Ethical Banking – Would you make the switch?
Our brokers have been getting asked more and more about what ethical banking options are available in the market. While many people have probably never heard of the term before, you may be persuaded to change your banking institution to one that reflects your social and environmental values.
What is ethical banking?
Your bank will have an ethical ranking based on their environmental and social responsibility values and policies. In Australia, banks and other financial institutions with a high ethical ranking are those that choose not invest, trade in, or have exposure to any of the following:
- Fossil fuels and coal mining
- Weapons (guns or other arms)
- Tobacco
- Deforestation of the environment
- Human exploitation or human rights abuses
- Gambling
- Pornography or sex slave trade
- Animal cruelty
You do need to be mindful that lenders with the same ‘ethical’ ranking may have different environmental and social values. For example, some lenders specifically try to avoid fossil fuels investments, while others care more about finding cruelty-free banking options.
Who is leading the way in ethical banking in Australia?
While there isn’t a set criteria for being an ‘ethical bank’, there are several banking institutions in Australia that were recently recognised for their sustainable practices. In 2016, Westpac won (for the ninth consecutive year) the award for the most sustainable bank globally in the 2016 Dow Jones Sustainability Indices (DJSI) Review. Commonwealth Bank ranked 4th in the G100 DJSI list of the world’s most sustainable corporations and Teachers Mutual Bank were honoured at Ethisphere’s 2017 World’s Most Ethical Companies awards.
Steps for how you can switch to ethical banking
If you want to switch from your current bank to a more ethically-minded institution – also known as divesting – it’s not a particularly hard process. Here’s how to do it:
1. Do your research
Check out the guides from Ethisphere, the Responsible Investment Association Australia, and Market Forces which will provide a complete list of highly ranked ethical banking institutions.
2. If your current bank doesn’t match your ethical standards, move to one that is
The next step is deciding on which banking institution to move your everyday banking to.
When looking at a bank, you may want to consider:
- Whether or not it has branches in your town or city, is online only, or is based somewhere else in the country
- The values and ethical guidelines it follows and operates under
- The quality of the banking products it offers (i.e. Does it offer competitive interest rates? What about the product features you need?)
3. Open an account with your bank of choice
Once you’ve chosen a bank you want to move your everyday banking to, it’s time to get the product you need from them – maybe a transaction account, or other products such as savings accounts or credit cards.
Depending on the location of the bank in question, you’ll be able to do this online, over the phone, or in person at a branch.
Make sure you have your identity documents handy when you’re trying to sign up.
If you are looking to change your mortgage as well, you can speak to one of our brokers at any stage, we will ensure that your requirements are met and that you are still receiving the best option for your situation.
4. Move your money, and tie up any loose ends
Now that you’ve moved to your new accounts and products provided by your ethical bank of choice, all you need to do is make the move. This means moving any savings you have across from your old bank accounts to your new ones, paying off any credit card balance you have on credit cards with your old bank, and closing the old accounts entirely!
Additionally, you’ll need to contact any companies that you have a direct debit arrangement with (such as your gym, streaming services like Spotify or Netflix, or Afterpay) and provide them with your updated bank details. That way, they won’t think you’ve ghosted them and cancel your account.
And there you go! Once your old accounts are closed and all your loose ends are tied up, you’ve officially divested, and can now proudly call yourself a customer of sustainable, responsible, ethical banking.
Original article by James Hurwood
Source: https://www.canstar.com.au/home-loans/ethical-banking-make-swap/
