Every time we deposit money into our bank accounts, we give our banks access to more funds.
Banks rely on millions of customers like us to keep their operations running. Using our deposits, banks make loans to thousands of businesses and organizations. Whether you realize it or not, banks wield tremendous power in shaping the trajectory of our society.
They decide who deserves financial help and who doesn’t. They influence political decisions and drive trends in the business community.
But how much do banks care about social responsibility? 93% of Americans have bank accounts, which intimately ties our financial wellbeing to the actions of banks. Every mistake they make could have repercussions for all of us, as evidenced by the Great Recession of 2008.
One particular bank that’s of interest to us at Aspiration is Bank of America. Bank of America serves approximately 66 million consumer and small business clients, making them one of the largest and most influential financial institutions in the country.
In this article, we’ll explore how socially responsible Bank of America is, and whether it might be time for you to switch from Bank of America to Aspiration.
What are the social responsibilities of banks?
Banks are the de facto guardians of our wealth. It’s their responsibility to help us grow this wealth, or at least keep it, for our future.
Although most big banks don’t look like they take this responsibility very seriously, we shouldn’t ignore their social responsibilities. Here are the key responsibilities that every bank has to practice.
They need to lend to organizations with positive action
Most of us would want our banks to align with our social values. These could be values related to human rights, environmental protection, or simply positive community development.
Many banks recognize this and have made efforts to integrate environmental, social, and governance (ESG) factors into their business practices and financial products and services. Banks have the responsibility to be conscientious about the social impact of the organizations they lend to, especially when they’re repackaging customers’ money into loans.
They have to prevent money from going to destructive industries
Banks have access to so much money that it becomes important for them to not mismanage it. They can do so by not giving any loans to destructive industries such as fossil fuels, weapons manufacturing, and private prisons.
It’s within their power to use the money for important, progressive causes, such as making clean energy available to all Americans.
They must ensure fair treatment of their staff
Before banks help anyone else, they must put their staff first. Fair treatment of staff is a top social responsibility for all banks because, without their staff, banks would not be able to function.
Fair living wages, good benefits, and appropriate work hours are just some of the employment conditions that banks need to have.
They must help their customers build wealth
Most importantly, banks must help their customers build wealth. They mustn’t engage in any predatory lending practices that would rob customers of their wealth.
Investment options like Aspiration’s Redwood mutual fund are good examples of how this can be done. The Redwood Fund invests only in profitable, sustainable businesses that are working to make the planet a better place.
Is Bank of America socially responsible?
Bank of America is one of America’s oldest banks. Their businesses have served customers for 240 years, all the way through the Civil War up until the present day.
During this time, they have received several awards for their corporate social responsibility efforts.
They have been recognized as an ESG leader on the Dow Jones Sustainability Index for seven consecutive years since 2012. They have also been named as a leader in the U.S. on the Equileap global gender equality report for their commitment to providing equal opportunities to all of their staff.
And just recently, in 2020, Bank of America received the World’s Best Bank for Corporate Social Responsibility award from Euromoney magazine for its commitment to tackling racial inequality, economic injustice, and carbon emissions. Earlier, in 2017, they received the same award for contributing over $125 billion to environmental and community development initiatives.
These awards should not come as a surprise. For almost a decade now, Bank of America has financially supported various social causes both in the U.S. and abroad.
It has set a program to lend $1.5 trillion to community development organizations, plus $2 billion in donations, to help build affordable housing units in Washington state.
It has also injected $250 million in capital into the Community Development Financial Institutions Fund to help small businesses get financial support during the coronavirus pandemic.
What are Bank of America’s core values?
Bank of America emphasizes the importance of their staff and customers in their core values. They attribute their success to the relationships they’ve built with them.
The four core values that underpin every Bank of America policy are:
Bank of America believes that every interaction with a client or a teammate matters, no matter how big or small the interaction may be. They aim to deliver products and services with passion and dedication, and they’re ready to go the distance to fulfill every request.
Bank of America is aware that each one of its decisions directly impacts human lives. Therefore, every employee needs to act responsibly, and make clear and fair decisions that are founded on the principles of shared success.
