So-called ethical banks are covered by the EU banking regulation and have to comply with the same regulatory framework as other banks.

However, from a more general point of view, the single market Act launched a general debate on how financial services can better serve the real economy and sustainable growth.

The starting point is that financial markets should serve people and society in general, not the other way round. Given its size and impact on the economy, the financial sector has an important role to play in fostering more sustainable, social and ethical business models and investment strategies. The Commission has proposed a range of measures to this end in the single market Act, adopted on 13 April 2011. These measures include the promotion of Corporate Social Responsibility and strong corporate governance requirements across all business sectors. In addition, the Commission will explore additional steps, as e.g. the ‘Social Business Initiative’, mentioned in the single market Act, in which the Commission committed to taking steps to facilitate, incentivise and reward social entrepreneurship.

Social businesses are important throughout Europe. They pursue ethical, environment and social goals as their core business activity, and not the greatest profits, and are able to provide creative solutions to societal problems. Their growth can help strengthen the real economy, while their focus on socially valuable interventions (‘social returns’) means they can in particular help foster greater inclusiveness and economic and social cohesion. A communication setting out the next steps and measures to be taken by the Commission in this area is planned for autumn. This communication will kick-off further debate on measures for ensuring social businesses have effective access to private finance, in addition to existing conduits for philanthropic capital. This includes the role of a Europe-wide regime for social investment funds, but also the role of the banking sector more widely. This would also include exploring possibilities to encourage the establishment of social investment banks or ethical banks.

The work of the Commission on ‘mainstreaming’ Corporate Social Responsibility and socially responsible investment will also be outlined in a separate communication which is intended to be adopted in parallel with the social business communication.