Ethical banking embraces socially and environmentally conscious practices for the greater good, encompassing everything from providing financial aid to environmentally-friendly companies, to participating in charity events for housing.
Practicing ethical banking in tandem with making profits can be a delicate dance. As a result, financial institutions are sometimes reluctant to provide their services to people with bad credit histories and low incomes. But when people in low-income communities are unable to save and borrow money from financial institutions, they are stuck in a cycle of poverty. This is where profit-based policies stand at odds with ethical banking practices.
The key to ethical banking is sticking to a set of principles, no matter what the situation is. If a company lacks a culture of ethics, organizations and people will be at risk. In fact, the U.S. Federal Sentencing Guidelines include expectations for companies to promote an ethical culture that enforces compliance with laws.
Strong culture within a banking institution has two defining elements: company-wide alignment on values, and the daily practice of preserving those values through action. When implemented, this can create a competitive advantage for any organization. Reinforcing ethical banking values stems from building strong culture. Here are a few ways financial organizations can help their employees “walk the walk” of ethical banking.
- Get your organization involved with the community. Developing programs that an active interest in the your surrounding neighborhood’s well-being will instill goodwill between employees and patrons.
- Hold seminars in the workplace to educate employees on company values. Holding a monthly or quarterly all-hands meeting gives your leadership team the chance to recognize employees who go above and beyond to embody your values and mission.
- Conduct client screenings. In order to avoid partnering with organizations or clients that have a history of immoral practice, but robust screening processes in place to stay true to your values.
- Maintain a healthy mood in the workplace. It’s true what they say: positive morale stems from the top of the ladder. Providing leadership training for your executives and managers will help them inspire the rest of the team.
- Appoint an ethics officer. Having a dedicated ethics officer in place will help promote a code of conduct that will improve accountability and performance.
- Actively reward ethical behavior. Incentivizing the embodiment of company values through promotions, bonuses, or extra time off will cause a ripple effect throughout your organization.
- Encourage company dialogue. Allowing employees to speak their minds will help members of the C-suite understand how people in the workplace think.
- Practice what you preach. For instance, if part of your ethics code prohibits you from doing business with companies that do not offer health insurance to their employees, then your bank should not refuse health insurance to your own employees.
With all of this under consideration, it is also important to remember that banks participating in humanitarian efforts should still keep an eye on finances. Ethical practices will not keep a bank from financial weaknesses.