What is ‘ethical finance’?
Ethical finance takes into account more than just financial returns.
It also looks at factors such as the environment, society, and corporate governance.
We describe this as “profit + purpose”.
What does this look like in practice?
When we open bank accounts, buy insurance or take out pensions, that money doesn’t just sit idly, it gets loaned out or invested.
Ethical finance tries to ensure that the way these funds are used either actively does good, or avoids causing undue harm.
Where does it come from?
Throughout its history, many of the pioneers of ethical finance were motivated by faith values, from the 1800s to the present day. Our own organisation has its roots in Islamic finance and the Islamic Finance Council (UK).
In more recent times, the fallout from the 2008 global financial crisis and growing awareness of environmental issues have heightened interest in a new model of business.
A distinguished history in financial services
There can be little doubt that over the past 300 years Scotland has contributed disproportionately to the development of financial services. The roots of what we in the West now call responsible investing can be traced back to the mid-18th century and the values and teachings of various religious groups, notably the Methodists and ‘Society of Friends’ (Quakers). The broader intellectual underpinning for responsible finance can be found in the writings of moral philosophers, such as Scots-born Adam Smith’s ‘The Wealth Of Nations’ (1776) and his earlier ‘Theory Of Moral Sentiments’ (1759), while in 1810 Church of Scotland minister the Rev. Henry Duncan established the world’s first savings bank, in order to provide ordinary people with access to finance.
Over the first part of the 19th century many of the earliest life assurance companies were created in Scotland, led by the Scottish Widows Fund and Life Assurance Society, established in Edinburgh in 1815 to serve widows from the Napoleonic wars. The development of actuarial science paralleled the growth of the life assurance industry and the Scottish Faculty of Actuaries became in 1868 the first actuarial body to receive a royal charter. Similarly, much of the modern asset management industry finds its roots in the many investment trusts established in Scotland over the latter half of the 19th century, such as what is now the Dunedin Income Growth Investment Trust, established in Dundee in 1873 by Robert Fleming, and the Scottish Investment Trust, launched in 1887 by John Dick Peddie, a prominent Edinburgh MP, to name but two.
This history, along with our current strength in financial services, places Edinburgh as the ideal destination to host leading global experts committed to driving this exciting agenda forward.
The strength of Scotland’s financial services industry lies in its diversity; it is a leading centre for pensions, investment, banking, credit unions, professional services and asset servicing.
- Banking: 44,000 people are employed in Scotland (11% of UK total)
- Insurance and Long-Term Savings: 23,000 people are employed in Scotland (7% of UK total)
- Asset Management: 7,500 people are employed in Scotland (20% of UK total)
- Asset Servicing: Six asset servicing businesses employ over 3,000 people in Scotland
- Financial services expertise based in Scotland: A further 75,000 people are employed across our wider professional services community