Microfinance is supported by banks ethical policies and investments.
The attitude toward ethical investments, that a bank may or may not have, make it an ethical bank.
Compared to conventional banks, which deal mostly with internal ethics, ethical banks also apply external ethics.
The term “internal ethics” refers to policies related to the well being of employees, customer satisfaction, benefits and wages, fair sex and race representation, and the bank’s environmental standing; so it regards all the factors directly dependent on the bank. Instead, the term “external ethics” refers to those policies that banks use when looking at the impacts that their business practices will have on society and on the environment. External ethics take into account who the bank loans to or what it invests in, and checks if the products of the bank are used unethically, and how borrowers use the money they received.
Generally speaking, the aim of ethical banks is to finance those practices that are socially responsible and that promote environmental and consumer protection, fair trade, human rights and diversity. Insted, those businesses involved in alcohol, tabacco, animal testing, GMOs, gambling, pornography, oppressive regimes, weapons and arms trade are usually avoided.
With greater regard to the social, many banks seek to support charities and the broad range of organisations involved in the Social Enterprise sector, including: co-operatives, credit unions and community finance initiatives. They can also decide to support organisations by matching or doubling any found they raise during benefit events for local causes.
To tackle social and financial exclusion banks can offer basic financial advice and products to people who do not normally have access to them.
Banks’ ethical policies can also be really useful in the fight against the Third World debt; indeed, the World Bank, together with the International Monetary Fund, support initiatives to eliminate the unsustainable debt in the poorest countries.
Promoting and inspiring video of the ethical partnership, about socially responsible and ethical investment: