What does ethical lending even mean and who qualifies as an ethical lender?

Let’s first define our terms, what do we mean when we use the word ethical in the context of banking?

Ethical banking can be considered through the lens of what areas, causes and businesses banks invest in, who they lend money to and what causes they support. Ethical banks may choose not to lend to the fossil fuel industry.  Or they may choose to invest their money in renewable energy. They may have a social and environment conscience and don’t get involved in weapons manufacture or are involved with the promotion animal welfare, they generally stay away from tobacco companies, human exploitation, gambling and pornography too.

Another way of looking at it is through the lens of what values you hold and what matters most to you. For example, if you ride to work, buy from local farmer’s markets, use a reusable coffee cup and do everything in your power to reduce your carbon footprint then chances are you are very environmentally conscious. But if you then bank with or inadvertently invest in a bank which supports the fossil fuel industry, then you are not banking within the bounds of your own ethics.


How do I find out which banks are ethical or environmentally friendly?

There are a range of resources you can rely on to understand whether the bank you are using or considering using supports the things that matter most to you.

One good resource is Market Forces who keep track of which banks lend to the fossil fuel industry, click here to see which banks are invested or lend to fossil fuel producing businesses: https://www.marketforces.org.au/info/compare-bank-table/

You’ll be very pleasantly surprised just how many banks and credit unions don’t support the fossil fuel industry if this is something that matters to you.

Another place to look is called Don’t Bank on the Bomb which will show you which banks around the world lend money to nuclear weapons producers: https://www.dontbankonthebomb.com


Where you put your money matters

If you feel very passionate about a particular cause (or many causes) then where you put your money matters. This goes for your savings and investments, along with who you borrow from because the interest you pay on loans will be invested according to the banks interests (which may differ from your own).

If you want to support an ethical bank then things you can do include:

  • Moving your savings and transaction accounts across to your bank of choice,
  • Using them for your personal lending needs such as credit cards or home loans and
  • Ensuring your superannuation is invested with an ethical fund too

We have a range of lenders on our panel who are environmentally and ethically minded. If you’d like to look at home loan options from an ethical bank then get in touch here:

Find an Ethical Lender

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