Banking On Values – Ethical Banks And Where To Find Them

Today, 8th of November, is the international day for banking on values.

Did you know that there is a whole alliance dedicated to transparent and ethical banks? It’s called the Global Alliance for Banking on Values, and it has 55 banks as members all over the world at the time of writing this. I have been trying to bank with the Norwegian member, Cultura Bank, for years. I will write a little bit about my experience with this, and hope you might consider moving your money to an ethical bank too, if it is feasible to you.

Size and patience

One small deterrent I’ve hit upon with Cultura so far is that they are a small bank and don’t have all the offers the larger banks do. They do, for instance, not have a mortgage savings account or investment options. The latter is easily amended, because both Mr. Frugasaurus and myself invest from Nordnet, not our primary bank.

The former is a bit more difficult to get around, but mortgage savings accounts are age bound, so after the age of 34 we will not be able to save more money in them (but we can still accrue interest), so I expect we will age out of them in a handful of years until this becomes a non issue.

Gradual change

I should already be a primary member of this bank. One of my dreams is to one day become as silently affluent and value-based as Vicki Robin, who can invest in her local community and sustainability projects without thinking too much about whether or not it will pay off.

But I am not. I have been with the same bank since I got my first job at 15, and they have served me well and won most customer satisfaction tests in Norway. It’s a solid bank, and Mr. Frugasaurus in the same place, so it was easy for us to move to semi-combined finances when we married.

But I still really, really like Cultura Bank and what they stand for. So I have opted to send all my sidehustle earnings to Cultura, and when we buy our dream place, I will do get our mortgage with them, or transition it to them when we can. They even have a lower rate when you can prove that your house follows certain passive house or sustainable housing rules, isn’t that awesome?

My goal is that over the coming 5-10 years, my earnings will move more and more to the primary sidehustle/freelance side of things. We will also age out of the mortgage savings accounts and hopefully find our dream place and move there. It is not perfect, but I hope to gradually transition to use Cultura as our primary bank for all necessary services. Because I just think they’re awesome, and I want to support them with all my might.

Why should you bank with an ethical bank?

I really could not have but it any better than Angela, who wrote a post about how sustainability is more important than retiring early. If you have a bank in the alliance available to you, you are lucky enough to be able to do both! Interest might be a little lower in some of them, but you get that back by knowing where and how your money is being spent.

Taking Norwegian Cultura as an example again. They have provided loans for sustainable housing, starting/expanding organic farms/restaurants, artists, clean energy/food projects and co-ops and building communities where mentally disabled adults can work and thrive. As you can tell, the leading themes are sustainability and community. They are investing in projects other banks might have said no to, but which provide added value to our planet and warmth in our local community.

Of course, I cannot speak for all the banks on the list of course, but my experience with my local banking on values member tells me that this is a project worth supporting. I just wish I was a better poster girl for using their services. I will get better.

Transparency

The biggest running theme for all the banking on values alliance is transparency. I can log into Cultura Bank and see all the projects they have borrowed my (albeit meagre) savings to. They are also honest about this when you open an account with them.

For instance, you can chose between an environmental savings account, where you earn no interest. This means the bank can lend your money to others at a lower rate, only taking enough interest to cover their administrative costs. The other alternatives are a regular savings account which earn interest, and organization donation savings accounts. For the latter, you choose to open an account to support – say the Rainforest Alliance. At the end of the year, 1% of your savings is donated by the bank directly to the charitable organization of your choice at no cost to you. How cool is that?

True, the interest rate is not the most exceptional in these banks. But the financial independence community most often have the majority of their savings invested in index funds in any case. Most of your money is off earning money elsewhere. Why not give back a little bit with your daily banking?

I must admit, I am convincing myself more and more as I am writing this post. I need to make some changes to make the transition to using Cultura as my primary bank more seamless.

Because we need incentives and companies like this if we are to reach our collective goal of reducing emissions and hit the targets of the recent IPCC report.

Not just that, but if enough people shift to more sustainable, transparent and conscious banks, it would send a message to the other banks that they need to change their ways if they are to retain customers.

Values

Do you have an ethical bank available to you in your area? There are several countries and areas not on the list yet, so the map is far from complete. But they are getting there! Combined with conscious, ethical investments (still working on that!), this is a powerful combination worth recognizing.

 

8 Comments on “Banking On Values – Ethical Banks And Where To Find Them

  1. Okay, I have to admit, I’ve not looked into an ethical bank before now. I’m happy with our main bank since I know them on the business side of things as well (so they at least do invest in sustainable projects, hooray!). Thanks for pushing me to think outside the box and focus on sustainability in places I hadn’t thought to yet.

    +1 to being like Vicki Robin someday!

    • Hooray for banks who invest in sustainable projects!

      I had not thought about this in a while myself – banks are just there, right? But when I looked into it, our choice can have more impact than I thought!

  2. In the U.S. member owned credit unions offer one of the best alternatives to large corporate banks. Not only are they more ethical, if it is a local credit union it keeps your money in the community and in use supporting local projects. I moved the majority of my money into a local credit union account about 7 years ago when I lived in DC. I also opened an account with a 2nd credit union in my town in Florida once I moved here and use it as the account linked to my self-directed IRA.

    Those in the U.S. who want to find better banking options in their area can use this link (https://www.greenamerica.org/getabetterbank). The Locavesting website also ran an article (https://www.locavesting.com/investing/is-it-time-to-finally-change-your-bank/) earlier this year listing some good options as well, although they aren’t necessarily local.

    • Great points, I think several of the banks on the global banking on values alliance in the US were credit unions. Good to see that there are more out there supporting local projects and investing in sustainability!

  3. I haven’t yet spent time on researching ethical banks but I am happy to add it to my list! Mostly my banking needs to accommodate my personal limitations and needs, but rolled up in that is my need for my bank not to be evil. I just hope I can find a credit union that’s accessible Nationwide so we can consider moving some of our banking.

    • I am so happy to just raise the topic. It’s often such an overlooked part of our personal finance/sustainability journey. I know it certainly has been a blind spot me.

      Good luck in finding an ethical alternative available to you!

  4. Very interesting, Kristine! We actually just changed our bank away from a shareholder-owned bank to a member-owned bank (I.e. profits being given to the members rather than shareholders), and I like that concept a lot, but I wished I had known about this list prior to changing. We have a good Danish alternative there – maybe next time we change bank!

    • That’s interesting, I’m not sure we have member-owned banks in Norway (but if we do, Cultura would be the one I think).

      I like member-owned enterprises in general. Such a great sharing model!

Leave a Reply

Your email address will not be published. Required fields are marked *