Banking Overview
How much do you know about your bank? Do you know what type of businesses it lends to?
Does it refuse to lend to companies with poor human rights records, that sell arms or pollute the environment, for example? Does your bank offer services to those on low incomes or the unemployed? And how many women sit on its board?
Such questions often go unasked of the banking sector. But the same caring principles that make you buy Fairtrade goods and recycle household waste can be applied to how you bank too.
Key green and ethical issues to consider
Finding a green or ethical banking option
How banks use your money
The money that you deposit in your current or savings account doesn't just sit there untouched until you require it again - your bank lends it on to others at interest.
Banks don't just lend money to current account-holding customers either, they lend to large corporations, public institutions and even governments.
As many banks are listed on the stock exchange, they are answerable to external shareholders who expect healthy returns on their investments.
While the Treasury hands down some prohibitions as to who banks can and can't do business with, it still leaves them relatively free to engage with companies that you might not approve of and they use your money to do it.
Would you approve if your bank was lending money to heavy polluting industries or even to an oppressive regime?
Key green and ethical issues to consider
Responsible Lending
The recent global economic downturn is often attributed to the 'sub prime crisis'.
Sub prime lending means giving loans to people who are considered to be in higher risk categories - those more likely to default or who have a poor credit history, for example.
This type of lending is not problematic in itself - credit unions and community development finance institutions regularly lend to sub prime candidates. Instead, irresponsible lending to customers in the sub prime category is the problem.
In the build up to the 'crunch' some financial institutions were lending 100% mortgages (and in some cases more) to people who would not be able to make their repayments in the long term.
Lending responsibly shouldn't be limited to just mortgages - it applies to all loans, big and small, and to the provision of credit cards too. Figures from the Bank of England show that UK residents owe £233bn on credit cards, overdrafts and other loans.
Key questions to ask: Does your bank have responsible lending policies that ensure that its products are targeted in an appropriate manner? And does it provide advice or debt management services to customers who fall into financial difficulty?
Climate Change and the Environment
Banks have an impact in these areas, not just in terms of who they lend to or invest in, but how they run their own operations. It is important to find out what your bank is doing to improve its environmental performance as a business: have they pledged to go carbon neutral for example? Or do they offer any green products to their customers?
Financial Exclusion
There are an estimated two million people in the UK without even the most basic bank account. Is your bank doing anything to address this situation?
For more details see our Financial Exclusion section.
Project Finance
In its most basic form, this type of financing is for companies and governments where lenders are repaid through the revenues generated, i.e. the lender has a vested interest in the success of a project.
Common projects receiving finance are petrochemical and chemical plants, power plants, telecommunications and infrastructure. But do lenders ensure that these projects are conducted in a green or ethical way?
Use our search facility to find out about your bank's policy on the environment, ethical lending, responsibility towards its customers, equal opportunities and other issues.
Finding a green or ethical banking option
Building Societies and Credit Unions
Mutual building societies and credit unions are generally smaller, customer-owned operations that primarily lend to individuals and so are less likely to have the same exposure to issues like the arms trade, for example.
Green and Ethical Alternatives
There are a number of banks and building societies with prominent green and ethical credentials.
- Co-operative Bank: this bank's robust green and ethical policies govern its current accounts, savings and investment products.
- Smile: this internet arm of the Co-operative Bank shares the parent company's ethical policy.
- Triodos Bank: this bank offers green and ethical savings accounts and investments. The bank was established in 1980 in the Netherlands and now has significant operations in the UK.
- Ecology Building Society: this mutual building society offers a range of green savings accounts and mortgage options.
- Charity Bank: this bank invests through loans to benefit charities and communities. It offers saving accounts and cash ISAs to consumers.
You can use the banking section search to find the banks that perform best against our green and ethical criteria.
Your next steps
What do you do now? Check out our guide Next Steps - Banking for information on how to give your bank account a green and ethical makeover.
Banking Search
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Bank / Building Society Profile
Triodos Bank
Green/Ethical Products
All of Triodos’ products and services qualify under this category due to its green / ethical policy across its business operations.
Here are some highlights:
- ethical savings accounts, bonds and Cash ISAs
- ethical investments (eg. Triodos Renewable PLC shares, Triodos Microfinance Fund, Triodos Bank Depositary Receipts)
- business and charity accounts for business and charities
- teaming up with Social Investment Scotland, Triodos also offers third sector organisations looking to purchase freehold or long leashold property, the opportunity to borrow up to 100% of the value of the property.
Ethical Lending or Insurance
Triodos Bank has an ethical lending policy.
Exclusions
This states that it does not lend to organisations, businesses and projects that are directly involved for more than 5% of its activities in non-sustainable products and services or non-sustainable working processes, including businesses that operate in:
- the fur industry;
- gambling;
- nuclear energy;
- environmentally hazardous substances;
- pornography;
- tobacco;
- the weapons industry;
- intensive agricultural production;
- corruption;
- dictatorial regimes;
- using animal experiments for non-medical purposes or selling nonmedical products that have been tested on animals;
- genetic engineering ;
- or those organisations frequently and seriously breaching legislation, codes of conduct or conventions.
Triodos states that it also, to the best of its knowledge, excludes all organisations, businesses and activities that produce or distribute nuclear energy, weapons and environmentally hazardous substances.
Triodos states that it will also reject loan applications that do not meet the spirit of the criteria.
