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Green and Ethical Banking.

From banking online to cheques made from recycled paper, This is as far as the idea of "green banking" goes.

People are now looking for ways to paint the Stock Markets of the world eco-green by investing in eco-friendly and ethical businesses. It is important to remember, the choice of your bank account, whether current or savings, can have an impact on the environment aswell as creating sustainability issues for your local community.

Green banking, socially responsible banking, community investment banking, and eco banking are all terms that mean relatively the same thing. Banks that have an ecological and ethical outlook into their business model. These mostly include supporting Human Rights, not investing in the unsustainable harvest of the world′s natural resources, nuclear power, arms trade or the development of genetically modified organisms and considering animal welfare and the environment.

The Basics of Green Banking

In its simplest form, your bank uses the money you deposit into your accounts, or certificates of deposit by making loans to businesses and to individuals for personal purchases such as cars and homes. The bank earns revenue from the interest it collects on the loans, investments it makes, and on fees and charges it earns.

Just as investors on the Worlds Stock Markets have traditionally been concerned only with the profitability and interest earned on an investment, traditional banks are concerned primarily with earning the highest interest they can get without regard to the kinds of business the investments promote and procure.

There is a tidal wave of change as more banks align their investment decision-making with the triple bottom line: people, planet, profit (ordered). Many banks are envisioning a bright future defined by ecological economics. While the staid old mega-banks are only now beginning to test the waters, some young upstart establishments are plunging in full force with a complete focus on social justice and environmental economics. They are insistent upon a green viewpoint, defining community banking in a whole new way that allows even their smallest depositors the opportunity to put their hard earned money to work for healthier communities and a healthier planet.

Green banks promote:

  • 1 forest preservation
  • 2 water production
  • 3 responsible farming practices
  • 4 recycling
  • 5 eco-tourism
  • 6 loans to displaced timber workers to help them start environmentally friendly businesses
  • 7 help for low-wage earners to purchase homes
  • 8 community education and mentoring programs
Visit the Web sites of Co-op America, Co-op Bank UK and Community Investing for more information about ecological economics and to find other eco-friendly financial institutions.

....no matter how small you may feel in this massive ocean of banking even the smallest bank account can work for you, the planet, and the sustainability of your own community.

Researching Your Options

While slow to enter the world of green banking, the larger banks are making progress—many have started solar lending programs and other loan programs that allow borrowers to purchase products and services for greening their homes and businesses. Recently, a well established US bank announced that their credit/debit rewards cards will allow cardholders to use their points to buy wind power to offset their personal carbon output. Every 5,000 points buys 6,000 kilowatt hours of wind power.

The best way to find out about the possibilities in your area is to shop around with local banks. Make appointments to talk with loan officers and ask them about the bank’s policies for community investment and customer participation programs. You may be pleasantly surprised to learn that your small savings account has helped build solar-powered affordable housing in your own town or perhaps helped fund a micro-loan to a woman in a war-torn region, allowing her to buy a sewing machine and start a small business.

Going Local

If you prefer to do business closer to home, one way to green your own banking practices is to look to your local bank and encourage them to incorporate the triple bottom line for local sustainability.

Look out for:

  • 1 the bank’s policy about recycling and paper use
  • 2 energy saving efforts or environmental improvements the bank has made to its buildings
  • 3 investment and loan policies
  • 4 what percentage of loans are awarded to environmentally focused companies or emerging technology
  • 5 future plans to do more—encourage your bank with your support and continued patronage

On a more personal level, you can ask if your bank offers:

  • 1 cheques printed on recycled paper
  • 2 online banking and account maintenance
  • 3 automatic cheque deposit
  • 4 online bill paying services
  • 5 Paperless statements

All of these practices help to reduce paper use, as well as fuel consumption, since records and money are exchanged digitally and are not sent by air and truck transport.

Credit Unions

More information on credit unions here.

A credit union is a cooperative financial institution that is owned and controlled by its members, and operated for the purpose of promoting thrift, providing credit at reasonable rates, and providing other financial services to its members. Many credit unions exist to further community development or sustainable international development on a local level. Worldwide, credit unions vary significantly in terms of total assets and average institution asset size since credit unions exist in a wide range of sizes, ranging from volunteer operations with a handful of members to institutions with several billion dollars in assets and hundreds of thousands of members. Credit unions nonetheless remain typically smaller than banks.

The World Council of Credit Unions defines credit unions as "not-for-profit cooperative institutions." In practice however, legal arrangements vary by jurisdiction. For example in Canada credit unions are regulated as for-profit institutions, and view their mandate as earning a reasonable profit to enhance services to members and ensure stable growth. This difference in viewpoints reflects credit unions′ unusual organizational structure, which attempts to solve the principal agent problem by ensuring that the owners and the users of the institution are the same people. In any case, credit unions generally cannot accept donations and must be able to prosper in a competitive market economy.

Credit unions differ from banks and other financial institutions in that the members who have accounts in the credit union are the owners of the credit union and they elect their board of directors in a democratic one person-one vote system regardless of the amount of money invested in the credit union. A credit union′s policies governing interest rates and other matters are set by a volunteer Board of Directors elected by and from the membership itself. Credit unions offer many of the same financial services as banks, often using a different terminology; common services include: share accounts (savings accounts), share draft (checking) accounts, credit cards, share term certificates (certificates of deposit), and online banking. Normally, only a member of a credit union may deposit money with the credit union, or borrow money from it. As such, credit unions have historically marketed themselves as providing superior member service and being committed to helping members improve their financial health.

Credit unions are sometimes called by other names depending upon where the credit union is located; for example, credit unions are called "Savings and Credit Cooperative Organizations" ("SACCOs") in many African countries "to emphasize savings before credit." Credit unions are often called "cooperativas de ahorro y crédito" in Spanish-speaking countries, but in Mexico a credit union is typically called a "caja popular." French terms for "credit union" include "caisse populaire" and "banque populaire." Afghani credit unions are called "Islamic investment and finance cooperatives" (IIFCs) to comply with Islamic lending practices."