Ethical banks have different policies that consider a different set of questions than conventional banks do with regard to what they will or will not invest in and to whom they will or will not lend to.

While ethical banks do differ from one another, concerning the ethical policies they use to decide whom they will lend to and what they will invest in, a general understanding of ethical policies used by ethical banks can be drawn from those used by the Cooperative Bank (UK) and the Citizens Bank (Canada).

Differences between conventional banks and ethical banks

The chart below portrays the general differences between conventional banks and ethical banks.

Ethical initiatives

Numerous ethical banks (as well as some conventional banks) create initiates that allow the banker to contribute to organizations that have positive societal/environmental impacts either in the local community or in developing countries.

For example the Cooperative Bank (UK) offers customers “a free Home Energy Rating on all house purchases, enabling them to better understand how energy efficient a property is and how to make improvements. Additionally, all of the bank’s mortgages include carbon-offset features. Every year that a customer holds a mortgage the bank offsets a fifth of the carbon dioxide emissions arising from a typical household’s energy consumption.

Following customer consultation, 2003 offset monies were used for reforestation in Uganda, a Bangladesh project which trains local people to build energy efficient stoves and a Bulgaria project supporting micro-hydro electricity generation.”

Whereas the Citizens Bank (Canada) allows its’ customers to choose between a variety of VISA cards that benefit Oxfam Canada, Amnesty International or their philanthropic Shared Interest program by donating $0.10 to not-for-profit initiatives worldwide every time their VISA card is used. This enabled Citizens Bank to donate $24,800 to Doctors Without Borders/ Médecins Sans Frontières in 2007.

These are only a few of the wide range of services available at different ethical banks. Many also have lower interest rate loans for low emission cars (ex. of low emission car initiative put forth by Citizens Bank).

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Definition by Wikipedia