Ethical Banking: What Is a Socially Responsible Bank?

Editor’s note, June 16, 2023: Ando was previously included on this page but the environmentally conscious mobile banking app has been defunct since fall 2022. Its accounts were offered through its partnership with Community Federal Savings Bank. Per the Ando site, account holders can get information about their accounts by emailing [email protected] or calling (646) 929-8106.

"A champion for good causes" may be the last way you would characterize a bank, but some fit that profile.

Part of how banks make a profit is by using the money in your checking, savings and other accounts to make loans to businesses, home buyers and other customers. But you don’t have a say in what your bank supports with those funds. They could be activities you don't support, such as projects that lead to deforestation or new oil pipelines.

At least a handful of U.S. banks ensure that their customers’ money in bank accounts doesn’t help industries that harm people or the environment. Third-party certifications help show those commitments. Here’s an overview of socially responsible banking, various certifications and a list of values-driven institutions to consider.

» Skip ahead to our full list of 27 socially responsible banks

A socially responsible bank is one committed to creating social or environmental good without an exclusive focus on profit and without funding causes that can harm people or the planet. These banking institutions generally prove their impact with external certifications or memberships that reflect their lending practices and community investments.

» Check out the 9 best socially responsible banks

This type of bank “looks to further economic, social, racial and environmental justice through its voice, resources and every aspect of how it operates,” Ivan Frishberg, chief sustainability officer at Amalgamated Bank, said in an email. “Our mission areas are our business.”

Socially responsible banks (and banking) can go by other names, such as values-based banks and ethical banks, and all of these can refer to having a focus on social and environmental justice. The term "sustainable banks" tends to emphasize an environmental bent, according to multiple banks NerdWallet spoke with. (If you’re interested in investing based on environmental, social and governance values, consider ESG investing.)

Here's an explainer on sustainable banking:

» Learn more about environmentally sustainable banking

Certifications provide external proof that a bank is serious about creating a positive impact and minimizing harm to people and the planet. (And climate change, for example, can impact our finances over time.) Not every certification requires the same effort level to attain, so look carefully at which ones a bank promotes on its website.

» Learn more: 4 ways to check if your bank is greenwashing

In terms of benefits, third-party certifications “allow values-aligned customers to discover our bank,” says Monique Johnson, senior vice president, director of client and community partnerships at Beneficial State Bank based in Oakland, California. Certifications “legitimize our impact and efforts in an unbiased and standard measurement.”

“A certification shows we’re walking the walk … [and] provides accountability to us,” says Ken LaRoe, founder and CEO of Climate First Bank based in St. Petersburg, Florida. The bank is currently a pending B Corp, up for an official assessment once it’s been in business for a year.

» MORE: How to pick a socially responsible bank

Our list below shows various certifications that U.S.-based banks, credit unions and financial technology banking companies (or fintechs) can have. (For more on how credit unions and fintechs differ from banks, skip down to this section.)

Click on any certification or designation to jump to that section below: Certified B Corporation Global Alliance for Banking on Values Fossil Free Certified 1% for the Planet Green America Certified Community Development Financial Institution Community Development Credit Union Minority Depository Institution Women-owned Bank

The banks most committed to supporting social and environmental missions generally undergo the process of becoming a Certified B Corporation, a member of the Global Alliance for Banking on Values, or both.

Certified B Corporation

• Includes fewer than 20 U.S banks and fintechs.

These for-profit businesses pledge to uphold some of the highest standards for social and environmental practices in the way they run their businesses. Founded in 2006, the nonprofit network B Lab runs the certification program with scorecards across five impact areas: governance (or management), workers, community, environment and customers. To be certified, B Corp companies must score an 80 or higher on a 200-point test. Other requirements include background checks, on-site reviews and re-certification every three years.

Several practices that can help meet certification include paying all workers a living wage, having a diverse board of directors and focusing on services (and for banks, lending) that create renewable energy.

“To put it simply, customers can be certain these banks are using their business as a force for good,” a B Lab spokesperson said in an email.

