FEUP-ethical-banking

1. OPEN EDUCATIONAL
RESOURCE III
ETHICAL BANKING

2. Ethical Banking
 Origin
 Concept and characteristics
 Advantages and disadvantages
 Differences between traditional
banking and ethical banking

3. Origin (EE.UU.)
 XIX c.  not invest in projects
related to slavery and alcohol
 in the ‘60s  opposition to
apartheid and the Vietnam War
 1971  Pax World Fund

4. Origin (Europe)
 1968  Triodos Foundation
coherence between ethical-
moral values and investment
 Italy, in the ‘70s  MAG (Mutue
per l’Autogestione)

5. Ethical Banking
CONCEPT
 banking entities
 real economy (no speculation)
 positive social impact

6. Ethical Banking
CHARACTERISTICS
 Ethics is the basis
finance committee & ethics committee
 Combat the economic exclusion of
the poorest

7. Ethical Banking
CHARACTERISTICS
 Transparency
customer is always informed
 Real economy
no speculation
no secondary markets

8. Ethical Banking
CHARACTERISTICS
 Social profit
activities that produce something
positive to society
 A more sustainable world

9. Ethical Banking
Advantages & Disadvantages
 Coherence
 Social and sustainable
commitment
 Less competitive products on
the market

10. Differences between traditional
banking and ethical banking
ETHICAL BANKING TRADITIONAL BANKING
Objective: social and
economic performance
Objective: economic yield
Main guideline: ideological
(counting with the
stakeholders ideas)
Main guideline: maximise
profit

11. Differences between traditional
banking and ethical banking
ETHICAL BANKING TRADITIONAL BANKING
It offers few products
(current accounts mainly)
Product variety
Assets placement based
on: added social value
Assets placement based
on: economic guideline
(high profitability)

12. Differences between traditional
banking and ethical banking
ETHICAL BANKING TRADITIONAL BANKING
High transparency: It allow
to assess if the ethical
objectives are being
achieved
Banking privacy:
customers don't know
where the bank is
investing
Sustainable investment
(long-term profits)
Investments based on
profit, even short-term

13. Differences between traditional
banking and ethical banking
ETHICAL BANKING TRADITIONAL BANKING
Integration: needy groups
can access to financial
system
Limited access (lack of
guarantees)
Alternative mechanisms
for participation:
connection between bank
management and
customers
Only managers make
decisions.

14. Differences between traditional
banking and ethical banking
ETHICAL BANKING TRADITIONAL BANKING
Alternative systems for
guarantees: project's
viability and confidence
Credits are conceded only
with bank guarantees
Customers can decide
where to invest money
Customers can not choose