Harry and Meghan Support Ethical Finance. What Is It, Anyway?
Prince Harry and Meghan, the Duchess of Sussex, have long made it clear that their values are at the forefront of their decisions, as evidenced by the bevvy of socially-minded initiatives the pair has supported in recent years. Yet it still surprised many when, this past Tuesday, Meghan and Harry announced that they were now ‘Impact Partners’ at Ethic, a sustainable investing firm based in New York. In their exclusive New York Times interview, they said they hope to encourage more young people to invest their money in sustainable companies.
You may have heard about this news and wondered: what exactly is ethical banking, and does it even apply to me?
Unethical Banking 101
Before we can delve into what sustainable, ethical finance is, let’s take a step back and understand: what’s unethical about banking to begin with? There are a few facets to this.
When you put your money in the standard, high-street bank, it doesn’t just sit there idly in your savings account. Banks invest your money and make a profit off it – which you may or may not reap the benefits of. How they invest your money is the point of contention here – one that more and more people are paying attention to.
A significant portion of banks indeed invest in questionable or blatantly unethical industries – fossil fuels, tobacco, arms trade, deforestation, to name a few. This means that your hard-earned money might be, unbeknownst to you, financing activities that are in direct conflict with your values and the health of the world.
This just scratches the surface, however. Big banks have frequently made headlines for tax evasion, unethical dealings, and unfair lending practices. Moreover, with the increasing global wealth gap worldwide, mis-selling measures, and mounting interest-based debt, it’s not a surprise that many people eye the finance sector with a degree of suspicion.
Can Banking Be Ethical?
Ethical finance is a broad umbrella. For a start, it means the institution has structured its products, services, and investments in ways that it deems as ethical or socially responsible. What this specifically includes varies from institution to institution, depending on their priorities.
Some, like the fintech app that Harry and Meghan represent, may broadly offer ethical investing, while others strictly focus on environmental impact; others still may prioritize offering transparent services and financial literacy programs to underserved communities.
Algbra, for example, fuses these priorities: it has strict policies on ethical investments, interest-free banking, and serving communities that have otherwise been neglected by the financial industry.
When asked about this new ethical wave within fintech, Nicolas Huss, former CEO of Visa Europe says this: “Inclusive, accessible, and ethical finance is no longer a niche demand within the industry, but a necessary transformation that banks must contend with. If we’re serious about improving the state of the world, we need to look seriously at what our industry can do and adapt meaningfully.”
Ethics Start Inside
Most of the problems we see in the financial world are systemic – so is ethical investing enough to make a change? Beyond banking, ethical business practices should also be reflected in how a company is run internally, how it treats its customers, and how it sees its role in broader society. Many ethically-driven institutions and B-corp businesses understand this difference and have taken steps to ensure they are actively contributing to a better society, such as instituting fair labour practices, gender pay equity, and supporting social impact initiatives.
Algbra has taken a multi-pronged approach. Institutionally, it was created by people from the communities it was built for – namely, immigrant, Muslim, and otherwise marginalized sectors of society – and prioritizes diversity in hiring practices to ensure that integrity is not lost. On the external front, Algbra X is a social impact foundation created by the fintech startup to build ongoing, long-term projects with the UK’s diverse communities, with a focus on building youth leadership, growing community partnerships, and investing in local social impact initiatives.
The Algbra app itself is also designed to help users do good daily and easily. It features a Carbon Tracker which empowers users to track their carbon footprint through their expenses. Moreover, you can donate to your choice of over 100 local charities from across the UK through the Donate feature.
“Real, long-term change needs to start from the roots up. Ethical practices shouldn’t be an afterthought or just a clever feature, but built into every level of an organisation”, says Nizam Uddin OBE, Chief Strategy Officer at Algbra
How to Get Ethical
It’s easy to get overwhelmed by the dozens of ethical finance institutions out there, from traditional credit unions to the latest fintech apps. We recommend that you start by considering your values and practical priorities: what financial services are most important to you, and how do you want to see your money used in the world?
When you research different ethical finance services, you can compare their offerings with your personal values and needs. From there, it becomes easier to determine the right fit, and you can take your first step in making your money do good. If Harry and Meghan can do it, why not you?