What’s ethical banking all about?
In a nutshell, ethical banking focusses on positive social and environmental outcomes as a result of investments or loans. Currently, there’s no clear definition of what this means and how these positive impacts are measured and reported. In the UK, the Financial Conduct Authority (FCA) regulates the financial market, and they’re working towards introducing climate-related disclosure requirements. Unfortunately, this means that any bank can say they invest ethically without having to show any proof. This sort of thing may sound familiar if you’ve read our blogs about hypoallergenic dog food and hypoallergenic cat food.
So, if a bank can say one thing and do another, how would you know whether they’re actually ethical? The key is transparency – something the FCA also advocates. If your bank publishes detailed reports about their investments and funding, that’s a positive sign. Look at the likes of Triodos, Co-op and Starling who are widely considered best in show – sorry, class. And steer clear of those who invest in or are funded by naughty industries. The likes of fossil fuels, weapons, mining, logging and others that are known for human and environmental exploitation. We won’t name anyone here, but a quick Google search will give you plenty of pointers (no pun intended).
Ethical investment is good for animals
Speaking of dogs (and cats of course), what does the obscure world of finance have to do with our pets?
Most of the above industries have negative impacts on natural habitats, although this usually happens far away, and we don’t experience it first-hand. There is widespread evidence that activities such as logging, mining and fossil fuel extraction (including fracking) displace wildlife. Clearly, switching investment away from those activities will have a positive impact on animals in general.
What’s more, our pets are breathing the same air, drinking the same water and are largely consuming foods from the same supply chain as ourselves! Any concerns about potential impacts of the above-mentioned industries on our own surroundings and health equally apply to our pets.
How we bank at Scrumbles
We’re a B-Corp, so reducing our environmental impact and delivering a positive social impact are front and centre of what we do, so of course, honouring ethical standards across our supply chain is part of that. When it comes to our own banking, we chose to bank with Starling Bank. Like us they're relatively young and a great fit for our ambitions as a young SME as well as a sustainable and ethical organisation, so it's a no brainer. You can learn more about Starling's ethical banking commitments here.
Here's just a few reasons we love Starling:
- Anne Boden, the CEO, made strides as the first female founder of a British bank.
- Starling is one of the most transparent banks in the UK - they are one of the few banks to make a firm commitment to never invest in fossil fuel firms, arms or tobacco
- Their digital platform is pretty snazzy helping us operate incredibly efficiently.
- They have recently announced an initiative with Trillion trees to protect you guessed it, one trillion trees by 2050, working in partnership with BirdLife International, Wildlife Conservation Society and WWF.
What can you do?
Ethical banking is simple to do. Most incumbent banks in the UK come with some baggage. However, the transformation of the financial sector over the last few years has opened up the market for some really interesting players who take ethical banking very seriously. Switching away from a non ethical bank is one small change you can make that can have a big impact.
It’s worth having a look at your bank’s sustainability strategy, ethical investment policy and annual report. Any of these should shed some light on whether your hard-earned dosh enables or undermines positive environmental and social outcomes.
As with our pet foods, we encourage you to get informed about whether what you’re buying (into) delivers on its claims to be good.