What is ethical finance? It’s a term which describes the practice of choosing financial institutions based on their ethical practices. Ethical finance can be used for most business dealings, including bank accounts, insurance, commercial mortgages, savings and investments. Ethical finance has many benefits for businesses. For starters, it boosts reputation with customers, helps to attract investment and can increase chances of selling to public institutions or large firms.
Increasingly, ethical finance for businesses is becoming the new fashion. These organisations are dedicated to the common good, as well as local communities and governments. They invest in projects that support social economy, establish partnerships with local authorities and support international solidarity. Ethical finance organisations also invest in renewable energy and organic farming, among other initiatives. The goal of ethical finance is to positively impact the economy and improve the world through the investment of capital.
In order to create an ethical culture, finance managers should set the bar for their teams. This is because ethical values can filter down to employees if finance managers don’t set a standard. Finance teams should be comprised of a diverse mix of people. When hiring new finance staff, consider the moral traits of candidates. While assessing their skills, consider how they will fit into your existing team. Ethical hiring processes will help you build a culture of integrity and ethics in your company.
A system approach to ethical financial practices is essential to maintaining a good reputation. Ethical finance requires a code of conduct and standardized ethics checks. The Institute of Management Accountants has established industry standards for ethical financial practice. Mid-level managers who recognize the value of ethics will benefit from this training program. The course focuses on developing leadership skills, ethics, and systems for establishing an ethical culture within their company.
Companies should implement central values for their company, which helps clear up moral ambiguity, ensure a consistent brand image, and keep employees pulling in the same direction. These central values should guide all business decisions, including financial ones. It is important to involve the finance team in this process, as they may have the best ideas and will be more likely to adopt the practices if they feel they are involved. Ethical finance also ensures that business practices reflect the values that matter to stakeholders.
An example of this is Wells Fargo, a bank that opened accounts without the permission of the customers. The employees did so to hit sales targets. This is a clear breach of ethics. The rewards system used by these financial services companies often prioritize targets over ethics. Having an ethical culture in the business environment is beneficial to the public as well. If you’re serious about preserving the integrity of your business, Ethical finance is important.