In this paper we will give an overview about the history of ethical, socially responsible and sustainable banking (see Figure 1). Thus it will not provide a general historical overview about banking and finance but concentrate on sustainable, socially responsible or ethical banking. Let us explain why we present some specific events in this paper. The overview starts with the foundation of the first banks in Italy in the 16th century. These banks were founded to guarantee financial flows between those that could provide capital and those that needed capital to start or to conduct a business. They were a type of community banks or credit unions and therefore a model for modern sustainable or ethical banks, financial cooperatives and credit unions.
We will have a look on the credit unions that were founded in the 19th century including financial cooperatives. Again they played and still play the role of a financial intermediary in the community and provide especially small and medium sized enterprises that are the backbone of nearly every economy with capital. Therefore they laid the foundation for modern commercial lending. Another reason to highlight credit unions and financial cooperatives is that they base on criteria that were used as sustainability criteria later. These are amongst others strong community relations, democratic decision making or supporting local economies.
Following the political disturbances in the 1960s and first discussions about environmental and social responsibilities of business the first ethical banks were founded in the 1970s. They wanted to re-integrate ethics into the financial business and to avoid business practices such as financing dictatorial regimes like the South-African Apartheid regime. They used some of the principles of the credit unions and co-operatives but added an ethical perspective to their business. With increasing energy prices on the one hand and new environmental regulations on the other hand, banks started to manage their energy and water use and their emissions as well. Because of higher energy and waste management prices it was worthwhile for a service sector as well to be eco-efficient in order to reduce costs. At about the same time new environmental regulations influenced the responsibility of business for its environmental impact. This implicated risks for the financial sector as a commercial lender and investor as well.