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How green is your bank?



Every day we put a lot of effort into making change happen by flying less, finding out where our food comes from, looking at who made our clothes and reducing the amount of plastic in our lives. What about how we manage our finances?


Have you thought about how ethical your bank is? Do you know where your money goes when you put money into your bank account? Do you know what happens with your monthly payments into your pension or ISA?


Most of us do not give a second thought as to what happens once we have handed over our money but it does not sit idly in a pot. Banks and pension providers use these funds - your money - to make investments and earn a profit. While we make amazing everyday efforts to reduce the negative impact we have on the environment, many major big banks are using our money to fund the very things we are fighting against.



Where is your money going?


If you dig a little deeper into who you bank with, you will discover most of the high-street banks fund heavily into fossil fuels! There may be other industries you might want to avoid having your money invested in too, including alcohol, tobacco, weapons or fur. If you do not want your money to be supporting any of these industries then it is worth doing your research and switching to a socially responsible bank.


One example, The Co-operative Bank is the only UK high street bank with a customer-led Ethical Policy which is now incorporated into the Bank's Articles of Association. Other alternative banks, such as Triodos, Starling and Charity Bank who are appearing in the market, are not only disrupting the financial industry but are paving the way for ethical banking.



What is ethical banking?


Ethical banks are transparent about what and who they invest in. These banks openly state that they do not fund companies or organisations that have a negative impact on people or the planet. Choose ethical banking options if you want to know for certain that your hard-earned money is going towards funding renewable energy, positive social impact projects or businesses-for-good.


You could expand further into ethical finance too to include looking at impact investing, socially responsible investing and where you take out a business or personal loan.





Where should you start?


1. Banking


Do your research into who you are banking with. If you are able to, review alternative options and make the switch! The Good Shopping Guide created a handy comparison table of UK banks here. SwitchIt, a global movement for switching to safer banks, helps you to review your bank (and energy!) providers, to switch who you bank with or to demand that they change how they operate.


2. Pension


If you have an employee pension or personal pension, again, it is worth contacting your pension provider to find out what your pension funds are being used to invest in. With the introduction of automatic enrolment for employees, this is another investment many of us do not think much about.


Your pension is usually set up with what is referred to as a default ‘portfolio fund’ that is likely to include fossil fuels, so you can find out if they have any specific portfolios that avoid fossil fuels or other harmful industries and ask to change funds. Depending on the pension provider, you may not have a socially responsible option available. If you find this to be the case then it is worth researching and making a switch.


3. Saving & Investing


We are all becoming increasingly concerned about the environmental, social and governance (ESG) standards of the companies we invest in. Whether it is an Everyday Savings Account or ISA, you will find fund managers out there whose aims are to generate returns and benefit society at the same time. You just need to look for and ask for them.

There are saving options outside of standard banks, so remember to shop around and check if their investment practices are aligned with your personal values. Nutmeg offers a socially responsible ISA option. You can also take a look at Boring Money’s ‘Sustainable Savers’ page to learn more about sustainable ISA’s and making ethical investments!



We hope these tips will help you get started in exploring and switching to ethical banking. One of the biggest ways we can each make a difference is by voting with our wallets. So let's put our money where our mouth is and make sure our savings are supporting both people and planet.


(Disclaimer: While we are in favour of ethical banking, we are not financial experts! Please do your research and speak to a financial advisor before you make any major financial decisions related to your banking, pension or investments.)



Have you made the switch to socially responsible banking and investing? Is it something you are considering? Come and join us in our The Climate App online community to share your thoughts, questions and suggestions with the group!


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©2019 by Samuel Naef