“They work just as well as traditional ones. They are a model of a more sustainable and fairer bank and society.”
There are not thousands like the traditional ones, but they exist: there are 24 ethical banks in Europe. Spain, France, Italy, Germany, Netherlands, United Kingdom, Belgium and Greece. Everyone has ethical banks.
“Once it has been demonstrated that ethical banks work as well as traditional oneswe can consider the idea that they represent not only a model of banking, but also a more sustainable and fair society”.
The words are from Simone Siliani, director of Fondazione Finanza Etica: “Investment in fossil fuels, for example, certainly involves more risks in the medium and long term and more conflicts. That’s why ethical finance is also a source of stability. And as finance feeds on savings, including the savings of small children, we can all make a difference.”
Explains it: ethical banks are a important form of alternative credit. They appear mainly in sectors little supported by traditional institutions, such as microenterprises.
They do not follow the principle of making a profit at any rate; there are exclusion criteria and one of the priorities is to support the social economy.
About exclusion criteria: They do not finance arms, fossil fuel, gambling or tobacco businesses.
Who support: social cooperatives, wind and solar plants, non-governmental organizations, organic and sustainable agriculture. They reach sectors where traditional banks do not always reach.
Yes, they also have classic banking relationships: current accounts for individuals and companies, loans and mortgages.
The recent Ethical Finance in Europe shows that, in 2023, ethical banks managed assets of 79 billion euros. It is an obvious sign of growth since, five years earlier, assets were 51 billion euros.
One number stands out: the ratio of loans in relation to assets is 67,91% – is higher than the 60.9% ratio for traditional banks. In other words, ethical banks grant more credit than traditional banks.
At the same time, there are less non-productive credits (mortgages, outstanding loans) in ethical banks (1.61%) than in traditional banks (1.89%).
A profitability overall activity was 0.75%; again higher than traditional ones: 0.64%.
Therefore, all these numbers “confirm that ethical banks are at least as solid as others”, summarizes Mauro Meggiolaro, analyst at Fondazione Finanza Etica and one of the authors of the report.
More than 70% of loans granted by European ethical banks went to social economy – against just 19% of large banks.
According to Peru Sasia, president of Febea, the European Federation of Ethical and Alternative Banks, the report “dispels the myth that ethical finance represents a niche and demonstrates that an alternative intermediation model is possible, based on quality capital, credit for families and companies and social and environmental assessments. It is a model that already exists. That is working. That produces financial stability and concrete benefits for communities”.
Ethical banks also think about environment: consume less than half the energy per employee; 90% of the energy they use comes from renewable sources – and in traditional banks this percentage is 65.4%.
There are fewer of them, of course, with fewer branches, simpler organizations and closer to each other.
Portugal does not have any ethical banks.
