You know the saying “put your money where your mouth is”? Well, if you chat about combatting climate change, then it’s time to make your money line up with your morals. We’re not talking about spending more money – just moving it to places where it does some good.
You see, it turns out that simply switching your bank account, credit card and other financial products to companies that invest ethically has a big impact on your personal carbon footprint. In fact, it’s one of the best things you can do.
So how the heck does it all work? And how do you make it happen? Fear not, friends – all will be explained.
What is sustainable finance?
When money is paid into your bank account or pension etc., it doesn’t just sit there in some fancy vault collecting dust. Providers pool the money of everyone who has an account with them and invest it. The shocking part is that often your money is invested in icky things like weapons and fossil fuels without you knowing it. High street banks are huge funders of fossil fuel giants. Not good.
Luckily some providers avoid investing in nasty things and instead fund lovely things like renewable energy, regenerative business, and other planet-friendly schemes.
Now, banks and funds invest in a range of businesses and organisations, which might not match your personal ethics to a tee (e.g. maybe you’d prefer vegan investments, or perhaps you’re not bothered). However, we’ve tried to find the best all-rounders when it comes to keeping your money green and ethical.
Sustainable and ethical banking
Lots of us avoid switching bank accounts because it seems like a faff. But once you’ve decided who to go with, making the switch is easy! Most banks offer a switching service which moves all your money, direct debits etc. for you.
When it comes to green banks in the UK, here are the best places to set up your new current account:
Triodos bank is pretty much the gold standard when it comes to eco-friendly banking in the UK. They don’t invest in fossil fuels (goes without saying, right?), and the bank was set up specifically to invest in climate-friendly initiatives. They offer a standard current account, as well as savings accounts and ISAs.
You’ve probably heard of Monzo, the trendy, app-based bank. While they’re not as focussed on sustainable finance as Triodos, they don’t invest in fossil fuels, so are strides ahead of most high street banks. Monzo has lots of handy features like payment links to easily request payment from friends and automatic spending breakdowns.
Starling is pretty similar to Monzo in that it’s an app-based bank that doesn’t invest in fossil fuels and has all the mod cons. It’s also a favourite among small business owners, so it might float your boat if you’re a freelancer or have a side hustle.
Ethical debit and credit cards
It’s not just your bank account that can make a difference – your card can too! Check out these more ethical options:
Ekko is a new debit card with the environment and the heart of everything it does. It tracks your spending in the app and plants trees & recycles plastic bottles as you spend. It also shows you an estimate of the carbon footprint of your purchases, encouraging you to think about your consumption and the effect it has on the planet.
Tred is a debit card offering that tracks your carbon footprint as you spend, so you can clearly see the CO2 emissions of each purchase! You can go carbon-neutral by offsetting your emissions each month with their carbon offset plans, and clearly track your personal climate impact.
Unlike banks, building societies are owned by members (account holders). Because these members have a say, building societies usually act in their best interests and altogether more ethically than banks. Nationwide’s credit card was listed by Good with Money as one of the most ethical credit cards in the UK in 2022.
Eco-friendly pensions
Ugh, pensions – we don’t need to think about them until we’re older right? Well, it’s actually pretty important to start saving into a pension when you’re younger. Plus, where you choose to invest your pension contributions could help save the planet, too.
If you’re employed, you’ll have a workplace pension, and you probably won’t have been able to choose it. However, you can ask your employer about your pension plan and maybe persuade them to switch to a more ethical provider.
And if you’re taking out a personal pension, you’re free to pick a provider of your choice. Here are our top picks for eco-friendly pension funds:
Many employers use NEST pensions, but did you know there’s a snazzier, more ethical version that invests in companies with positive records on the environment and human rights? Why not see if your employer will switch to that fund?
Royal London offers both workplace and personal pension plans and has several ethical and sustainable funds available. If you’re looking to take out a personal plan with them, you’ll need to find a financial adviser who can set one up for you.
Sustainable investing
Recently there’s been a huge rise in personal investing, particularly in sustainable investing. Here are some great options for getting into sustainable investment:
Clim8 invest is an app that lets you invest your money in stocks and shares – either through a stocks and shares ISA or with a general investment account. All their portfolios are free from fossil fuels, tobacco, gambling, weapons and big tech and are based on the UN sustainable development goals.
Ethex is a marketplace for ethical investments. If you’re looking for worthy causes to invest in, it’s the place to go. They list different investment opportunities – and also allow new businesses to find and raise funds for their new ethical and climate-friendly endeavours!
Making your money work for good
Moving your money to ethical providers is a great way to maximise your positive impact. But every purchase makes a difference! Simply choosing a more ethical company to buy from instead of your usual high street store can do a world of good. For a helping hand, install The Beagle Button – the handy browser extension that offers you ethical alternatives as you shop online!