Of the 3,500 Certified B Corps worldwide, only a handful are U.S. banks. Every B Corp has a legal obligation to consider the impact of their decisions, including social and environmental factors, which protects their mission-driven identity from changes in leadership and pressure from shareholders solely focused on profit. Companies less than a year old can become Pending B Corp temporarily if they meet the same legal requirements as B Corps do.

Global Alliance for Banking on Values

• Includes fewer than 20 U.S banks and credit unions.

Founded in 2009, this independent network of more than 60 banks worldwide, roughly a third in the U.S., seeks to drive positive change through banking. Member banks must be regulated directly by their government, have a minimum of $50 million in assets, transparency in reporting their business practices, and follow six core principles: a triple bottom line (supporting the planet, people and profit), serving the real economy (versus the financial economy), being client-centered, maintaining long-term resiliency, having transparency (in governance) and a culture that promotes the bank’s social and environmental values.

Like B Corp certification, membership into the Global Alliance for Banking on Values, or GABV, involves a scorecard that captures the organization’s values. With the smaller size of this network, there are also annual meetings and member-led initiatives such as a climate change commitment in 2019 for each bank to track and monitor the carbon impact of their loans and investments.

Fossil Free Certified

• Includes fewer than 10 U.S. banks, credit unions and fintechs.

Starting in February 2022, the not-for-profit Bank Green launched the Fossil Free Banking Alliance and certification program focused on one requirement: A bank must not finance fossil fuel companies or projects, now or in the future. Fossil fuels consist of oil, coal and natural gas, and their extraction and energy use remain the largest sources of greenhouse gas emissions from human activities, according to the U.S. Environmental Protection Agency. Reducing emissions is necessary to maintain a livable world climate, according to the United Nations 2021 report.

“We’re acting as a kind of pressure point on banks … [to] create a shared moral standard within the industry,” says Zak Gottlieb, director and co-founder of Bank Green. The program is run by a small team of volunteers with backgrounds ranging from climate activism to tech.

Bank Green aims to onboard more community development financial institutions that work with underserved populations, which are disproportionately affected by factory pollution and natural disasters. Hurricanes Katrina and Harvey are just two examples where African American communities suffered more than white communities, according to a summary of findings by Scientific American.

"When it comes to community work, there’s always a question of environmental justice,” Gottlieb says.

1% for the Planet

• Includes fewer than 10 U.S. banks, credit unions and fintechs.

Established in 2002, this global movement makes member businesses and nonprofits commit to giving the equivalent of 1% of total annual sales to environmental nonprofits. Some of the 1% can come from pro-bono professional services and volunteering. The environmental nonprofits must be approved by 1% for the Planet.

This certification alone, however, doesn’t mean a bank divests from destructive environmental projects. For example, Bank of the West has this certification. But it’s wholly owned by a parent bank that finances extensive fossil fuel projects globally, according to a 2021 report by nonprofits Rainforest Action Network and Sierra Club, among others.

Green America Certified

• Includes fewer than 10 U.S. banks, credit unions and fintechs.

Since 1982, the national not-for-profit Green America has built a green network of small businesses. Green America defines “green” to mean a focus on social justice and environmental responsibility. Certification requires submitting an assessment, and eligibility includes companies at least four months old that fulfill a host of requirements.

Specific to banks and credit unions, eligibility involves over two dozen requirements across four categories: company (business practices), company employment (fair worker wages and benefits), education (truthful marketing) and sustainable facilities. Under the company category, banks must have clear policies around where customers’ money may or may not be invested. Any banks that fund certain industries, including but not limited to weapons and fossil fuels such as gas, oil and coal, aren’t eligible to be Green America Certified.

Most banks and credit unions committed to some social and economic values, though generally not explicitly environmental causes, become one of the following:

Community development financial institution

• Includes more than 540 U.S. banks and credit unions.

CDFIs provide affordable banking and credit services to people in economically underserved areas and communities of color. Started in the mid-1990s, the federal program is managed by the CDFI Fund, which is part of the U.S. Treasury. The network includes nearly 1,400 banks and credit unions as well as loan and venture capital funds nationwide that share the goal of economic development. Certified CDFIs can be eligible for various awards to help them grow.

