Banks, based in Minnesota, is also among the best environmentally friendly banks, part of GABV, B Corp certified, and CDFi certified.
Don’t see a bank near you on the list? Don’t worry — these are far from the only environmentally and socially responsible banks in the US, or throughout the world for that matter.
As increasing numbers of banks voluntarily uphold the highest environmental sustainability standards and make doing good in the world part of their core business mission, checking if your bank embraces ESG values actively is going to become easier and easier.
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