Thinking people before profit
The Global Alliance for Banking on Values
26th Apr 2018 by Ben Martin GEC
These days, there are few industries with such a poor public reputation as banking. Overpaid and scandal-plagued, the finance industry is forever associated with inequality, impunity, and the 2008 global recession.
But a growing number of banks are trying a different approach - one that prioritises people and planet, rather than profit. They’ve joined together to form the Global Alliance for Banking on Values, a global network of banks, cooperatives, credit unions, microfinance institutions and community investment groups. From Paraguay to Pakistan, members are united by a shared mission: to use finance to deliver sustainable economic, social and environmental development.
Presently there are 48 independent GABV members, profitable and growing, with combined assets of USD 131 billion. Together, they touch the lives of more than 420 million people across 31 countries.
Making sure the planet prospers, too
When the GABV first came together in 2009, there was far from common agreement about the agenda of the alliance. “Some banks had a distinctly green orientation, some focused more on values and culture, and some were more committed to social inclusion,” remembers GABV’s Marcos Eguiguren, GABV Executive Director. “Some banks had been working for decades, while others were just getting started.”
But despite the disparities, they were united by a shared belief: that finance and economics works better when it is driven by a set of conscious values, rather than left to the whims of unfettered markets and naked self-interest.
“Imagine when you go to sleep at night that your money flies out of your purse and travels around the world. Where do you want it to land? Where can your money do the most good?”
Most banks are run with a focus on profitability above all else, blinding them to the potential economic, environmental or social costs of their decisions. This blinkered approach is not only bad for communities and the environment, but often for the banks themselves too: just think of Lehman Brothers, bankrupted by its own short-sighted pursuit of profit.
Local values, global impact
But values-based banking takes a different approach. For GABV members, business decisions start with human needs, and hold themselves accountable to meeting those needs in a truly sustainable way – socially, environmentally and economically, including sustainable profitability for the bank.
Starting from values gives GABV members roots in the real world, rather than the rarefied atmosphere of high finance. Six principles make up the core of this values-based philosophy:
- Triple bottom line: giving equal weight to people, planet, and prosperity
- Real economy: financing real people, not esoteric investment vehicles
- Client-centred: close and direct relationships with clients
- Long-term resiliency: services must be self-sustaining and resilient
- Transparency: Inclusive governance and open reporting to stakeholders
- Culture: an institutional commitment to the principles, so they are used at all levels of decision making.
A new way of operating
More and more banks are committing themselves to a social, cultural, environmental and economic transformation of the finance sector – and the GABV is leading the way. This new breed of bank are renewing their communities and the real economy, while still achieving profitable growth for their stakeholders and members.
As this movement continues to grow, more and more people are waking up to the possibility that “banking” doesn’t have to be a dirty word. And more and more customers are banking safe in the knowledge that their money is being invested in ways that aspire to improve their quality of life and wellbeing of people everywhere on Earth.
Citizen-led banking with decisions based on human needs
Ecological and environmental sustainability mainstreamed into finance
Investment for communities; economics for nature
Find out more:
- GABV have produced a couple of handy guides, including #BankingOnValues: Moving Forward Together and Stories of Systemic Change, which lay out their philosophy in more detail.
- And the GABV website has an excellent collection of case studies, sharing profoundly different perspectives on how banking can, and should work.
- UN Environment have produced a detailed, if dry, report on values-based banking, which maps out the sector and recommends policy options for encouraging its growth
- This excellent introduction to values-based banking from New Economy and Social Innovation explains the concepts, ideas, and strategies of this new global movement, and includes handy videos too.