Sustainable and values-based banks outperform world’s biggest institutions

Values-based banks offer better returns on assets and provide more capital to the real economy than mainstream banks, according to a new report by the Global Alliance for Banking on Values (GABV).

Real Banking for the Real Economy compares financial data from different banking institutions, including sustainable and ethical banks, and found that the alternative options had performed better than their counterparts on the high street.

According to the report, sustainable banks lend a greater proportion of their money than big banks (75.9% compared to 40.1%, from 2003 to 2012), rely more on customer deposits to fund their balance sheets, have a stronger capital position and offer better assets returns (0.53% versus 0.37%) with lower volatility risks.

Click here to read The Guide to Sustainable Banking 2013

“We cannot afford to ignore the increasingly compelling business case for sustainable banking”, said GABV chair Peter Blom.

“It’s now clear that over the long-term, values-based banks that put people and the planet they depend on first, have proved to be more robust and resilient than the world’s biggest banks.”

The report focuses on the US and European markets and reinforces the GABV’s findings from last year, which came to similar conclusions.

According to the 2013 report, “Sustainable banks in Europe show significantly higher levels of finance for the real economy, stronger levels of equity capital, and better levels of return on assets. They also delivered significantly stronger levels of growth over the cycle, especially post-2008 when the crisis became evident.”

Blom added, “The results matter because we need a stronger banking system to support a more resilient, modern economy. And we need it soon, so finance can play its role in helping to meet urgent and converging social, environmental and economic challenges.

“If we take the mounting evidence seriously, we have an unprecedented opportunity to build a more diverse, transparent and sustainable banking system in the interests of us all.”

Further reading:

Sustainable banks more ‘robust and resilient’ than high street institutions

Values-based banks call for transparency, sustainability and diversity

Sustainable banks outperforming mainstream counterparts

‘We need a radical shake-up of the banking system’

The Guide to Sustainable Banking 2013