No more space, ladies and gentleman, the green bandwagon is full to capacity. Even the major corporates have clambered on board. This January, for example, the New Year advertising schedule included a sequence from HSBC announcing the arrival of its first ‘green sale’. For every new product taken out with the bank, a donation was made to a charity working to combat climate change or protect the world’s ecosystems.

One may be sceptical of the intentions of the financial giant, but the advertisement signalled a change in attitude towards banking and its global impact. This was compounded by the February release of figures naming a socially responsible investment fund, the Co-operative Insurance Sustainable Leaders Trust, as the top performing unit trust in the UK market, proving that ethical investment had moved from the fringe into the mainstream.

It is exactly the social climate that Triodos Bank has been waiting for. Its report, The future of finance, proposes a new model of lending and investment that goes beyond the rather hackneyed concept of ethical banking, which it has termed ‘conscious investment’.

Under this new model every bank, from the principled Triodos to the largest international corporation, would be fully transparent about its dealings and its partners. Armed with this information, a more financially literate public would be able to choose which organisation to bank with. The hope is that this decision would be made with a clear understanding of exactly who the customer’s investments would be working for, and its global impact.

More sustainable than ethical investment, which often simply excludes certain financial partners such as tobacco companies or those dealing in arms, the report claims conscious investment would foster a more intelligent and well-rounded approach to financial gain than simply the highest interest rate available on savings, or the greatest return for an investor.

For charities, this change in emphasis could represent a real opportunity. Triodos envisages the third sector, which is already beginning to embrace ethical investment, leading the way in the promotion of conscious investment.

James Vaccaro, head of investment banking at Triodos, says that the bank wants to enforce a change in attitudes to finance and admits that this will be very difficult. “I’d accept fully that it’s a challenging environment but, if you look at any change of the kind our ambitions are set on, it starts with these kinds of tools which empower individuals to approach things in a different way,” he says.

The first of these tools is a new, and more penetrable, language with which to talk about investing money. “A lot of people just don’t understand some of the terms involved in ethical investment,” Vaccaro says. “It’s always difficult to know if what the ethical fund said on the tin didn’t quite match up with what it actually does.”

By introducing new terms with which to talk about money, and promoting complete transparency from the banks, Vaccaro hopes Triodos can force financial discussions to take place in layman’s terms, and find a “plain English kind of way of understanding money flows”.

Though this would be a gradual process, it would help customers understand the impact that their money has, even when it is sitting in the bank, and prove the worth and viability of the alternative – ethical banking. Charities are already at the forefront of this cultural change, Vaccaro says.

“Programme-related investment is predicated on a fundamental change in thinking about how charities approach the problems in the world that they’re dealing with. They cannot distance themselves in that clear cut way. There has got to be more of a degree of integration.” But what progress within the sector? “There has been a lot of thinking and talking about the programme-related investment model. There are a few who are now really taking it very seriously and are now starting to much more directly integrate it into their investment strategy,” Vaccaro adds.

Despite the fact that charities are keen to ensure they promote their mission in everything they do, Vaccaro says there is still a “natural reticence” about moving away from mainstream banking for fear that they will jeopardise their financial returns. But if the third sector does embrace the new concept of conscious investment, Joe Public may be only a few steps behind. “So many charities will have a campaigning element; there is a way of being able to integrate what they’re doing into what the rest of the public are doing.”

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So far, though, charities have been less than ambitious in their investment and borrowing practices.

Charity Finance Directors Group deputy chief executive David Membrey says he is disappointed by the poor uptake of ethical investment policies among charities so far. In theory, the Triodos report could be the trigger for action. “CFDG welcomes any demand for increased transparency in the sector and likewise for increased financial literacy,” Membrey says. “Many charities that do not have a cause that meets easily with the obvious ethical criteria have found it hard to develop an ethical investment policy in support of their aims and a more subtle and refined approach to the subject might make it easier to do this.”

