What is Ethical Banking?
£12.2 billion is currently invested in green and ethical funds in the UK. And with the mainstream banking sector continuing to invest in fossil fuels and nuclear weapons, the demand for ethical banking alternatives has never been higher. If you’re interested in switching to an ethical bank or just want to know more about this new phenomenon we provide the full low down on what ethical banking is, who is topping the ethical tables, and how to switch to a more ethical financial provider.
What is an ethical bank?
Ethical banks, also known as sustainable banks, are banks whose business model is designed around making sure they have no negative impact on the environment or society. This means that they have environmentally and socially conscious rules and policies in place determining where they will invest your money. This might involve withholding money from industries or companies whose practise is against the ethical code of the bank (e.g. companies that conduct animal testing, take part in arms trade, bomb making or trade in fur). Ethical banks also take positive action on a number of causes including:
- Investing in renewable energy research
- Supporting eco-friendly start-up businesses
- Helping poorer communities by financing affordable housing
- An increased level of transparency – so that you can see where and how your money is being used
Banks depend on our money to fund their investments. Switching to a more ethical bank will help to create system that works in our interests and takes positive steps for the environment, local communities, animal and human rights.
Which banks are considered ‘ethical’?
Move Your Money is a great resource to help you become a better informed customer. Ethical Consumer have also developed an ethical current account guide where they investigate, score and rank the ethical and environmental record of 29 current accounts. They are calling for big banks to adopt clear policies to avoid lending to “problem sectors” such as coal and tobacco, and provide full transparency about who they lend to and why.
|Best Buy Ethical Banks||Worst Rated Banks|
|Clydesdale||Bank of Ireland (Post Office)|
|Nationwide Building Society||M&S Money|
|Metro Bank||Tesco Bank|
|Yorkshire Bank||Virgin Money|
Triodos is at the top of the Ethical Consumer leaderboard for ethical banking. Triodos is uniquely transparent about everything and has an extensive ethical investment policy, only investing in businesses and charities that it judges to be of social or ecological benefit. Monzo is also named a “best buy” for current accounts. As well being clear about how they operate, and how their product works, Monzo also help you to better manage your finances by notifying you instantly of any changes to your account balance, suggesting cheaper alternatives and allowing you to set specific savings goals with their savings pots function.
Should I Switch to an Ethical Bank
Switching to an ethical bank gives you the opportunity to make a stand against unethical banks and wrack up that good karma knowing that your money will not be used for negative purposes in the future. You have nothing to lose, the difference between the highest paying savings accounts and the rates from responsible savings institutions is closer than ever. This means that you won’t be losing out by saving with a provider that only invests your money in environmentally and socially beneficial projects. You can see from the table above, which financial providers are leading the charge for ethical current accounts.
Triodos, Ecology and Charity Bank also top the ethical league table for Cash ISAs, with the building societies not too far behind. Ecology is also the most ethical mortgage provider on the market according to Ethical Consumer’s list of ethical mortgages. Another option for ethically minded consumers are credit unions. Credit unions run as financial co-operatives owned and run by their members helping those on low-incomes get affordable credit.
How to Switch Banks
If you’re considering switching current account provider, you’ll be pleased to know that the Current Account Switch Service makes switching your current account simple, reliable and stress-free. To start your switch, ask your new bank or building society to move your old account using the Current Account Switch Service. From here, the switching process will be handled by your new bank or building society, and they’ll let you know when the switch is complete.
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Do you want to make the world a better place? And to do what is right for society and the environment? If so, make sure you switch to a bank that isn’t using your money to invest in war, exploitation and non-renewable energy. Want to do more? Switch to an ethical energy provider that only uses 100% renewable energy!