Looking to make a real impact with your money? Ethical banking in Australia goes beyond eco-friendly products—it includes social responsibility, transparency, and avoiding harmful industries like fossil fuels, tobacco, and arms. This guide explores how to evaluate banks, understand third-party ratings, and choose institutions that align with both your financial goals and values.
What Is Ethical Banking?
Ethical banking is a way to manage money while making a positive impact. It goes beyond profit. Ethical banks focus on environmental, social, and governance (ESG) practices. They consider how investments affect people, communities, and the planet.
Ethical Banking Criteria Explained
Not all banks claiming to be ethical truly follow responsible practices. Understanding ethical banking criteria helps you make informed choices. It ensures your money supports environmentally and socially responsible projects.
1. Environmental Criteria
- Avoid banks that invest in fossil fuels, coal, or gas projects.
- Look for banks funding renewable energy, clean tech, and sustainable businesses.
- Consider policies on energy efficiency, green mortgages, and climate-friendly initiatives.
2. Social Criteria
- Ethical banks prioritize human rights, fair labor, and community development.
- They fund affordable housing, education, and local social programs.
- Avoid banks involved in gambling, arms, or industries linked to exploitation.
3. Governance Criteria
- Transparent policies and clear reporting are essential.
- Check for certifications like B Corp or recognition from Ethisphere.
- Evaluate leadership commitment to ethical, long-term decision-making
Why Choose An Ethical Bank?
Choosing an ethical bank is about more than managing your money. It lets you make a positive impact on society and the environment. Ethical banking aligns your finances with your values and long-term goals.
Key Benefits of Ethical Banking
1. Reduce Your Carbon Footprint
- Your money avoids funding fossil fuels and harmful industries.
- Supporting renewable energy and climate-friendly projects reduces environmental harm.
- Even small banking decisions can make a big difference over time.
2. Support Eco-Friendly Initiatives
- Ethical banks fund sustainable businesses and community projects.
- Your deposits contribute to affordable housing, education, and clean energy.
- This promotes social good while still earning competitive financial returns.
3. Encourage Traditional Banks to Adopt Sustainable Practices
- By choosing ethical banks, you signal demand for responsible finance.
- Larger institutions may follow, increasing environmental and social initiatives across the sector.
4. Align Your Finances With Personal Ethics
- Banking ethically ensures your money matches your beliefs.
- You can confidently invest without supporting industries that conflict with your values.
- This approach creates peace of mind alongside financial growth.
- Ethical banking combines financial strategy with social and environmental responsibility. Its advantages go beyond money—it shapes a sustainable future.
Step-by-Step Guide: How To Evaluate Your Bank
Choosing the right ethical bank involves more than just checking a logo or mission statement. Follow these steps to ensure your bank aligns with ethical banking criteria and your values.
1. Research Investment Policies
- Check if the bank funds fossil fuels, coal, or other harmful industries.
- Tip: Review the bank’s annual or sustainability reports for clear investment details.
2. Review Social Initiatives
- See if the bank actively supports local communities, education, and affordable housing.
- Tip: Visit the bank’s sustainability or community pages to explore social projects and partnerships.
3. Check Governance Practices
- Ensure transparency in policies, reporting, and decision-making.
- Tip: Look for ethical certifications or third-party ratings to verify their practices.
Third-Party Ratings & Certifications
Third-party evaluations provide an independent assessment of a bank’s ethical and sustainable practices. Key organizations include:
- Ethisphere Ethical Banks – Recognizes banks demonstrating strong governance, ESG commitment, and ethical business practices.
- Corporate Knights – Measures environmental, social, and corporate governance performance.
- Global Alliance for Banking on Values (GABV) – Certifies banks prioritizing social and environmental impact alongside financial sustainability.
How to use ratings:
- Check if the bank appears on reputable ethical bank rankings.
- Compare certifications like B Corp, Ethisphere, or GABV membership.
- Look at what each rating measures: ESG factors, social responsibility, and governance practices.
- Example: Teachers Mutual Bank and Bank Australia appear in ethical banking rankings and hold certifications for sustainable lending.
4. Compare Products
- Evaluate green loans, eco-friendly savings accounts, and ethical lending options.
- Tip: Check if products are designed to support renewable energy, sustainable housing, or environmentally friendly vehicles.
5. Read Reviews & Ratings
- Consult independent ethical bank rankings and ESG reports.
- Tip: Use resources like Market Forces or Global Alliance for Banking on Values to see verified data and comparisons.
Following these steps ensures you select a bank that meets ethical banking criteria, aligns with your values, and has independent verification from trusted sources.
Ethical vs Green Banking: What’s the Difference?
Many people confuse ethical banks with green banks. While they overlap, they are not exactly the same. Understanding the difference helps you make informed financial choices.
