In a conference on ethical finance in Europe organised in the European Parliament on Monday (December 1st), the Vice-President of Banca Etica, Federica Ielasi, highlighted the need to defend the credibility of sustainable finance as the EU has been weakening the Environmental Social and Governance (ESG) criteria that would allow that even weapons production could be included among sustainable activities.
“This is a dangerous direction that undermines everything that we have achieved so far. Ethical finance demands clear rules and a taxonomy that integrates environmental protection, social equality and peace”, she stressed. “This is not a moral issue. It is about the efficiency and citizens’ trust in financial markets”, she added.
Referring to the 8th Report on Ethical Finance in Europe, “Capital for Common Good” that was presented during the conference, Ielasi stated that “the survival rate of social enterprises supported by ethical banks exceeds 90%, which means that relationships, proximity, and knowledge of local context improve lending quality, It sends a powerful political message. The financial system stability comes not only from scale, but from strong community ties.
This is why we should construct more scalable instruments that focus on finance truly oriented toward the common good. Only this way 2026-2027 will be a political opportunity to make Europe more just, inclusive and more credible”.
The author of the report Mauro Meggiolaro highlighted that “social economy in Europe has a turnover that is comparable to the whole automotive sector”, which includes “4.3 million organizations with a turnover of €913 billion and 11.5 million employees, about 6.3% of the workforce”.
The report finds that 72% of ethical banks’ loans have a positive environmental (e.g. support for the circular economy, waste management, organic farming, urban regeneration, etc.) and social impact (e.g. loans to the third sector, for social inclusion and welfare initiatives, for social housing, international cooperation, female entrepreneurship, innovation financing, microcredit to families and/or businesses, etc.) compared to 19% of large banks.
Noting that ethical banks give more loans in comparison to traditional banks while having a lower ratio of non-performing loans and higher return on assets than large banks, Meggiolaro affirmed “these figures demonstrate that ethical finance is not only socially responsible but also financially robust”.
Underlining that 93% of loans by ethical banks go to micro-enterprises, which are often excluded from traditional credit for being risky or less reliable, he added that ethical banks apply stricter criteria concerning investments in armaments, fossil fuels, or companies that violate human rights.
Maria Elejalde Elcuaz, Represenatative of the FEBEA Youth Working Group, said that young people are interested in ethical finance as it proposes a more equal financial system, a more feminist one and one that cares about the people and the planet first”, giving examples of ethical banks investing in women’s sports, or opening branches in a small Mediterranean island because the rest of the banks decided to leave”.
“At the time when sustainability risks are being diluted, ethical finance stands firm: Peace, social cohesion and ecological transition must remain at the cornerstone of the European policy. Because finance is not neutral. We are already full of conflict and inequality, or we can foster inclusive resilience and hope. And ethical finance chooses the latter”, said Peru Sasia, President of FEBEA, adding “Ethical finance safeguards the space where money becomes a currency for justice not domination. This space is threatened today by narratives that subordinate sustainability to security. We reject this logic. Sustainability cannot be built on militarisation”.
In her closing remarks, MEP Maravillas Abadia Jover, Co-Chair Intergroup on Social Economy, said that “ethical finance is not marginal but it a solid and growing pillar of our European economy, which puts resources where Europe needs most: Microenterprises, cooperatives, mutuals, associations, foundations – actors that generate real value for the society.”
She continued by saying: “Ethical finance and the social economy have the same DNA, the same proximity to communities, the same belief in long term value, the same culture of listening, responsibility, and trust. It is more than a relationship between a financial provider and a client. It is a shared mission, mutual recognition, enrichment, and a common agenda for Europe in a moment when Europe faces big challenges, such as housing and competitiveness”.
According to the MEP, “Ethical finance has a close understanding of local realities and is uniquely placed to support affordable housing projects, ensuring that no one is left behind. “Also, if we want a competitive Europe, we need a strong foundation in skills, sustainability and social aspects. Ethical finance contributes to all of these by investing in not only financial but also social returns and this is exactly the type of competitiveness Europe needs for its future”, she added.
Referring to the definition of sustainable finance being lost, the MEP concluded by saying “ethical finance is reminding us that social cohesion are not optional but the true foundation of a sustainable economy. Another way of banking is possible – a bank closer to people, that listens, builds trust and invests in common good. Europe needs this more than ever”.
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