We acknowledge that a generally accepted definition of Social Banking (also referred
to, inter alia, as alternative, ethical, green, sustainable, values based banking) does not exist, and given the variety of its historic origins and underlying values arguably cannot exist. But we believe that there is a common denominator within many organizations that can be subsumed under the notion of Social Banking, which we define as follows:
Our Definition of Social Banking
Social Banking describes banking and financial services whose main objective is to contribute to the development and prospering of people and planet, today and in the future. First and foremost this means simultaneously taking into account the social, environmental, cultural and economic impacts of activities on all levels, with the aim of reducing their negative and increasing their positive effects on the common good. In this context, money and monetary profit are not ends but means to achieve the above objective. Because Social Banking constantly requires identifying and balancing different, changing and sometimes conflicting interests, it describes a process rather than a steady state. Its success depends on an on-going dialogue among its stakeholders, as well as on a continuous reflection of their respective motives (why?), actions (what?) and approaches (how?). This demands a willingness and capacity to learn and develop at both an individual and an institutional level.
Common characteristics of Social Banks
Common characteristics of many Social Banking organizations are: Catalogue of social, environmental and ethical negative / positive criteria to prevent / support activities that harm / foster common good Core Banking - traditional banking practices and values; focus on certain traditional activities namely, in the loans and savings business Focus on the needs of communities in the real economy and civil society Non-monetary values base guiding all business activities Ownership structures preventing dependency upon dominant individual interest Participative organizational structures and customer relations Pro-active dialogue with stakeholders and engagement in public discourse Promotion of giving as a central ingredient to renewal and development Rejection of profit maximisation principle and of speculative activities Strategies that limit risk exposure and ensure resilience Set salary ratios (top-bottom) of around 10:1, with no or very limited equitable bonus systems Transparency and accountability