The transformative power of ethical finance

  • 2012

Conventional media, as well as many political and business leaders, often talk about financial activity as if it were an area devoid of any kind of ethics. Nothing is further from reality. When banks choose to finance certain companies, such as weapons, instead of very different ones, such as socio-labor insertion companies or those dedicated to improving the environment, they are also betting on a clear model of society, with its own moral values, to the detriment of another model that could be radically different.

This is also known in the Enclau Network, composed of a group of social organizations of the Valencian Community that advocate the development of new financing alternatives for socially positive projects and activities. This is what Christian Mecca, president of Enclau and manager of the Novaterra Foundation, a member of the network, tells us in the following interview.

Positive News: When and why was it decided to start this network of associations for ethical financing?

Christian Mecca: Enclau was born 12 years ago by the hand of some social entities of the Valencian Community convinced of the need to have new products and financial entities in which the social profitability of money was valued, taking into account that access to Credit is transformative and that, depending on who is lent, we can make the world a better or a worse place.

Enclau is currently formed by the organizations Nova Feina Foundation, Engineering Without Borders, Atelier, Menuts del Món and Fundación Novaterra.

We are entities that although we work in different fields (labor insertion and development cooperation) we share the values ​​of social justice, equity and respect for people, and we firmly believe in the role we have as civil society to achieve a world according to these values, and in the importance of vertebranos and work in network.

N +: What differentiates your proposal for ethical and solidarity financing from conventional financing?

CM: In a conventional system, the financial institution uses the money of savers (and also that of international funds) to be able to lend it to people and companies that need that money for their personal and / or business projects and who can demonstrate the ability to payment. The entity remunerates the money of the saver with an interest, which is lower than the one charged to lend that money to those who need financing.

When we talk about a solidary financial product, the saver gives a part of that interest to support certain initiatives for social purposes. The financial institution instead of paying the interest to the client, puts it in a Solidarity Fund that is donated to social projects. Regarding capital (the client's savings), the financial entity decides according to its own parameters to whom to lend and to whom not, and obviously the companies and projects that are financed may or may not be ethical.

An ethical financial product is one that uses client savings (capital) to finance companies and initiatives that respect ethical criteria previously established by the financial entity. Here the important thing is to whom it is lent and why, and the social and environmental impact we achieve with it. These criteria no longer only indicate to whom it is not provided (companies that degrade the environment, companies that do not respect the rights of their workers, etc.) but also to whom: projects that generate quality employment, which generate job opportunities for the most vulnerable people, project that contribute to the social development of their environment, etc.

Finally, it should be noted that there are ethical and solidarity products at the same time, that is, products that combine the donation of interests by the client, and the responsible use of capital by the financial entity, directing it to projects that meet the pre-established ethical criteria.

N +: An example of a solidarity product is El Estalvi Solidari, the range of financial products that you have developed together with Caixa Popular. What are the highlights of these financial products?

CM: The Estalvi Solidari is a range of solidarity savings products (savings and fixed-term book) developed between Enclau and Caixa Popular, a financial institution established in the city of Valencia and other cities and regions of the Valencian Community.

The "Estalvi Solidari" offers savers the opportunity to give solidarity to their money by transferring a percentage of the interest generated to a Solidarity Fund.

In this way, by opening a passbook or a fixed term and transferring part of those interests (only the interests, the capital logically belongs to the client and has the guarantee of the Bank of Spain as in any other savings product), Caixa's clients Popular contribute to a Solidarity Fund, whose amount serves to launch solidarity projects of different types, whether they are socio-labor insertion, development cooperation or projects that pursue a positive environmental impact.

As a peculiarity, it is the clients of Caixa Popular who vote each year between different projects, with the most voted project receiving the money collected in the Solidarity Fund.

Caixa Popular also gives EnClau the additional amount necessary to reach, together with the aforementioned interests, the amount that results from applying 0.7% to the average annual balance held by the Solidarity Notebooks and Deposits.

Currently, there are more than 1, 000 notebooks and fixed operating terms (and a similar number of Caixa Popular clients) that are part of the Estalvi Solidari family with whose donated interests different social projects with a high social value have been launched.