Realize the power of our people
Bank of America believes that the diversity of its staff is what keeps the organization strong. They value differences in opinion, culture, and experience, and strive to help each and every one of their staff reaches their full potential.
Trust the team
Bank of America prioritizes mutual trust, shared ownership, and accountability in their teams. They work together as one company to meet the needs of their customers.
Shortcomings of Bank of America’s social responsibility
Although Bank of America may have received several CSR accolades, they’re not without their faults. In recent years, the bank has received bad press for its involvement in fraudulent practices, fossil fuels, and private prisons.
They were in the news in 2020 after unfairly locking small businesses out of the government’s coronavirus relief loans. The bank was reported to unlawfully prioritize their borrowing customers while refusing to allow depository clients and small business owners from applying to federal relief packages.
In the aftermath of the 2008 financial crisis, they were ordered to pay $16.65 billion in fines for their involvement in fraudulent practices that caused the recession. They’ve also been caught trying to set up a predatory fee system that would’ve robbed hundreds of dollars from the unemployment checks of jobless workers.
If that’s not enough, Bank of America has been lending trillions of dollars to harmful industries around the planet. A consortium of environmental organizations discovered that Bank of America, together with Wells Fargo, JPMorgan Chase, and Citigroup, had invested a total of $2.7 trillion in fossil fuels between 2016 and 2019.
Does Bank of America reimburse stolen money?
Yes, Bank of America does reimburse stolen money.
Their credit and debit cards are covered by their Total Security Protection® package, which will reimburse you for any fraudulent transactions. This protection also includes a $0 Liability Guarantee, so you won’t be charged any money for the unauthorized transaction.
If you are a Bank of America customer who’s just discovered a fraudulent transaction made with your card, report it to them immediately. You can also submit a claim to dispute a charge that you did not authorize, such as an unknown fee on your bank statement. Claims like these must be submitted within 60 days of the date of the statement on which the error appeared.
While Bank of America will do their best to reimburse stolen money, you may be asked to provide evidence of the theft during the verification process. Some people have spoken of the bureaucratic hurdles they had to go through to get Bank of America staff to process their fraudulent transaction claims.
Where to go for a fully socially responsible bank?
If you’re looking for a fully socially responsible bank to switch to from Bank of America, try Aspiration.
Aspiration is a B Corp certified neobank that was founded to bring the best financial solutions to everyone. They invest only in sustainable businesses that have been proven to aid community development and environmental sustainability. They do not fund organizations involved in fossil fuels, weapons manufacturing, or private prisons.
Customers who bank with Aspiration are guaranteed to see their wealth multiply. Aspiration offers a high yield savings bank that offers up to 1.00% APY, one of the highest in the country.
In addition to that, they integrate environmental sustainability into each of their products and services so that whenever you make a transaction, you’re doing something good for the planet. Their Planet Protection program, for example, helps you automatically offset every gallon of gas you purchase with tree plantings.
Aspiration vs. Bank of America
There are some key differences between Aspiration and Bank of America that are worth nothing.
Although both institutions are banks, Aspiration is a neobank that does not have any brick and mortar branches. It’s entirely online, which means that you’ll only be able to contact bank representatives via email or telephone. Bank of America, on the other hand, has 4,300 retail financial centers.
With regards to savings interest rates, Aspiration is the better of the two. Aspiration offers up to 1.00% APY on savings deposits while Bank of America offers about 0.06% with its “Preferred Booster” program.
Bank of America does provide more financial services than Aspiration. Whereas Aspiration at the moment only offers checking and savings accounts, as well as a mutual fund, Bank of America has a full range of financial products and services, ranging from small business loans to savings accounts to wealth management advisors.
But of course, when it comes down to social responsibility, Aspiration wins hands down. Bank of America has a disappointing track record of fraudulent behavior, fossil fuel investments, and unfair treatment of small business owners. Aspiration has never engaged in any of those activities.
Instead, they have mechanisms in place to prevent that kind of behavior. They give back to local communities and help foster environmental sustainability.