Ever wondered what your bank does with the money you’ve carefully saved with them? Many of us make conscious spending choices and some of us have already begun investing ethically. But are their ways to save and bank ethically too? The answer is yes. I’ll show you 3 positive switches you can make for more ethical banking as well as some other more positive choices.
Your own ethics and values will be very personal to you. There is no “perfect” and certain issues will be more or less important to you and your family. Key questions might be:
- Do their actions align with your personal ethic and values?
- Are they lending, investing or insuring fossil fuel or ‘dirty’ industries, arms or nuclear technologies?
- Do they invest or insure corporations that you don’t support with your own personal choices?
- Are they benefiting from tax avoidance, excessive executive pay or treating employees poorly?
- Do they actively pursue making a positive ethical, social or cultural impact?
It can be challenging finding the answers to these questions. They are not often transparent about where this money goes and transparency with money is also an ethical consideration.
What do Banks do with my Savings?
When we save into a bank or building society, that money is used to lend to other organisations, individuals or for long term investments. So who and what are they lending to?
Currently almost all major banks are contributing to climate change industries. Almost all fall short on most areas of positive ethical, social and cultural impact. So if you have your emergency and family savings with any major bank it is likely that money is being used to support projects that wont align with your ethics.
3 Options for Banking “Better”
- Ethical Banks specifically don’t lend to businesses that do environmental, social or cultural harm. AND actively lend to companies looking to create a positive impact such as renewables, sustainability, charities and social projects. This means your savings are potentially financing ethical projects having a positive impact in the world. They tend to be far more transparent about their ethical policies and lending criteria.
- Building Societies are “Mutual” which means they are owned and run for their members. As all customers are members it means you get a say. Building societies have a specific regulation which states that a minimum of 75% of their assets MUST be in residential property mortgages. This means they have far less to lend to other organisations and will be having a less negative impact than the banks.
- Digital Banks are currently app-based and whilst seeing huge growth themselves are still much smaller than the high street giants. They do not currently make large corporate investments or loans so are not directly funding “destructive” industries. They also seem to actively listen to customer feedback and requests, so may be more responsive to customer requests for stronger ethical policies.
3 Switches for Ethical Banking & Saving
Triodos Bank has existed since 1980. Its mission is to “help create a society that protects and promotes quality of life and human dignity for all”. It is transparent about all organisations it lends to. Triodos chooses not to not invest in Fast Fashion, Fossil Fuels, Weapons & Ammunition. It actively invests in Renewable Energy, Education and Sustainable Farming. They offer a range of banking options for individuals and businesses including current accounts, savings account, ISA and investments.
Our banking and financial services are for individuals and organisations who want to change the world for the better. As one of the world’s most sustainable banks, we have over 740,000 customers who are already playing their part in our positive movement.Triodos Bank Statement
Charity bank operates slightly differently having started as a lender to charities unable to borrow elsewhere. It offers savings accounts and lends to charities, social enterprises and other organisations where the loan is being used for a social purpose. They do not offer an instant access account but when savers save with them they offer fixed notice savings accounts from 33 days to 1 years notice and that money is used to invest in their ethical projects, which they list openly.
What matters to us isn’t profits but a shared idea about the world we want to live in. If you share it, join usCharity Bank Statement
Ecology is a building society established in 1981. The founders purpose was to create a sustainable future by supporting projects that have a positive environmental impact. It offers a range of instant access and fixed notice savings and ISA options as well as Mortgages. And is totally transparent about the projects it funds.
Our impact isn’t about the profit we make – it’s about the difference we make to the environment and to communities across the UK.Ecology Building Society Statement
Learn to LOVE your Money and Make, Save & Grow MORE
Other Positive Choices
Some other banking options to consider are the building societies and digital banks. These are not specifically aiming at ethical banking in the way the above 3 ethical options do. But currently they do less or no lending to the big industries by virtue of being smaller or working to specific lending criteria or a have a clear company ethical policy.
- Starling Bank
- Monzo Bank
- Cumberland Building Society
- Yorkshire Building Society
- Co-Operative Bank
Is My Money Safe?
The government compensation scheme offers protection of £85,000 per person per banking group in the event of the organisation failing. Banks and Building societies have to be regulated and authorised by the FCA and the PRA and you’ll also benefit from being protected by the Financial Ombudsman.
Look out for the following logo and the below statement for peace of mind that your money is safe. All the ones cited in this blog at the time of writing were protected by FSCS and regulated and authorised by the FCA and PRA.
Authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority under registration number xxxxExample statement on website showing regulation and authorisation
How do I Choose?
Start with what values and ethics are most important to you.
Do you want to do less harm and avoid supporting companies that go against this then the digital banks and building societies are a good consideration. If you want to go further and use your money to create an impact and know that your money is being used for good then consider the ethical banks. Some of the banks whilst avoiding the negative and harmful industries may still not support you particular politics, social or environmental values, so review their individual policies and the list of who they are lending to and find the one that is the best fit for you.
Once you’ve chosen, simply open the type of account you need with your new bank or ask them to use the bank switching service to effortlessly switch everything over form your existing bank to the new one.