More and more homeowners are becoming interested in ethical lending and what their banks are doing with their investments with regard to the environment.

We’ve had a number of people over the past 12 months reach out to us specifically asking to go with an ethical lender. Basically, they want to borrow from a lender who aligns with their beliefs and ethics with regard to the environment. As such, we thought this was a topic worthy of some investigation. Our research took us down several paths which we’ve tried to condense into this article, but we have to admit, it barely scratches the surface.

The burning global issue of climate change

The subject of climate change is of huge interest and debate around the world. The World Wildlife Organisation and Greenpeace have blamed the latest Australian fires and subsequent smoke haze on climate change. We have to say that it was a first having to wear a mask to the supermarket in Canberra (pre-pandemic) because of the smoke from the bushfires raging out of control in New South Wales.

Now more than ever before, people are consciously trying to reduce their carbon footprint in an effort to help save the planet from global warming. There are numerous ways to do this, from using a reusable coffee cup, to cycling to work, to recycling, to switching off lights, and many more.

Some of us remember being taught about energy emissions when we were at primary school. When the sun went down, we would run around the house switching off lights and appliances to conserve energy. One of our team remembers a night where their mother said, “Um excuse me, can you switch the light back on so that I can keep reading my book?” She was quite passionate and somewhat over-zealous in her attempt to help save the planet back in the day.

Today, the global community is taking things more seriously than ever before. Some things, like recycling, for instance, have become second nature for most people. But we – and governments, particularly – still have a long way to go.

What is an ethical lender?

More and more businesses are evolving as ethical and sustainable entities, and it’s no different with financial lenders. An ethical lender is a lender who considers the environmental and social impacts of its loans and investments. For instance, an ethical lender is one who chooses not to invest in fossil fuels like natural gas, crude oil and coal. A lender can also be deemed ethical (or sustainable) when they choose to invest their money in renewable energy. They may also have a social and environmental conscience and won’t get involved in weapons manufacture. Or they may promote animal welfare and avoid getting involved with human exploitation, tobacco companies, pornography, gambling and the like.

For those who do feel passionate about a cause, it matters where they put their money. This goes for savings and investments, and also who they borrow from. They want to ensure that the interest they pay on their loans is being invested according to the lender’s interests (which ideally align with their own).

Which lenders are ethical or sustainable?

Keep in mind that lenders with the same ‘ethical’ ranking may have different social and environmental values, so you may want to dig deeper to find the ones that best support your beliefs. There are many lenders who have some loan types where investments are environmentally friendly, but other loans which are not. Market Forces have collated a list of banks which do and don’t have a record of funding fossil fuels.

Here are a few lenders on our panel who are environmentally and ethically minded:

Bank Australia

Only lends to industries that advance social and environmental causes, meaning things like firearms, tobacco, fossil fuels and live animal exports are strictly off limits. Carbon neutral since 2011.

Teachers Mutual Bank

Recognised as one of the world’s most ethical companies by the Ethisphere Institute for ten straight years. It’s also the only Australian bank to receive certification from the Responsible Investment Association of Australasia for all retail products – deposits, mortgages and wholesale funding. They’ve had a no-fossil-fuel policy since 2015.

Beyond Bank

Customer-owned and B Corp certified. They do not invest in or lend to fossil fuel companies, and they reinvest profits back into the community. One of the few banks in Australia to embed environmental and social purpose into their operations and governance.

MOVE Bank

Listed by Market Forces as having zero fossil fuel funding. They’re smaller in scale but maintain a clean lending and investment footprint.

ME Bank

No investments in fossil fuels, mining, coal or gas. Market Forces currently lists them as fossil-free.

Auswide Bank

Does not finance companies involved in the exploration, mining, manufacture or export of thermal coal or coal seam gas.

Suncorp Bank

Although not traditionally thought of as ethical, Suncorp has announced it will phase out fossil fuel lending and insurance by 2025. Currently has no new exposure to thermal coal projects and is exiting oil and gas over time.

Adelaide Bank

Part of the Bendigo and Adelaide Bank Group. Doesn’t currently lend to coal or coal seam gas projects, and offers a selection of green home loan options.

Heritage Bank

Recognised as having no exposure to fossil fuel industries and regularly cited by Market Forces and ethical banking guides as a clean lender.