Features
Can There Really be an Ethical Bank?
Irish banks have been getting a lot of stick from the public and the media lately. Entire radio programmes have been devoted to giving disgruntled customers an opportunity to air their grievances. There is a widespread belief that the Irish banks' ability to generate profits is in marked contrast to their desire to provide a reasonable service to its customers. Record profits are recorded yet basic customer services are curtailed. And of course there was the scandal of all those offshore accounts.
Of course the banks would argue that their primary aim is to make a profit. They are not charities, nor do they exist to enhance the common good. They have to make sufficient profits to keep their shareholders happy.
So you might tend to be sceptical if you heard of a bank that was founded for social and ethical purposes. You might be very confused if you heard a banker say that 'money should be a tool for social good' or that 'investment should be for the good of the community and the environment.'
But these are the words of Kieron Brennan, the Irish representative of the Dutch based Triodos Bank. With branches in Holland, Belgium and England, Triodos Bank claims to be very different to the banks that we normally deal with.
The bank was set up in Holland in the 1980's with the aim of providing investment for social and ethical purposes. It also aimed to provide a place for peoples savings where the customer could be sure that their money would not be used for projects they didn't approve of..
'Customers lodging their savings with us can choose what their money will be used for', says Kieron Brennan. 'For example they can decide they want their money to be used to support renewable energy, organic farming or alternative medicine. Our lending criteria is that what the borrower plans to do with the money must be socially, environmentally or culturally useful.'
But having a socially worthwhile project is only one aspect of their lending criteria. Equally important is that the business itself is ethically and environmentally sound.
'Take a company involved in producing alternative medicine', says Kieron. We support alternative medicine but if, when we examined their premises, we discovered that their waste management policy was not up to scratch, we would not grant them a loan. We always visit a potential borrower's premises to check it out before granting a loan.'
In Britain the bank has £100 million on deposit. And about 25% of the lending is to the organic sector. 'We are the only bank that has a specific policy of lending to organic farmers', says Kieron . Organic farming satisfies our criteria of being environmentally sound. We are particularly interested in supporting farmers in conversion. But we don't give loans for conventional farming.'
The money for organic projects comes from savers who open up an organic savings account with the bank. With such an account the customer is assured that his money will be used to support the organic sector. In the same way customers can opt for their savings to be used to finance wind farming or social housing.
Many of the bank's depositors are prepared to take a lower rate of interest on their savings when they know it's being used for a worthwhile purpose. As a result the bank is able to offer a lower rate of interest to borrowers and a more flexible repayment schedule than other banks. Their current rate of interest is 5.5%.
One particular laudable aspect of the bank's business is their support of small farmers in developing countries. They invest in trusts in places like Bangladesh to provide what they call microfinance. This refers to the granting of small loans of amounts as low as £100 for such things as seeds or a water pump - the sort of loans that other banks would not be interested in.
The bank's commitment to ethics applies equally to the running of their own business. The bank is answerable to a group of trustees rather than to its shareholders. All their employees or co-workers have a say in the day to day running of the business. Meetings are held once a week at which each co-worker is free to express his or her opinion. Surprisingly for bankers they don't wear suits in the office. 'But we do put them on if we are going out to meet a client!' says Kieron.
Bob Jefferies manages their organic lending in the UK. 'We lend for smallholdings of one acre and for large farms of 2000 acres', he says. 'We lend for projects like organic conversion, buying land, buying quotas and machinery - all the normal needs of organic farmers. Recently we've given a lot of loans for organic egg production. Organic egg production seems to be taking off in Britain.'
At present Tridos bank is looking into the possibly of setting up a branch in Ireland. This involves getting approval from the banking authorities here. However in the meantime they are already lending to customers in Ireland. The Organic Centre in Rossinver, Co. Leitrim is just one of their Irish customers.
Many people are unhappy with the less than people-centred policies of Irish financial institutions. Ethics and banking are not words that naturally flow together. Hopefully it won't be long before the Triodos bank is allowed to set up a branch in Ireland to give us an opportunity at first hand to experience what to many of us is a most unlikely institution - a bank committed to the social, cultural and common good.
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