Because Ethical Banks have developed from niche players to serious competition for traditional banks, supposedly Ethical Banks and even traditional banks use the term Ethical Bank in order to sell bank services under the cloak of sustainable and ethically correct business conduct.
Therefore, the focus of this research is to make truly Ethical Banks distinguishable from traditional banks by investigating, analysing and determining principles, Ethical Banks have to fulfil or refrain from in order to call themselves truly ethical. Based on the results of the academic research, a web- based survey identifies bank customer’s attitude towards sustainability and ethics in general, their banking, as well as their ethical attitude towards nine areas of business, banks may be confronted with. The survey result build the basis for a list of positive and negative Ethical Guiding Principles (EGPs), which should serve as a general standard for Ethical Banks that want to settle down within the European Economic Area and Switzerland.
The main conclusion drawn from this study is a comprehensive list of positive and negative EGPs, applicable either directly to Ethical Banks or as a basis for further research. But because of the ever-changing environmental, social and legal environment, EGPs need to be continuously reviewed and validated. If directly implemented, a control mechanism within or outside the bank must monitor and ensure compliance with these principles.
Table of Contents
1 Introduction
1.1 Background
1.2 Research focus
1.3 Research aim and objectives
1.4 Outline structure
2 Literature Review
2.1 Ethical Banks
2.1.1 Definition
2.1.2 The role of Ethical Banks
2.1.3 Stages of sustainability
2.2 Measuring social and environmental development
2.2.1 Environmental Reporting
2.2.2 Ethical Performance Measurement
2.2.3 Ethical Guiding Principles
2.3 Ethical decision making
2.3.1 Definition
2.3.2 Theories
2.3.2.1 Teleology
2.3.2.2 Deontology
2.3.2.3 Virtue ethics
2.3.2.4 Ethical learning and growth
2.3.3 Stakeholder Theory
2.4 Emerging issues and the need for empirical research
3 Theoretical Framework
4 Data and methodology
4.1 Research design
4.1.1 Post-positivism
4.1.2 Inductive research approach
4.2 Survey
4.2.1 Research process
4.2.1.1 Survey method and distribution
4.2.1.2 Survey design
4.3 Data collection and analysis
4.4 Practical research problems
5 Findings and analysis of results
5.1 Respondents’ characteristics and attitude towards different bank types
5.2 Evaluation of ethical criteria
5.2.1 Leisure and entertainment
5.2.2 Animals and plants
5.2.3 Weapons
5.2.4 Energy
5.2.5 Medical and pharmaceuticals
5.2.6 Commodities
5.2.7 Transportation
5.2.8 Law, International Agreements, Corporate Governance
5.2.9 Finance and Support
5.3 Final list of criteria
6 Conclusion
6.1 Summary of findings
6.2 Limitations
6.3 Opportunities for further research
Objectives and Topics
This research aims to establish clear distinctions between truly ethical banks and traditional institutions by defining standardized Ethical Guiding Principles (EGPs). Through an investigation of ethical decision-making theories and a web-based empirical study of customer attitudes across nine business areas, the paper seeks to provide a reliable framework that enables banks in the European Economic Area to align their operations with sustainable, ethical standards.
- Ethical banking definitions and the challenge of market greenwashing.
- Application of stakeholder theory in evaluating ethical financial behavior.
- Empirical analysis of customer attitudes toward various business sectors.
- Development of a standardized list of positive and negative ethical criteria.
- The necessity of control mechanisms to ensure organizational compliance.
Excerpt from the Book
1.2 Research focus
Although the financial crisis may have strengthened the demand for Ethical Banks, little consideration is given so far to ethics in finance and particularly to ethics in banks, so that it is a research subject to develop nowadays (Boatright, 2008, p. 7).
Additionally, customers struggle to identify truly Ethical Banks because there is no such certificate, quality seal or standardised rating that helps customers assess the ethical quality of a bank. Considering other fields of business, quality seals (432 eco-labels in 246 countries) like the ‘CSR-Tourism-certified’ seal in the travel industry, are globally accepted and make the identification of ethical services, respectively products customer-friendly and easy (Global Sustainable Tourism Council, 2012; Ecolabel Index, 2012).
National eco-labels like the German ‘Blue Angel’ or Europe-wide ‘EU Ecolabel’, set standards for eco-friendly products and services, but fail to include financial services (The Blue Angel, 2012; European Commission, 2012a).
