As people become more aware about sustainable living, becoming sustainable goes to all facets of life. Questioning the ethical standards of their lending institutions is becoming more commonplace by the day. It is important to understand what ethical lenders are and whether they align with one’s values and priorities.
An ethical lender is concerned with the social and environmental impacts of its loans and investments. It generally avoids investing in fossil fuel production, but some go further than that to avoid industries that are involved in animal cruelty, tobacco, war and weapons, human trafficking and other environmentally unsustainable industries.
What methods are used to monitor lenders?
There are organisations that monitor and report on the industries lenders invest in, though there is not a standard method of assessment for an ethical lender. One organisation is Responsible Investment Association of Australia which reports annually on the currently status of ethical banking investments.
Here are some examples of lenders with strong ethical commitments, who are owned by their customers and therefore accountable to them. These lenders have particular focuses, such as:
ME – don’t invest in fossil fuels and never will
Beyond Bank – committed to partnering with the community, and working collaboratively with not-for-profit organisations.
Teachers Mutual Bank – all Teachers Mutual Bank mortgages are certified responsible investment products by the Responsible Investment Association Australasia (RIAA).
While some lenders may not meet the qualifications of an ethical lender, they may still have Corporate Social Responsibility initiatives in place. These lenders often give back to the community via environmental causes, people in need and donations.
Therefore, it is up to individuals to determine what values and causes are most important to them and seek support from their mortgage broker to find a lender that aligns with their priorities. They can then engage support from their mortgage broker to find the best fit both economically and ethically prior to engaging in a mortgage.