Ethical Banking & Sustainability

Sustainability is a keyword today in every sphere of our life noted by Bahaa Abdul Hussein. This includes the banking and financial sectors. Banks are today focusing on sustainability by demonstrating their commitment for the future. Ethical banking plays an important role in ensuring sustainability in the financial sector.

What is ethical banking?

Ethical banking is all about banks being aware of the impact of their operations on society and the environment. Banks are today adopting ethical banking principles that govern how banks interact with society. While banks continue to focus on profit, they ensure it is done by not affecting society and the environment.

Some of the ways in which banks can practice ethical banking include:

  • Offering loans to firms that are environment friendly.
  • Helping firms that are helping the community.
  • Assisting individuals with housing.
  • Not working with firms that promote child labor or have high carbon emissions.

The ultimate aim of ethical banking is to help in building financially stable communities and thus promote sustainability.

How does ethical banking work?

Some of the ways in which banks following ethical banking include:

  • Banks can screen clients. While banks do it to ascertain financial risks, they can now do it to ascertain ethical risks. Banks can ensure the client follows ethical practices and their activities do not negatively impact society or the environment.
  • Banks can work with local communities to help in community development. They can fund local businesses, offer loans for housing, and also carry out activities like sponsorship, scholarships for students, etc.
  • It is important for banks to practice what they preach. Banks need to follow the standards that they expect from their clients. They should be a role model for their clients by following best practices.
  • Banks can specifically focus on the environment and ensure they work with firms that have a positive impact on the environment.

How does ethical banking help?

A bank that follows ethical banking is demonstrating its commitment to sustainability. Such a bank is telling its clients and society of how it is committed to helping society and environment. Ethical banks have a positive impact on local communities and can help people in different ways.

It is an assurance to clients that their money is being used in a socially responsible way. We live in a world where climate change is a serious issue. Organizations are concerned about the future and hence practice sustainability. By focusing on ethical banking, a bank can be a part of the journey towards sustainability.

The article has been written by Bahaa Abdul Hussein and has been published by the editorial board of

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