N +: Could you highlight some examples of solidarity projects financed through El Estalvi Solidari?

CM: Last year, for example, The Environmental Education Classroom “El Cerezo” has been the project selected from nine projects submitted. The destination of the money has been this center of environmental education of the population of Villena, in which workshops of renewable energies, of recycled inventions, of ecological agriculture, path of paths, route of the wetlands, etc. are carried out.

On other occasions, the selected projects have been socio-labor insertion projects of people in situation or at risk of social exclusion, or development cooperation projects that seek to improve the living conditions of countries with less development opportunities.

N +: Enclau has also participated directly in the consolidation of the Fiare Project in the Valencian Community. What role do you play in this ethical bank?

CM: The Fiare Project offered, when it was brought to Valencia in 2008, an important step in our search for financial alternatives. It was not only to donate the interests to a Solidarity Fund, which is very good, but also to use capital (again with the same guarantees of the Bank of Spain) to make the flow flow I tell hundreds of projects that, under conditions of economic viability, sought to generate positive social and environmental impacts.

That is why Enclau, as a network for alternative financing in the Valencian Community, has supported from the beginning the implementation of the Fiare Project in the Valencian Community presiding over the Fiare Association for four years Xarxa Valenciana.

As promoters and founders of this territorial association of Fiare, our role has been to contribute to the social construction of the project in our territory, fundamentally supporting the dissemination of it and bringing entities and people to be linked to the project as promoter partners.

A few weeks ago Enclau has given the witness of the presidency of Fiare Xarxa Valenciana to a new entity and a renewed board of directors to address a new stage of the Fiare Project. We are very satisfied with our role, having worked for the implementation in Valencia of a project of ethical banking as complete as that of Fiare, a project that is now the heritage of Valencian society.

N +: What place do you think ethical banking can occupy in the midst of this international financial crisis, which has highlighted the need to change the behavior of large banks?

CM: Ethical banking is not an end in itself, but a means to transform a reality that we do not like unfair.

We need financial entities attached to the land, attached to small and medium-sized businesses, attached to new entrepreneurs, entities that papen reality and that lead people to save towards real projects that generate employment quality. These seem to be logical m n

Ethical banking ventures go beyond the minimum, financing projects that seek to make our society and our planet a better place, projects than any other, require access to credit. dito for its implementation, consolidation or growth. Making money flow to these projects is transformative.

Not all companies deserve access to credit in the same way. Money can simply be used in different ways. Now we know the consequences of lending money according to who and for what. And we also know who is paying and will pay for a long time the consequences of getting the money to the wrong hands. It seems that the citizens and citizens understand what has happened and we begin to demand a new scenario where new actors deploy new proposals. It is in this new context, the current one and the one that will emerge after the crisis, in which the demand for a more beaten, more informed and more aware society will grow The role of ethical banking making it a relevant alternative within the financial system.

N +: Can solidarity finance be useful for the reactivation of the real economy?

CM: As in many other things, the client - once again - can have the key of major changes demanding that things be done in a certain way.

Regarding finances, fundamentally adopting an active attitude towards the destination of the financing made by the entity. We must want to know to whom the financial institution with whom we work lends money and to whom we do not. It is clear that having access to financing is critical for companies and organizations, therefore financial institutions have the opportunity to empower certain companies and leave others on the road. Now, the financial institution we work with, who do you support? we know? Do we agree with this financing and investment policy?

Consuming with responsibility goes beyond the consumption of tangible products. Financial services must also be consumed responsibly and for this we must want to know.

As consumers of financial services, but fundamentally as citizens who want to get out of the hole we are in, we must support transformative projects, concrete projects, projects that really reactivate the economy and generate job opportunities here and now.

Through ethical finance we have the possibility of getting our savings, while generating an interest in safeguarding our capital, to finance projects with real impact on the economy and people. If, in addition, as customers of solidarity financial products we donate that interest, the effect is even greater.

CONTACT INFORMATION:

http://www.enclau.org

Image: Christian Mecca Courtesy of the interviewee.

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