Positive Business Focus
It further seeks to lend to companies and organisations with a positive and sustainable business focus. It states that its lending process identifies sustainable sectors; selects projects which will bring real and meaningful benefits for the wider community; considers the motivations of the people involved in a loan application; ensures each selected project meets absolute criteria which measure the potential negative impact of an organisation’s activity on people and the environment; and finances clearly defined assets, activities or projects. Triodos is fully transparent about who it lends to on its website. See here for more information.
Application of ethical policy
Triodos only lends money to businesses and charities with clear social, environmental or cultural aims and has a clear ethical policy underpinning this across the organisation. It has a lending team that applies its ethical lending policy. Examples of its ethical policy in action:
- Garden Organic receives finance from Triodos Bank
- Triodos Renewables acquired the UK’s largest wind turbine, in Lowestoft in Suffolk in the Summer of 2005. It has a capacity of 2.75 MW of electricity.
- Southdown Housing Association receives finance from Triodos Bank. SHA has provided specialist and housing support in Sussex for over 30 years to vulnerable people with a range of disabilities.
Human Rights
Triodos' ethical lending policy states that it will not invest in organisations that are directly involved for more than 5% of activities in non-sustainable products and services or non-sustainable working processes, including organisations that operate in
- corruption, (that have been condemned by a court for frequent and serious corruption, bribery and money laundering and enterprises that have violated structural codes of conduct or treaties in the last three years);
- dictatorial regimes (all organisations and businesses and activities that directly and significantly contribute to, or profit from, human rights violations by a government or other actors) and
- those frequently and seriously violating legislation, codes of conduct or conventions, including breach of fundamental labour rights.
After a loan application which is assessed against the ethical lending policy, the bank subsequently monitors the use of funds.
Its ethical lending policy states that Triodos Bank focuses on lending to small and medium sized institutions, businesses and charities, and by doing so, it can maintain a close connection with the people who run the organisation concerned and track how a loan is actually used. Loans are also deliberately made for specific purposes that the Bank can monitor.
(Triodos Bank also lends to larger businesses and initiatives whose primary focus may not be on positive social and environmental added value, but which crucially operate specific projects or assets that are clearly and directly connected to sustainable sectors or activities. These loans must meet the objectives set out in Triodos Bank’s core mission.)
Financial Exclusion
Triodos does not offer current accounts. It specialises in lending to less conventional businesses, such as: ethical businesses, social enterprises, charities, environmental businesses, organic busineses and social housing in the UK. Apart from this fundamental product offering, it does not appear to offer products and services aimed specifically at the financially excluded.
Triodos lends to community development organisations. For example, it lends to Clondalkin Community Property Development Company. This development company was established in Dublin in 1997, to purchase and lease properties to voluntary and community organisations in disadvantaged areas of the city.
Triodos also offers finance for established trading subsidiaries of housing associations.
Since 1994, Triodos’ assets under management in the microfinance sector have increased to EUR 360 million. Through microfinance funds (Triodos-Doen, Hivos-Triodos Fund, Triodos Fair Share Fund and Triodos Sicav II-Triodos Microfinance Fund) Triodos provides finance to 95 different emerging and well-established microfinance institutions across 43 countries. Triodos holds equity stakes in 19 leading microfinance institutions and banks and plays an active role on the board of directors.
Environment
The bank has an environmental policy that covers the key areas of energy efficiency, water use and waste management, amongst others. It also addresses travel, paper usage and biodiversity. It also indirectly refers to climate change through its climate neutral efforts.
The bank is committed to continued improvement and development of its environmental management system.
Carbon Neutral
Triodos Bank offsets 100% of its CO2 emissions.
The bank’s environmental policy is designed to reduce greenhouse gas emissions in three distinct steps. The bank aims to take as many energy-saving measures as possible. Any essential energy consumption is sourced from renewable supplies where possible. Finally, the remaining CO2 emissions are compensated by buying CO2 credits.
2011 CO2 emissions were compensated by emission reduction projects certified by The Gold Standard.
As far as possible, Triodos Bank avoids the use of volatile organic materials and other materials that could damage the ozone layer.
The UK Branch has committed to the West of England Carbon Challenge along with almost 100 other businesses to reduce its carbon emissions by at least 10% by 2014.
Equal Opportunities
No public data found on the exact content of the diversity policy.
Women on the Board
37% of the management team were women, according to figures from 2011.
Voluntary Standards & Initiatives
Triodos Bank is a member of the following relevant initiatives:
- International Association of Investors in the Social Economy (a worldwide network of financial institutions active in social and environmental areas)
- EUROSIF, VBDO, BELSIF and UKSIF
- the Social Venture Network (a network of socially and environmentally engaged entrepreneurs dedicated to changing the way the world does business)
- Insitute for Social Banking
- Global Alliance for Banking on Values
- International Association of Microfinance Investors.
- using the Global Reporting Initiative guidelines since 2000
- Women’s World Banking (which works to expand the economic assets, participation, and power of poor women as entrepreneurs).
Triodos Bank NV is a member of the UN Environment Programme Finance Initiative (UNEPFI) and a member of Eumedion in the Netherlands.
Triodos Investment Management is signatory to the Principles for Responsible Investment and a member of the Global Impact Investing Network.
Charitable Giving
Through the charitable foundations operating within the Triodos Bank Group, Triodos Bank supports innovative initiatives in the field of organic farming, renewable energy and economic development in developing countries.
In 2011 the foundations made donations totalling EUR 1.48 million (2010: EUR 1.21 million).
Triodos Bank
- Savings
- Investments
