The Challenge of Ethical Banking in Latin America

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Joan Melé Cartaña, Member of the Triodos Bank Advisory Council, Advisor of the Chamber of Entrepreneurs and Businessmen of Cataluna, Ethical Banking Promoter in Spain and Latin America.  Author of the books Money and Awareness and Economy Explained to Young People

Translated by Natalia Tranchino

In January 2016 the NGO Oxfam presented a devastating report at the Davos Forum: the projections made the previous year had fallen short and it was already possible to affirm that we were starting the year in a situation of social and economic inequality, which continues to ensure that the world’s 1% have more economic resources than the remaining 99% combined.

Meanwhile, at the United Nations Climate Change Conference, which took place in Paris, in November 2015, reports on the destruction of the Earth were presented.  What is happening is that the biological balance is broken, thousands of species, including animals and vegetation, have disappeared, the deforestation of millions of hectares of forests and natural jungles is increasing every year, and the contamination of soils, water and the air we breathe is far exceeding imaginable limits.

Despite all of this, there is no deep analysis of causes, no true self-criticism, and no real determination to change things. Making money is the only priority. The great decisions that affect humanity are still made by anonymous people hidden in the shadows; people whose real power has turned nation–states into easily manageable puppets. The expression “markets rule” has been uttered shamelessly by many leaders, who afterwards do not even feel a need to resign.

What can we do?  What should we do? We should do everything except feel discouraged or that we cannot do anything about the problem.  That would be like falling into a trap—perhaps that is the ultimate plan; a society overwhelmed by conflict and chaos, a scared and disoriented society, is much easier to continuously manipulate. When faced with chaos, the fear sets in, and everyone minds their own business, aiming only for survival; there is neither strength nor clarity available to question the system, let alone the energy to try and change it.

One of the biggest lies of the current system, repeated continuously so that everyone considers it to be an unquestionable truth, is that we live in a free market governed by the law of supply and demand; in other words, the law of competition, and that its ultimate purpose is simply to maximize benefits. Indeed, this falsehood is repeated naturally and as common sense in schools and universities, so that the new generations grow up with it like an inoculated virus, preventing them from perceiving that things can, in fact, be different.

Enough with the lies! Not all human beings are selfish; there are people who dedicate their lives to others. Besides, the goal of life is not only to survive, but also to live.  Human beings strive for something beyond just eating and sleeping; we aim towards truth, beauty and kindness. We see this every day in religion, in science, in art, and in the millions of volunteers and NGOs that exist around the world today.

Another economic model is possible, necessary and urgent, and many of us are developing it all over the world. We must spread a more human, conscious and responsible economy, where the primary objective is to satisfy the needs of all human beings. In addition, we must do it in harmony with the Earth.  We can develop an economy where companies strive to contribute, with real solutions, to the real needs of people, and not only to obtain the maximum benefit in the minimum amount of time possible.

Faced with this context, one possible direction is ethical banking. This concept arises at the end of the 1960’s, when some people had already come to realize that banks use their client’s money to finance activities that many of these same clients would not allow if they knew about them. This sparked a very simple and logical, and therefore revolutionary, idea: “While I am in no need of it, I want my money to become useful to society.” How? By only funding companies and projects that are both human and environmentally sustainable, and informing clients of all their investments—it is that simple. That is ethical banking; a form of banking that very accurately defines the criteria of investment and noninvestment, and, at the same time, is completely straightforward with its clients.

The case of the Triodos Bank—the worldwide model for ethical banking—is worth mentioning due to how modern it is and to the remarkable success it has achieved over the last years, which has led many universities and business schools to study it as “the Triodos Bank case”. In 1980, after several years of planning, four friends, who did not need to at all since they were leading quite comfortable lives, decided to found a European, modern, and professional bank that could improve the quality of life of people and the environment. As it happens with every good idea based on human values, as soon as the bank opened it brought about the skeptical smiles and derision of the so-called experts, who anticipated that the bank would last only four days because it could not compete in the market; they said that there would not be a demand. First, it opened in Holland, soon it was in Belgium, Great Britain, Spain, Germany, and now there is an investment office in France; the bank continues to expand.

When we started in Spain, in the midst of the economic boom, again the comments were similar: it will not be possible here, there is no demand, customers are only interested in maximizing their profits, etc. However, we did not allow ourselves to be discouraged by the bad omens, and we went ahead anyway; we managed to gain the trust of hundreds, and thousands of people who supported us unconditionally in order to ensure the success of the project.  We managed to turn something that should be normal, i.e. ethical banking, into an exceptional story. Indeed, we managed to call the attention of the mass media; radio stations, TV channels and the Press were interested in us and helped us spread the word even further. Accordingly, today our ethical banking has become an unstoppable phenomenon, with over 20 branches open across Spain and with many more to be opened in the near future.

This is a bank that only invests in companies and projects that add value in terms of culture, the environment and civil society, and which stresses transparency as a fundamental value. A bank like this has demonstrated that it can be economically viable and that it can become the best model for the new economy. If a bank has been able to change its ways, then every company can do so; there is no excuse.

Years ago, Triodos Bank promoted the creation of the Global Alliance for Banking on Values (GABV), which today connects 40 banking organizations all over the world. Latin America has a great opportunity for becoming the continent where ethical banking is developed; firstly, because it is necessary to redistribute wealth in a more equitable way, in harmony with the environment and by putting people first. And secondly, because we have already started doing it: in 2016 the Double Impact prototype was launched and in 2017 we will launch the bank’s feasibility study, in the hopes that by 2020 we will be ready to begin ethical banking operations in Latin America. Today there are thousands participating in this project and many more are willing to join us; it is a project that aims to transform people’s money into an engine for a more equitable and sustainable society.

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