Banking on values
What value could we possibly find in banking? Banks are banks and they will always be banks.
Tradition says, citizens would save their money in their bank accounts, banks would lend to the borrowers and earn interest. Tradition also says, banks would sell credit cards to their customers and earn from that. Tradition further says that banks would create access to entrepreneurial credit to businesses, and thereby contribute to driving the wheel of the national economy.
What tradition, and for that matter, traditional banking may not say is: “Responsible banking.” Responsible finance.
Responsible finance means to serve those customers not supported by the mainstream lenders; investing to deliver economic, social, and environmental benefits with mission-driven goals; treating the customers fairly by being transparent with them; and above all else, caring for the environment in the entire eco-system of doing business.
With these fundamentals in mind, the idea of banking on values was first conceived in 2009.
With guidance from Sir Fazle Hasan Abed, KCMG, the founder of BRAC and BRAC Bank, the CEO of Triodos Bank of the Netherlands Peter Blom and Mary Houghton of ShoreBank in Chicago thought of creating a global network of values-based banks. And that’s how the Global Alliance for Banking on Values (GABV) became a reality.
The passion and commitment of the visionary founders of GABV has now become a global movement, connecting financial institutions that prioritize human values over profit, turning the alliance into a global cause.
Presently, a total of 67 banks and financial institutions operating in 40 countries across Asia, Africa, Australia, Latin America, North America, and Europe are pledge-bound to uphold the values of GABV. The member-institutions of GABV presently serve more than 60 million customers and hold over $210 billion of assets to take care of.
This new banking wisdom says that investors eager to invest in banks are interested to know how their banks invest, how the borrowing businesses are contributing to a holistic social advancement, and for that matter, creating positive impacts in the lives of the people at large.
Today’s banking demands new standards of banking. Customers now want to put their money where their values are when it comes to helping the society as well as the planet.
GABV is also an awareness movement that leads to values-based banking. Its members try to ensure social and environmental impact and sustainability to be at the heart of their business model. They also strive to serve the real economy and enable innovative business models. They care for long-term relationships with the customers and a direct understanding of their economic activities and advise them about the risks. They are always transparent and ensure inclusive governance.
The first Banking on Values Day (#BankingOnValues) was organized in 2013 for raising general awareness on values-based banking models as the alternative — for people, planet, and prosperity.
The GABV has also a mission of de-carbonized economies. Some of its member-banks, right now, are taking part in the Conference of Parties 26 (COP26) in Glasgow, disseminating their values-based banking wisdom to the climate advocates
In terms of making a difference, GABV’s member-institutions’ focus has always been on doing different kinds of business in the right way and with the right partner.
They do business with entities that use less environmentally harmful or resource-depleting raw materials. Every kind of financing that the members do has a values-based lens attached to it.
GABV members observe the Banking on Values Day on November 3 every year. They try to disseminate the message of values to the larger audience and promote the movement of sustainable banking across the world.
This year, GABV’s themes for the values day are: a) A healthy climate, b) a fair economy, and c) a diverse and inclusive society.
It’s heartening to see that the regulators and policy-makers in our country are also encouraging the banks to enter the sustainable finance realm in a bigger way, and thereby harvesting long-term benefits of the innovative banking model.
As our country is set to graduate into a middle-income country within this decade and a developed country by 2041, values-based banking and investment in the real economy would be vital to its sustainable development journey.
First published in Dhaka Tribune on 6 November 2021.