What is Ethical Banking?
- Focuses on environmental, social, and governance (ESG) practices.
- Avoids harmful industries like fossil fuels, gambling, tobacco, and arms.
- Supports community projects, fair labor, and human rights initiatives.
- Example: Teachers Mutual Bank invests in sustainable projects and avoids fossil fuels.
What is Green Banking?
- Specifically targets environmentally friendly products and services.
- Offers green loans, eco-friendly mortgages, and sustainable investment accounts.
- Funds projects like renewable energy, electric vehicles, or energy-efficient homes.
- Example: Bank Australia provides discounted car loans for low-emission vehicles.
How They Overlap
- Many ethical banks offer green banking products.
- Green banking can be a part of a broader ethical strategy.
- Both support sustainability and responsible lending practices.
Quick Comparison Table
Feature | Ethical Bank | Green Bank |
Focus | ESG principles | Environmental products |
Investments | Avoids harmful industries | Supports eco-projects |
Products | Loans, savings, investments | Green home loans, car loans |
Community Impact | Social and environmental | Mainly environmental |
Why It Matters for You
- Choosing a bank that is both ethical and green maximizes your positive impact.
- Your money can support renewable energy, sustainable businesses, and community projects.
- You can confidently align finances with personal ethics while still accessing competitive banking products.
Banks Investing In Fossil Fuels vs Ethical Banks
When it comes to banking, where your money goes matters. Many traditional banks still invest heavily in fossil fuels in Australia, while ethical banks actively avoid these industries. Knowing the difference can help you make informed financial decisions
Banks Funding Fossil Fuels in Australia
Several major banks continue to fund coal, oil, and gas projects, which contributes to climate change:
- ANZ – Significant investments in fossil fuel projects across Australia.
- Commonwealth Bank (CBA) – Funds coal and gas industries domestically and internationally.
- National Australia Bank (NAB) – Continues lending to high-emission energy sectors.
Westpac – Maintains exposure to coal and gas mining ventures. - Others – AMP, HSBC, Macquarie, Bank of China, Bank of Queensland, and Citi also invest in fossil fuels.
These institutions are sometimes referred to as “fossil fuel banks Australia” because a portion of customer deposits indirectly supports non-renewable energy projects.
Ethical Banks Avoiding Fossil Fuels
If you want your money to support sustainability rather than fossil fuels, consider these banks from our ethical bank list Australia:
- Bendigo Bank – Avoids coal and gas projects and invests in community and renewable energy initiatives.
- Teachers Mutual Bank – Funds only socially and environmentally responsible projects, including green home loans.
- Heritage Bank – Explicitly avoids lending to fossil fuel companies and focuses on ethical lending.
- Suncorp – Phased out fossil fuel investments and now only provides loans to personal, SME, and agribusiness clients.
Banks Owned by Larger Fossil Fuel Investors
Some smaller banks appear ethical but are subsidiaries of major banks that invest in fossil fuels. For example:
- Bankwest – Owned by Commonwealth Bank, so it may still indirectly fund fossil fuel projects.
- Always check the ownership structure and investment policies before assuming a smaller bank is fully ethical.
Switching to an ethical bank allows you to ensure your savings support renewable energy, sustainable projects, and socially responsible initiatives instead of high-emission industries.
Green and Sustainable Banking Products
Bank Australia
Offers the Clean Energy Home Loan, providing discounted variable or fixed interest rates for purchasing or building energy-efficient homes. Supported by the federal government’s Clean Energy Finance Corporation, this loan also includes free access to the BOOM! Power Electrify Your Home tool to assist with energy upgrades.
Commonwealth Bank
Previously offered the CommBank Green Loan for energy-efficient home improvements. However, as of 1st October 2025, this product is unavailable for sale. Existing home loan customers may be eligible for a Home Energy Loan with a discounted rate of 3.99% p.a. and $0 establishment and monthly fees.
Westpac
Provides the Sustainable Upgrades Home Loan, offering a 4.49% variable interest rate for energy-efficient home improvements, including solar panels, batteries, and insulation. This initiative is part of the $1 billion Household Energy Upgrades Fund backed by the federal government.
Firstmac
Provides Green Loans in partnership with the Clean Energy Finance Corporation (CEFC). These loans offer substantial interest-rate discounts for energy-efficient home upgrades and electric vehicle purchases. Firstmac has also issued Green Bonds to support sustainable projects.
How Can I Save The Planet With My Banking Habits?
Your everyday banking choices can make a real difference for the planet. Small changes add up.
Go Paperless
- Opt for emailed statements instead of mailed copies.
- Use mobile banking apps to monitor accounts and pay bills.
- Paperless banking reduces waste, transport emissions, and branch energy use.
Reduce Branch Visits
- Conduct transactions online whenever possible.
