Do you put your money where your mouth is?
We are all ethical now — Aren’t we?
The ethics of money and banking
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TL:DR We made a quiz to help show you how aligned your personal values are to the ethics of your bank. Try it here.
The ethical consumer has become a powerful force in global economics.
Gender equality, sexual identity, environmental impact, and racial equality are powerful motivations personally, professionally, and economically. Businesses are falling over themselves to convince consumers that they represent the best choice and align with their personal standards.
People are more aware of their power than ever before. They understand they can influence gigantic global corporations with each dollar they spend and social media post they make. Corporations, in turn, are playing a difficult game to balance profit and perception.
With such profound stakes at play, the amount of effort going into understanding this complex environment is also high. Unfortunately, there’s often a gap between good intentions and ethical spending.
The findings can be summed up pretty well by this quote from Ashley Iredale
“While many consumers say that they think it’s important for brands and companies to behave ethically, our actual behaviour when we shop suggests otherwise. While many of us express pro-social and ethical attitudes, when it comes to the crunch plenty of us don’t put our money where our mouths are when it comes to buying or investing in more ethical options.”
Professor Timothy Devinney, the co-author of The Myth of the Ethical Consumer, found that how public a purchase strongly influences the ethics of behaviour. Whilst only 1% of consumers would happily buy fairtrade coffee without prompting, that number increases to 30% when asked by the server; if it’s in earshot of other customers, it shoots up to 70%!
We are also highly variable in our application of ethical behaviour, writes Iredale. We might be very ethical when it comes to how we source our food but not care, for example, about recycling. This is perhaps not surprising — there are an awful lot of factors that come into play in a purchase decision, not least price and value for money and our own personal experiences and background.
There is also great variability between different groups when it comes to ethical consuming. Millennials score especially high when it comes to placing importance on Environmental — Social — Governance (ESG).
The good news, though, is that when it’s easy to do and with a little positive reinforcement, the majority of us will default to more ethical choices.
So what about money? When it comes to money, do we really “put our money where our mouth is?”
There are two things to be considered when we look at banks and banking: first, practices that relate to how banks acquire and treat customers and, secondly, what they do with the money they take from us.
There is also the matter of relativity — ethical or not ethical compared to what?. Think about the industries that we historically associate with the lowest ethical practices — Big Oil, Tobacco, Defense (why don’t we call it “Attack”?).
How does Banking stack up?
Here is some comparative data. The tobacco industry was literally killing people for decades and lying about it — justice finally caught up with them and the largest civil settlement in US history was made with the Tobacco industry paying $246bn in fines.
In comparison, during the 10 years between 2008–2018, the banking industry paid almost the same in fines: a total of $243bn for a combination of criminal activities and compliance and regulatory breaches — often around misleading advertising and overcharging.
You would not trust a tobacco company with your health — with these fines, why would you trust a Big Bank?
Keep in mind the top handful of banks account for the majority of all deposits and their share is increasing. So, what about what Big Banks do with the money we give them?
A recent investigation by Buzzfeed gives an indication. The title alone gives a good synopsis of the findings “Secret Documents Show How Criminals Use Famous Banks to Finance Terror and Death.”
So, where should those who care about the ethics of the companies they support put their money? And do you have to sacrifice either return or features and functionality to bank ethically?
Ironically, the Big Brand Banks offer some of the worst value for money with typical interest rates right around zero — this being true even prior to COVID when the Fed effective rate was far higher than it is today.
Similarly, in terms of features and functionality, the size of and bureaucratic structures within these institutions make it very hard for them to innovate on top of their old and inflexible tech platforms. Instead, they spend their time and money flooding the market with marketing, overwhelming consumers with their messages.
So, if you can get better service and better value for your money, wouldn’t you want to bank more ethically? Seems like a win-win.
To help you decide we created a quiz:
“How Ethical Are You? Banking Edition.”
This entirely unacademic quiz is designed to illuminate your personal ethical standards broadly and give you some indication if your bank meets those standards.
Side note you can see the full list of banks and their associated crimes and penalties here. Too many to put in a single quiz.
There are plenty of places you can put your money that can achieve a higher ethical bar than the Big Brand Banks.
We hope you will consider Unifimoney amongst them.
Sign up for an account at www.unifimoney.com!