Charity Bank is also broadly welcoming of the report, but chief executive Malcolm Hayday fears that the high minded goals it sets out cannot be achieved in the current climate. “We’re still far too consumption obsessed,” Hayday says, sceptical of the progress that can be made. “There are a number of things happening that are causing people to question the sense of some of this frenetic consumerism. But even in the climate change marketplace we have got lots of people saying ‘we shouldn’t fly as much, but I’m jetting to Prague this weekend’.”

However, he agrees that the term ‘ethical’ has become meaningless, and has been “hijacked as a branding methodology”. “The word ethical can mean so many different things to different people. It’s an overused and therefore devalued term, as I think are other words like ‘sustainable’,” Hayday says. “Part of the problem we face as providers with services in that market is that we haven’t yet come up with a general brand in the way the Fairtrade movement and organic sectors have done.”

Nevertheless, he believes the charity sector is the place to start. The very public review of the investment profile of the Bill and Melinda Gates Foundation is one example of how ignorant charities can be of the global impact of financial investments, and how much change can be made. “Not even to know that your investments could be harming the work that you’re doing is completely unacceptable,” Hayday warns charities. “In this country the third sector at one level or another has at its command substantial amounts of money, particularly in the resources of grant making trusts or foundations.”

Hayday maintains that, in the main, consumers are intelligent enough to realise that mainstream banks are self-interested organisations. “There is little confidence that banks believe in the moral or ethical,” he says. But though they may recognise this, consumers currently have little choice. Ethical banks, including Charity Bank and Triodos, cannot yet provide the services that the majority of the population needs, such as a starter student account for the 18 year old leaving home and becoming financially independent for the first time. For now, at least, though charities have their investment options open, the public does not have the same luxury.

It is not a surprise that the largest banks already believe they are doing enough. Brian Capon, a spokesperson for the British Bankers’ Association, says banks already take their ethical responsibilities and accountability very seriously. “Banks are transparent; you just have to look at their CSR reports, but some banks promote their green credentials more than others,” he says. “The big banks – and smaller ones as well – invest heavily in environmentally-friendly projects and publish detailed corporate social responsibility reports which are both informative and educational. If anything, the difficulty for the bank is getting people interested in reading them.”

Capon admits that banks are commercial organisations and will differ in their approach to ethical policies and lending structures. “These are complex, particularly for the larger banks, and are seen as competitive areas which banks will use to position themselves in the market,” Capon says. “Customers and prospective customers can easily obtain details of individual banks’ ethical policies and activities and can use this information as one of the markers to help them decide which financial institution they want to be with. All the information is there and customers can easily compare what each bank offers.”

Capon’s tone suggests a not entirely surprising lack of enthusiasm for an overhaul of how we think about banking from the major financial institutions. But Penny Shepherd, chief executive of the UK Social Investment Forum, is surprised by his comments. In her experience there is support for change; banks themselves have admitted they can do more.

“There is an appetite there in some of the banks, but the appetite needs to be reinforced by customers,” Shepherd says. Charities can play their role by proving that they invest consciously themselves and promoting sustainable financial products to their supporters. All this cannot happen overnight, but lessons have been learned from the surge of interest in ethical and green lifestyles two decades ago which quickly dissipated. “It takes time to turn around a tanker,” Shepherd concedes.

For now, both banks and charities must act quickly to take advantage of consumer pressure to spread the benefits of wealth by banking ethically and consciously. One of Britain’s best known brands, Marks & Spencer, has already launched its own ethical fund. If individuals are investing consciously on the high street, charities will need to scrutinise their investment portfolios to avoid being left behind.

What Triodos recommends…

Challenges for the banks:

• make a commitment to sustainability at the level of core business
• make business models transparent
• commit to a better understanding of the values of stakeholders

Challenges for government:

• introduce tax incentives to encourage mainstream investment in social finance
• address the lack of financial literacy across the UK population
• increase support for the third sector

Challenges for the consumer:

• find out how your financial services providers lend and make money
• know what you own and where your influence lies
• become a conscious consumer
• write to the charities you support asking them how they invest their funds and urge them to become more transparent
• recognise that attitudes to money are shaped by our culture

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