- Fewer trips to the branch save fuel and cut carbon emissions.
- Digital banking also reduces energy consumption in bank buildings.
Support Sustainable Projects
- Choose banks that invest in renewable energy or community initiatives.
- Select green products, like eco-friendly home loans or ethical savings accounts.
- Align your financial choices with your values to indirectly support environmental change.
By adopting these environmentally friendly banking habits, you actively reduce your carbon footprint and promote a sustainable future.
Frequently Asked Questions: Ethical Banking & Home Loans in Australia
What are ethical banks in Australia?
Ethical banks in Australia prioritise socially responsible and environmentally sustainable investments. They avoid funding fossil fuels, weapons, tobacco, and gambling, while supporting renewable energy, affordable housing, and other ethical initiatives.
Which Australian banks are considered ethical?
Some ethical banks in Australia include Bank Australia, Teachers Mutual Bank, Heritage Bank, and other smaller institutions committed to sustainable and socially responsible finance.
How do ethical banks differ from traditional banks?
Ethical banks balance financial returns with social and environmental impact. They offer transparent investment policies, sustainable projects, and products that benefit communities and the environment.
Can I get a home loan from an ethical bank in Australia?
Yes. Many ethical banks in Australia provide ethical home loans and sustainable home loans, often with competitive rates and incentives for energy-efficient upgrades.
Are home loans from ethical banks more expensive?
Not necessarily. Sustainable home loans often match traditional rates, and some include discounts or incentives for green improvements like solar panels and rainwater tanks.
Do ethical banks offer the same range of products as traditional banks?
Most ethical banks offer bank accounts, term deposits, credit cards, and home loans. Specific products vary, but environmentally friendly and socially conscious options are often available.
How can I verify if a bank is truly ethical?
Research the bank’s policies, check investments, review ethical certifications like B Corp, or consult the Global Alliance for Banking on Values (GABV).
What is the Global Alliance for Banking on Values?
The GABV is a network of banks prioritising social and environmental impact alongside financial sustainability. Member banks follow strict ethical and sustainable banking standards.
Are ethical banks in Australia government-backed like major banks?
Yes. Many ethical banks are authorised deposit-taking institutions (ADIs). Deposits up to $250,000 per account are protected under the Financial Claims Scheme.
Can I switch my existing home loan to an ethical bank?
Yes. You can refinance to an ethical home loan. Compare rates, fees, and loan terms to ensure a smooth transition.
Do ethical banks offer mortgage broker services?
Some do. Others prefer direct customer relationships. Check each bank’s policy for ethical mortgage broker services.
What types of sustainable projects do ethical banks typically support?
Projects include renewable energy, sustainable agriculture, affordable housing, education, healthcare, and community development.
Are there any tax benefits to banking with an ethical institution in Australia?
No specific tax benefits exist. Some ethical banking products may offer tax advantages through savings accounts or investment options.
How do ethical banks’ home loan approval processes compare to traditional banks?
Approval processes are similar, assessing income, credit history, and loan-to-value ratio. Some also consider the environmental impact of the property.
Can I get a green home loan from an ethical bank in Australia?
Yes. Many ethical banks provide green home loans with discounted interest rates for energy-efficient homes or environmental upgrades.
Conclusion: Make The Switch To Ethical Banking Today
Choosing an ethical bank in Australia allows you to align your finances with your values. By opting for sustainable home loans or other environmentally friendly banking products, you can reduce your carbon footprint, support renewable energy, and encourage socially conscious banking practices.
Whether you are considering a green home loan, an eco-friendly savings account, or simply want to adopt more environmentally friendly banking habits, the options are growing. Banks like Bank Australia, Teachers Mutual Bank, and Heritage Bank provide competitive rates while prioritising social and environmental impact.
Switching to an ethical bank isn’t just a financial decision—it’s a step toward a more sustainable future. Start by evaluating your bank’s policies, exploring certified products, and comparing your options. Every action counts, and your banking choices can make a real difference for the planet and your community.
Take control today. Choose a bank that reflects your values, supports sustainable projects, and offers ethical home loans in Australia that work for you.
Get Expert Assistance With Your Ethical Home Loan
Looking for an ethical home loan broker in Australia? Hunter Galloway’s expert team can help you switch your existing loan or secure a new sustainable home loan that aligns with your values.
Working with our full team offers advantages over a solo broker:
- Broader lender access: We compare multiple banks to find the best rates and products.
- Specialist knowledge: Each team member is trained in ethical and environmentally friendly banking options.
- Streamlined process: From application to approval, we handle the details so you can focus on your goals.
Unlike other mortgage brokers who are just one person operations, we have an entire team of experts dedicated to help make your home loan journey as simple as possible.
If you want to get started, please give us a call on 1300 088 065 or book a free assessment online to see how we can help.
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