The 7th Report on Ethical and Value-Based Finance in Europe delves into the distinctive features and impacts of ethical banks versus large traditional banks. Using the CAMEL framework (Capital Adequacy, Asset Quality, Management Quality, Earnings, and Liquidity), it evaluates the stability and societal contributions of these institutions. Ethical banks demonstrate stronger capital bases and prioritize lending to support social entrepreneurship, job creation, and environmental sustainability, even if it results in higher operational costs and modest profitability metrics compared to mainstream banks. Their focus extends beyond financial metrics to emphasize transparency, community engagement, and governance models rooted in participatory decision-making.

A significant part of the report critiques traditional financial practices such as high-risk securitizations and military financing while highlighting ethical banks’ approach to challenges like managing non-performing loans. Ethical banks often prioritize dialogue and personalized solutions over bulk sale of loans, ensuring fairness and client well-being. The report also explores the synergy between ethical finance and the social economy, advocating for banking models that serve collective well-being rather than short-term profits. This approach is increasingly relevant as European regulators push for more inclusivity and sustainability in finance.