FETS - Finançament Ètic i Solidari

Basic Info

FETS- Finançament Ètic I Solidari is a second level Association that gathers together Catalan entities implicated in third-sector business and in the Social and Supportive Economy. All the companies are involved in promotion the ethic and supportive financial system in Spain.

From its year of creation, 1999, FETS works in order to see that the ethic banking is beyond an ideology or a utopia, and that is a tangible and real project.

Origin

Barcelona, 1999

FETS was created as a result of an Ethic Financial Congress in La Pedrera (Barcelona).
At the point of creation FETS had two main objectives:

1. Dissemination and lobby activities to the administration.
2. Creation of an ethical financial entity in Catalonia.

Even though its principal activity at the beginning was promotion, they believe there is still a lot to do in this field. However, they succeed in the development of FIARE – an already created association of ethic banks and one of the most influential ones - in the Catalan area.

Why this company?

We wanted to focus on a the banking sector, a sector that especially in the recent past years have experienced a large decline in its reputation mainly because taking advantage on people’s financial situation. We wanted to find a company that, inside this tense environment, has been able to do well economically and socially speaking.

As we have mentioned, FETS is an association inside the ethical financial sector that not only works hand by hand with banks that offer social responsible products, but fights to spread this system with active and consistent promotion activities. FETS has inspired us in the sense that it shows how important is to make your values prevail and that not everything in the banking system is black. FETS promotes an ethical system in one of the most unethical sectors of all, giving the right to their banks’ clients to decide on which activities they want to invest and what society they want to build for the future.

A. The main facts about the activities of the company.

FETS’s ultimate goal is a positive social change that leads to fairer, more sustainable, and more human environment. FETS’s contribution to this change is to spread the awareness and projects about ethical finance.
In order to do so, FETS have incurred multiple actions to increase socialization and diffuse an ethic, responsible, and supporting use of money. Promoting ethical financial instruments is one of the main active ingredients of its entity, since they believe is the first step needed in order to achieve the desired transformation into an equitable society. By adding ethics into daily financial decisions and knowing where our money goes, we are influencing what kind of activities are being financed, and therefore what kind of society are we building.

Moreover, FETS keeps a constant dialogue with public administrations to encourage government involvement in social activities, and to create a new financial system that offers specific financial instruments and broad financial services that facilitate the expansion of the ethic finance project.

FETS have also committed on the creation of knowledge and production of information, studies, and relevant analysis about ethic finance. They also provide services in order to open new ways of action as well as having an impact on education. One of the main instruments to boost this area of action is the Observatori de les Finances Ètiques, a meeting point for all the different parties involved in the ethic financial system of the Government with the main objective of reporting new Social Responsible Investment activities at a national and international level. The Observatori also offers a media barometer of the ethic activity inside the banking sector. This represents the first study about the Spanish situation related to this topic, and the first time that the number of companies that fulfill all the requirements are registered – around 13 in Spain.

FETS has also developed the EthSI seal (http://ethsi.net), which identifies a company as ethical, mainly insurance companies and their products. In order to create the report, FETS first studies the company as a whole and then its financial products. The order in this procedure is really important because even though a company offers a Social Responsible Investment product, if the company does not represent ethical values it will not receive the EthSI seal. Some of the characteristics that are analyzed in this first step are the social responsibility of the company’s activities, social investments, its transparency, etc. Finally, an independent group –assessment panel– with no direct relation with FETS values if the seal is fairly awarded in order to avoid commercial temptations. As an appreciable part of FETS come from this activity, they could have incentives to issue certificates to companies that not fulfill all the requirements. However, this last step makes the value and the meaning of the seal prevail. Members of this assessment panel are, for instance, Arcadi Oliveres (Justícia i Pau), Joaquim Sicília (Abacus, SCCL) or Jesús Carrión (ODG).

As we mentioned before, promotion of ethic finances is at the top of FETS priorities. They organize multiple chats and speeches, days of debate, events and fairs, and spreading material with the main objective to invite the society to reflect on ethic finance and related topics. One of the most relevant actions that FETS have organized since its creation is the I International Congress of Ethic Finance.

B. The Ethical challenges this company is addressing.

Ethical investments have existed throughout the world since the mid-20th century. In the U.S.A. these entities were created around 1968, after the Vietnam War, and in Europe they started to develop in the 1980s. Soon after came the first ethical banks.

Ethical finance invests in productive projects that have a high social content, i.e. invests in projects and initiatives which add value to society as a whole and ultimately, to provide a social impact.

As they state in their homepage, FETS has worked to display that ethical banking goes beyond an idea or a project; it is something tangible and real. Something that FETS puts a lot of emphasis in is that we must be aware that with our savings, directly or indirectly, we help to develop a type of economy and, consequently, a type of society.

The main activity the entity is working nowadays is the development of the EthSI project, which as explained above is devoted to catalogue companies as ethical after doing an exhaustive report.

FETS tries to diffuse their values and their beliefs basically throughout advertisement, speeches in educational centers such as universities, and mainly throughout l’Observatori de les Finances Ètiques, which has already been mentioned, aims to become a meeting point of different actors in the ethical financial system, and which is devoted primarily to the observation, analysis and preparation of studies of the reality of ethical finance and its impact on Catalan and Spanish socioeconomic reality –all this with a very limited budget, which has been cut drastically over last years.

With all that, FETS wants society to reflect and so it proposes some questions such as: Do you know where your money goes? Do you know if your money is used to produce weapons or to pollute the environment? This way FETS tries to make the whole society to be aware that responsibility is among all of us.

