When you ask the average Australian what their opinions on the big ASX banks are, most answers would probably not be fit to print in any respectable outlet (including The Fool of course).
Bank bashing has long been something of a national sport and the 2018 Royal Commission into the Australian financial services sector revealed how deserving many of our banks and financial institutions are of this bashing.
Commonwealth Bank of Australia (ASX: CBA), Westpac Banking Corp (ASX: WBC), Australia and New Zealand Banking Group (ASX: ANZ) and National Australia Bank Ltd. (ASX: NAB) all copped big reputation hits as allegation after allegation surfaced of rip-offs, mischarging customers (some of whom were deceased) for services or lack thereof and generally placing 'profits above people'.
Although more than one of the banks have had a leadership clean-out after these various allegations came to light, I think it's still fairly safe to say there's a long way to go for the big four to restore their reputations.
Considering all of these facts, I was somewhat surprised to find that NAB and Westpac have been named as two of the most ethical companies, not just in Australia, but in the world (yep, you heard right).
According to a 2020 report by Corporate Knights which names the top 100 ethical and sustainable corporations, NAB and Westpac were the only two Aussie companies to make the list, at numbers 42 and 75 respectively. For what it's worth, they also made the 2019 list.
If you're wondering who the top five are, here's the list:
Orsted and Chr. Hansen Holding (Denmark), Neste Oyk (Finland), and Cisco Systems and Autodesk (USA).
So NAB and Westpac?
Yes that's right. So the criteria for making this list includes things like taxes paid, pension fund status, women in executive management and boards, absence of international sanctions and how 'clean' the company's revenues are, amongst others. Also considered was how much waste companies produce (including greenhouse gas emissions) and injuries and fatalities in the workplace.
And clearly, NAB and Westpac got good marks on these criteria.
Now, it's not fair to say that NAB and Westpac were up against all global companies. Many are initially excluded from even running if they fail a basic 'ethics screen'. This excludes companies that operate in the weapons, gambling, tobacco or thermal coal industries amongst others from consideration.
But this doesn't include most global companies and especially most ASX companies.
Foolish takeaway
So hat's off to NAB and Westpac for their inclusion in this report. It shows that no matter the reputation that a company may have, these things are rarely just black or white. So if you've written off investing in the big four ASX banks for ethical reasons, you might have jumped too soon!
