Banking can be used as a force for good, pooling its vast resources to make widespread, sustainable changes that help meet the current challenges facing the world, at both a global and local level.
Banks are not simply intermediaries of money; they are critical agents of change. How and where they allocate money impacts the wellbeing of people and the planet.
A Bolder Approach in Banking means to find innovative solutions towards a just transition to a low carbon and inclusive economy.
The global #BankingonValues movement consists of independent, sustainable banks that intentionally use finance to tackle social inequality and environmental challenges.
These banks help to build resilient, inclusive communities. And driven by their values, they work together to promote change in the banking system, transforming markets and economies so that they are more inclusive, sustainable and fair.
Beyond basic ESG metrics and common standards and methodologies, values-based banks pursue to create a meaningful impact in the communities where they operate. They intentionally finance positive change as well as avoid harm.
Think Bolder: Think Values-based Banking
Learn how values-based banks promote social empowerment, economic prosperity and environmental regeneration in their communities.
Download our report ‘Best Practices for Sustainable Market Transformation in the Financial Sector’ and discover nine practices from values-based banks that can provide a future pathway for the banking industry.
Broaden ESG screening to Impact screening
Many regular banks only aim to reduce credit risks. From that perspective, ESG becomes a screening exercise to identify and exclude or manage ESG risks. Values-based banks demonstrate the advantages of prioritising purpose for the real economy and the community. While this involves making ESG risks explicit, client assessments and related financing decisions are made in pursuit of positive impact.
Ensure knowledge sharing with all stakeholders
The screening of clients generates a lot of information related to sustainable social, economic, and environmental development. Values-based banks do not treat this information as their own. They aim for radical knowledge sharing so that every stakeholder can use this information.
Base decisions on intentionality of positive impact
At regular banks, the entire organisation is dedicated to making profit and might generate social and environmental value almost by accident. Conversely, in values-based banking, an tailor-made organisation applies a holistic and intentional approach to real economy transformation to the entirety of the portfolio. This is called the Triple-Bottom-Line approach to banking.
Aim to provide finance to socially relevant clients
Another practice of values-based banks is broadening the interpretation of clients included in financing activities. Typically, the norm is clients who are creditworthy. For values-based banks, the norm is different: they aim to finance societal actors who are contributing to positive change in society. Instead of excluding risky clients, values-based banks aim for the inclusion of socially and environmentally relevant clients by looking at the needs of people and then looking at how finance can support those needs.
Expand product portfolio
Innovative products are required to be able to also finance clients with lower creditworthiness. Financing for the transformation of the real economy requires continuous innovation, providing products that are needed and finding a way to become profitable in the long-term. To do this, banks need to be working in partnership with others for the longer term.
Reconnect deposit owners with impact
Normally, clients who give their savings to a bank have no idea how this money is invested. Banking is organised like a black box in which money flows in and out and somehow generates a return. However, values-based banks open up the black box around their investments.
Stimulate loan recipients to transform their practices
Any transaction with a client is not just financial. Banks always have an influence on the activities of the client due to the conditions linked to the transaction. These conditions can be focused on increasing creditworthiness but can also be used to stimulate clients to become more responsible. The latter is done by values-based banks.
Raise the voice of banking for just institutions
Banks have significant knowledge about the influence of governmental policies on the real economy. They can use this knowledge to advocate for just institutions. For example, through VALoRE, the GABV advocated for progress in a social taxonomy and for the exclusion of gas and nuclear from the green taxonomy of the European Union.
Organisations are tailored to deliver positive impact and sustainability
Banks have intentionally pursued synergies across all aspects of their operations. Departmental collaboration is grounded in a joint commitment to impact.
Thinking about switching banks?
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