Ethical finance, and within it, ethical banking, is an active solution to these questions. Increasingly, more and more organizations decide to provide ethical financial services. FETS highly value the diversity of initiatives and the difference between each other, as demands and economical and social needs from each individual are different. So it is important to offer different answers to different needs.

C. What makes you believe this company is really ethical and why you trust it?

There are many reasons to believe FETS is really an ethical association. It is important to bear in mind that it is a non-profit organization; therefore all the activities FETS carries out are not motivated by the economical interest, but by other purposes which we believe can be considered as ethical motives.

First, the objectives it has regarding the financial sector, whether they are ethical per se or try to foster activities related to the ethical finance. As stated in its annual report, FETS aims “to generate awareness and foster an ethical use of money; to promote entities that already offer ethical financing instruments in Catalonia; to act as mediators with the public administration and other social actors; to offer services to find new channels of action and social presence; and to promote an alternative financial entity in Catalonia which responds to the basic principles of ethical banking”. Moreover, FETS not only promotes the adoption of the 5 ethical principles (Applied Ethics, Participation, Coherence, Transparency and Involvement) and the presence of these criteria in each and all of the financial entity’s activities, but it also adopts those guidelines in its own daily activity as an organization.

Another reason to believe in the ethical position of FETS is the partner members. Entities such as Intermon Oxfam, Càritas, Acció Solidària Contra l’Atur or Fundació Catalana de l’Esplai, whose ethics are proven, collaborate with FETS and believe in its activities, fact which may be seen as a credibility signal of FETS ethical character.

In addition, the association participates in several programs like FIARE, a network of people and organizations committed with the creation of alternatives within the financial markets to build an economy with other values to serve a more fair society; Xarxa d’Economia Solidaria (XES), committed with the demonstration that it is possible to be a solvent business, together with democratic, equitable and sustainable; and SpainSIF, mainly in charge of the diffusion of the Socially Responsible Investment. That involvement shows its true purpose of working for the creation of a more ethical financial environment.

Regarding the motives to trust FETS, again the non-profit orientation of its activities provides incentives to believe in it. But there are more reasons.

FETS communication objective has a character which is merely informative, without any persuasive intention, nor a willingness to convince the users of financial entities to switch to ethical companies in the sector. The association mainly wants to generate awareness in the society and provide enough information to the citizens about the differences between the ethical banks and the traditional ones. The purpose of its promotion campaigns is to inform potential users. In line with that, the creation of l’Observatori de les Finances Ètiques reinforces that argument.

Crucial to build our trust in FETS is the disclosure shown by one of its members, Narcís Sánchez (board member), in an interview we had with him, where he proved himself to be willing to share with us all the information we wanted to get about the association. He gave us all the data regarding budgets and activities we asked, and his speech was consistent with the values/principles the association is built on: transparency and coherence.

It is worth to mention that FETS carries out its activities without getting involved into denunciation campaigns about unethical behaviors of entities in the traditional financial sector. Despite they can agree with them, FETS focus its attention in the objectives mentioned before, and that can be seen as a reason to trust it too.

D.The possible challenges facing the company in the future and how you think this company may improve.

As previously mentioned, one of FETS’ objectives is to create awareness about the ethical use of the money. In order to promote something among society, communication is a must. First thing we noticed is that the latest report they have on the website dates from 2011. Also, due to the lack of lucrative benefit traditional banks can obtain from ethical projects; they tend to put these kinds of projects aside. Thus we strongly recommend FETS to be even more updated with the information they provide in their website if they want to get banks involved in the association. We think that in a fast paced world like ours, consistency needs to be implemented if we want to get far.

A study about ethical banking awareness was published in the 2011 report. With a sample of 300 people, the following results were obtained:

• 80% had not heard of ethical banking and only a 20% had notions or knew about it.
• TV spots and talks are the most effective means of communicating whereas social networks are the means which cause the least impact on people’s memory.

Thus with this conclusion, we can advise FETS to not only be updated with the information published but also communicate through:

• Talks at congress meetings or Universities where students can be very receptive with things such as ethics before they step into the big unethical world and create this ethical banking awareness at a bigger scale.
• Create an effective TV campaign which involves a cost just enough to start spreading the word. For instance, do not pay for primetime but neither for the slots with the lowest audience.
• Communicate the objective of ‘the Observatory’ to traditional banks open to ethical projects as well as to already ethical ones.

As a non-profit association, finance is a main challenge. Up to 2010, FETS counted with membership fees plus public subsidies which the latter was the main source of income (90%). The average annual budget has been 100,000 – 125,000 EUR except in 2010 which rose up to 300,000 EUR due to the high investment in communication and where they received an extraordinary subsidy from the Agencia Catalana de Cooperació al Desenvolupament (ACCD) of the Generalitat de Catalunya. However, in 2010 public subsidies dropped dramatically and public financial support accounted less than 30% of the total income. So the challenge for the future is to find other sources of income. The idea is to do so through membership fees and the EthSI seal. With these sources of income, it is expected that for 2015 it will finance the project of becoming an independent entity. More recommendations in order to build the brand image of EthSI and FETS are:

• Again, investment in communication should be considered to promote ‘EthSI’ through the already mentioned recommendations.
• Create a sufficiently large network to circulate EthSI certified reports B2B or B2C.
• Look for private investors at congress fairs and participate actively in these to get as many members as possible who are willing to join FETS or get their EthSI certification on the companies’ reports.