Banks are an essential part of your financial life, but where are the ethical banks? You know, the ones not blowing the tops off mountains or using racist lending practices.
Wells Fargo, Bank of America, and Chase are all terrible banks when it comes to how they treat the planet, how they treat their customers, and their business practices.
Wells Fargo has the worst record among major banks for lending money to Black Americans, and has been accused of racist lending habits.
Chase invested $51.3 billion into fossil fuels in 2020 alone.
Bank of America has stolen money from customers, and mishandled pandemic loan disbursement in 2020.
We need more ethical banks! Let’s break down what ethical banking is and choose from a list of banks that are at least trying to do the right thing.
What is Ethical Banking?
There’s no one universal standard for ethical banks to meet that qualifies them as “good banks.” Instead, ethical banking is usually judged by the banks professional practices, such as
-how the bank invests or lends money to earn a profit
-how it treats employees with regards to pay, workplace safety, and hiring practices
-what kind of impact the bank has on the environment
We usually categorize banks as ethical if they deviate from the normal financial practices we all know suck, like paying women employees less than men, or refusing to lend to people based on race.
(Sidenote: isn’t it wild how terrible most financial institutions are and we just…live with it???) You can get our free “spend your values” workbook right here for more personally ethical money.
Red Herrings To Watch Out For
A lot of banks try to brand themselves as ethical banks by highlighting volunteer efforts by their employees, or short term initiatives that the bank has taken on a specific issue.
For example, a recent news story about Chase highlighted that it will have electric vehicle charging stations at 50 locations by summer 2023.
This is what we as bank users need to watch out for: banks that try and shield the truth of their activities behind a shiny facade.
Read more: How to Avoid Financial Greenwashing
How an employee of a bank acts doesn’t reflect how the bank itself acts. When you see something that might be financial greenwashing, ask yourself these questions:
-What level of impact does this action have? In the Chase example, Chase has more than 5,100 branches in the US alone. 50 of them having an electric vehicle charging station is a tiny portion.
-Who is the good guy here? If a bank highlights that an employee organized a fundraiser for homelessness, the good guy is the employee, not the bank. Getting clarity around who is actually do the good work will keep the rose colored glasses off.
Making the Rest of Your Money Ethical Too
Ethical banks are really step one in making your money as value friendly as possible.
There’s ethical investing, where you invest in companies conducting business in a way you agree with.
There’s values based spending, where you align your spending with your personal values.
There’s divesting, where you remove your money and energy from companies you dislike.
And of course, there’s activism, where you use your time, privilege, and energy to change the terrible, problematic systems we live in. This would be running for office or volunteering your time at a nonprofit or political cause you care about.
I want you to feel excited about finding more and more ways to change the financial choices you make, but also the financial system we live in. That’s why we offer an ethical investing course that also covers ethical spending, banking, and real estate!
3 Ethical Banks Options to Consider
As with all ethical investing, which of the ethical banks out there will be best for you will depend on what value you personally hold closest. I’m going to outline 3 options from three different ethical viewpoints; RACE, GENDER and THE ENVIRONMENT.
None of these options is an A+ on all three. In fact, there is no ethical banking option that is perfect at everything. So instead, I want you to ask yourself what personal value you hold most dear, and do your banking with an ethical bank that is enacting that value.
None of the more ethical banks are perfect, but a LOT of them are way LESS BAD. And under our current messy capitalistic system, less bad is a good starting point.
Amalgamated Bank- Amalgamated bank is a B-corp bank that is 100% carbon neutral and union owned! Their savings account has a .40% APY as of May 2022 and no monthly fees. Issues Amalgamated has taken a stand on are worker’s rights, solar power, and going carbon neutral.
Spring Bank– New York state’s first B-Corp bank, Spring is also a member of the Bank for Good movement. This is a coalition of banks and credit unions divesting from fossil fuels. Spring has been carbon neutral since 2019.
Beneficial State Bank– Based in CA, Beneficial is a CDFI bank. Four of their 11 board members are women, including their co-founder. Beneficial has a specilal focus on lending money to minority owned businesses, such as women and Black owned businesses.
Ethical banks are just one part of building out your ethical financial plan. Get our FREE guide to spending and investing your values here to help round out your ethical financial strategy!