» Learn more about CDFIs

In addition to providing banking access, “CDFIs are engines of economic development,” says Pablo DeFilippi, executive vice president of not-for-profit Inclusiv. As a certified CDFI intermediary, Inclusiv supports credit unions through that certification process. CDFIs can provide asset-building opportunities and financing for affordable housing and small businesses.

Community development credit union

• Includes more than 350 U.S. credit unions.

Established two decades before the CDFI program, Inclusiv built a network and the criteria for supporting underserved communities. Its network of community development credit unions, or CDCUs, have similar missions to CDFIs, and in fact, credit unions can be both. CDCUs specialize in fairly priced loans to people with limited credit history, financial counseling and general banking services.

“Inclusiv is the only national association of CDFI-certified and [minority-owned] credit unions,” DeFilippi says. The organization focuses on financial inclusion, community development and closing the nation’s racial equity gap.

Minority depository institution

• Includes more than 140 U.S. banks and 510 credit unions.

Both within and outside the CDFI network, minority-owned or -led banks and credit unions support communities of color with a focus on closing the racial wealth gaps in America. Black-owned banks, in particular, have been in the spotlight in recent years thanks to the Black Lives Matter and Bank Black movements. See our list of black-owned banks.

For banks: the Federal Deposit Insurance Corporation defines a minority depository institution, or MDI, in two ways:

• Minority-owned: individuals of a specific minority group have at least 51% of a bank’s voting stock.

• Minority-led: at least half of a bank’s board of directors identifies as part of a specific minority group and the bank predominantly serves that group.

The difference is more technical than functional, and ultimately both types serve their communities.

For credit unions: the National Credit Union Administration defines MDIs differently since credit unions are not-for-profit and member-owned. A credit union must self-report as MDI and have more than 50% people of color as members and current board members.

There are four or five minority communities that MDIs can represent and support, according to the FDIC and NCUA:

• Black or African Americans.

• Hispanic Americans.

• Asian or Pacific Islander Americans.

• Native Americans or Alaskan Native Americans.

• Multiracial Americans (or multiple minority groups listed).

» Learn more about how minority-owned banks make a difference

Women-owned bank

• Includes fewer than 15 U.S. banks.

In 2021, the Federal Reserve expanded its definition of MDIs to include women-owned financial institutions. Women-owned banks have a majority of ownership or revenue held by at least one woman, and senior management positions are largely held by women. These banks help address the historical exclusion of women from the industry. In addition to gender pay and wealth gaps, women face more financial barriers when running a business and getting loans compared with men.

Although the biggest U.S. banks have given billions to charity and financed billions in renewable energy initiatives, they are still some of the biggest contributors to the fossil fuel industry. Several banks that funded the Dakota Access Pipeline in 2016 also financed new construction on the Line 3 oil pipeline in Minnesota, according to a Rainforest Action Network report. The new addition to the pipeline directly affects five Ojibwe tribes in the area, as reported by Bloomberg News and shown on a map by Enbridge, the company building the pipeline.

The four largest banks alone have funded $976 billion to fossil fuel companies and projects ranging from tar sands (to make gasoline), oil fracking, arctic and offshore drilling, and more, from 2016 through 2020, according to a report by nonprofits including the Sierra Club and Rainforest Action Network. You can see if your bank contributes to fossil fuel funding through such reports as well as on BankTrack.org.

Not every financial institution that offers checking and savings accounts is officially a bank, and the alternatives shouldn’t be overlooked. Here are three:

• Banks: These for-profit businesses are licensed to hold and lend money, and depending on their size, may focus on big or small geographic areas. For people able to bank exclusively online or mobile apps, a small bank may still be available nationwide.

• Credit unions: These are not-for-profit equivalents to banks and have membership requirements to join, such as living in a certain area or agreeing to a small one-time donation, such as $5, to a specified organization. Like banks, there are online-only credit unions.

• Fintechs (or neobanks): These internet-only financial technology companies provide online banking websites and apps for a nationwide audience, and usually partner with a bank to provide federal deposit insurance for their bank accounts.

» Learn about the pros and cons of these banking institutions

Here’s a list of banks — as well as credit unions and fintechs — with various certifications such as B Corp, membership in the Global Alliance of Banking on Values, among others.

If there are none near you and you prefer in-person banking, scroll to the bottom for more options.