Consumers have the opportunity to choose banks and financial products that are socially responsible, in addition to existing ethical investment choices.
Teachers Mutual Bank Limited is one of the first Australian banks that has Responsible Investment Association Australasia (RIAA) certification for its deposits, mortgages and wholesale funding.
The RIAA certification program considers how the product from a financial institution complies with environment, social and governance (ESG) obligations.
“We have ensured that within the banking institution that we are certifying that there are responsible marketing practices in place and financial hardship policies in place,” RIAA chief executive Simon O’Connor says.
Bank Australia and Community Sector Banking also have RIAA certification that they provide responsible deposit products that give back to communities while still remaining competitive to the big four banks.
Aside from social responsibility, the banks are assessed on the proceeds that go towards community projects and the downstream use of debt issuance.
“It is not only where the proceeds are coming from, but the downstream use of the proceeds is also where ethical screens are applied,” O’Connor says.
We have requirements and have undertaken an audit to review any legal or marketing documentation around a product and how that responsible or ethical overlay is being implemented ensuring that it is not misleading.
In the case of investments, responsible or ethical investment products such as management funds and superannuation can be selected through the choices that are being made about the fund such as negative or positive screening or a broader ESG approach.
Certifying investment products involves assessing the product disclosure statement (PDS) and much less at the organisational policies.
The same criteria can be applied and established in the same way for banking products with certification ensuring the authenticity of the product.
“Consumers are becoming much more aware and interested in ensuring their banking is aligned with their own personal values,” he said.