Furthermore, marketing slogans suggesting ethical behaviour like Deutsche Bank’s (2012) “Banking on Green” or Lloyds (2012) “Doing more to help Britain prosper” (Lloyds, 2012) may confuse customers in their quest for a truly ethical partner because these banks may not be as ethical after all. UBS serves as an excellent example: While advertising “high ethical standards to all [..] activities and decisions” (UBS, 2011, p. 6) in their ‘Code of Business Conduct and Ethics’ and being one of the first banks to sign the UNEP Statement, UBS was vigorously criticised for violating social and environmental policies by funding the Turkish Ilisu Dam project (Giuseppi, 2001, p. 102). Ultimately, UBS backed out of the project because of rising stakeholder pressure.
To conclude, advertisements, company policies like Corporate Social Responsibility (CSR), regular environmental reports or banking rules that prohibit certain products or behaviour, do not suffice to make a bank truly ethical (Al-Ajmi, Al-Saleh & Abo Hussain, 2011).
Summary of Chapters
1 Introduction: Provides background on the rise of ethical banks and justifies the research focus on distinguishing these institutions from traditional ones.
2 Literature Review: Defines ethical banking, examines sustainability stages, and contrasts reporting standards with ethical decision-making theories.
3 Theoretical Framework: Explains the research problems and applies a multi-step model to integrate ethical beliefs into banking practices.
4 Data and methodology: Details the post-positivist research design and the execution of a quantitative online survey using snowball-sampling.
5 Findings and analysis of results: Evaluates customer feedback on various ethical criteria and consolidates them into a definitive list of positive and negative business practices.
6 Conclusion: Summarizes the key findings and addresses the limitations regarding environmental volatility while suggesting future research directions.
Keywords
Ethical Banks, Ethical Guiding Principles (EGPs), Sustainability, Stakeholder Theory, Environmental Reporting, Financial Ethics, Corporate Social Responsibility, Survey Research, Post-positivism, Islamic Banking, Ethical Metrics, European Economic Area, Business Ethics, Ethical Decision-Making, Sustainability Reporting.
Frequently Asked Questions
What is the fundamental objective of this master's thesis?
The research aims to distinguish truly ethical banks from traditional ones by investigating and determining a standardized set of Ethical Guiding Principles (EGPs) that banks should fulfill or refrain from.
What are the primary themes discussed in this study?
The core themes include the definition of ethical banks, the role of banks in the economy, environmental reporting standards, ethical decision-making theories, and the evaluation of business practices based on customer attitudes.
What is the central research question?
The research seeks to identify what specific principles define an ethical bank and how these can be standardized to protect customers from misleading marketing claims regarding ethical conduct.
Which scientific methods are utilized?
The thesis employs a post-positivist, inductive approach using quantitative data collected through a web-based snowball-sampling survey of 96 stakeholders, alongside a literature review of banking and ethical theories.
What topics are covered in the main body of the work?
The main body covers the theoretical basis of ethical banking, existing reporting and measurement tools, and an empirical analysis of specific business criteria categorized into areas like leisure, energy, medical, and commodities.
Which keywords best characterize the research?
Key terms include Ethical Banks, Ethical Guiding Principles, Sustainability, Stakeholder Theory, Financial Ethics, and Corporate Social Responsibility.
How does this study address the issue of greenwashing?
The study highlights the lack of standardized certification for ethical banking and proposes a comprehensive list of positive and negative criteria to provide a reliable benchmark for both banks and customers.
Why are the survey results for certain criteria described as "absurd" or "contradictory"?
The author notes that some participants provided inconsistent answers toward the end of the survey, likely due to fatigue or a lack of technical knowledge regarding complex topics like ozone-depleting chemicals or nuclear energy.
How should an ethical bank monitor its compliance with these principles?
The author suggests that if these criteria were implemented, a control mechanism—similar to a Sharia Supervisory Board—would be necessary to ensure continuous compliance with the defined principles.
What is the importance of the "absolute majority" rule used in this research?
The author utilized a 50% approval benchmark as a transparent and democratic method to categorize business practices as "ethical" or "unethical" based on the collective judgment of the surveyed bank customers.
- Citation du texte
- Hedwig F. Heerdt (Auteur), 2013, Ethical Banks. Implementation of Unified Ethical Guiding Principle, Munich, GRIN Verlag, https://www.grin.com/document/214262
