Public want banks to lend ethically, survey finds

News - Banking

Written by Ray Clancy

Tuesday, 09 November 2010 10:30

Some 73% of the British public think that banks should have ethical lending policies in place to prevent them from investing in, or lending to, companies involved in controversial areas such as arms manufacturing, or companies with poor records on the environment and human rights.

There is clear evidence of the need for change in all investment and lending practices, according to a new survey, conducted by Ipsos MORI on behalf of non-profit research organisation EIRIS.

It found that 66% think that banks and other financial institutions have not learnt the lessons needed to prevent a future financial crisis but instead have reverted to business as usual.

The survey is published as EIRIS figures show that the amount of money invested ethically in the UK has risen 289% over the last decade.

In the wake of the BP oil spill, many consumers recognise the impact that green and ethical issues can have on a company’s bottom line. Some 82% of the British public think that it is important for financial product providers to pay more attention to environmental, social and governance risks when deciding which companies to invest in or lend money to, as part of ensuring a good financial return.

Survey respondents were presented with a list of ways that banks or financial institutions could offer more to their customers. Ranked most highly was the disclosure of information on how and where banks lend to or invest their money, with 77% thinking that banks or financial services providers should have this.

When asked what might encourage them to switch to an ethical financial product or service:
38% would be more likely to change if more information was available on the high street about ethical/green products.

While 43% said they would be more likely to switch to an ethical financial product if its green and ethical credentials were externally verified so that it was easier to trust the claims made.

It found that 41% would be more likely to change if a greater choice of ethical/green products was available and 37% would be more likely to change if there was more information available on how green/ethical products make a difference in the world.

‘It’s clear that there's a lot more that financial institutions can do to build trust and persuade us that they have switched away from short term, unsustainable investing and lending practices. Our survey shows that there’s a huge appetite for a more intelligent approach to finance which places a greater emphasis on society and environment as part of a path towards a more sustainable financial future,’ said Mark Robertson, head of communications at EIRIS.

The survey is launched to mark the UK’s third National Ethical Investment Week which aims to raise the profile of green and ethical investment in the UK.