Money

To bank on a better future, start with moving your money somewhere ethical and green

Your savings might be supporting industries that are bad for the planet. Here's how you can find out – and do something about it

A piggy bank with a flower painted on it

Image: Alexa from Pixabay

It appears 2023 is going to be a bumper year for switching bank accounts. Almost a million switches have already been recorded this year by the Current Account Switch Service, which launched 10 years ago to take the hassle out of moving providers. If you are thinking about moving your money, it’s important to look carefully and find the best provider for you. 

While the obvious route could be to pick the provider that promises the most financially, there are other crucial factors to consider. To encourage people to switch, some banks offer a ‘cash bonus’ or short-term high rates. These incentives, while attractive, often divert our focus from factors like ethics,
sustainability, customer service or excessive overdraft charges that can trap people in debt. Perhaps many banks hope you won’t look any deeper.  

The money you place in your bank account isn’t just kept safe (though that is an important function of a bank); it is leveraged to make investments. Unless you’ve chosen a provider that offers complete transparency in every loan and investment they make, it can be difficult to know how it is being used. The lack of transparency from many banks hides the fact that they could invest in arms, tobacco, new fossil fuel extraction and all manner of dirty sectors that many of us would not want to actively support.  

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Transparency also applies to fees and charges. Fairer Finance provides rankings of banks and building societies based on their customer experiences and considers factors like trust. They might have sustainability policies on their websites, but can you trust them to follow through? We all have a role to play in this; after all, it is our money that is held by banks and asset managers. 

We commissioned a piece of independent research with the general public recently that showed 83% of those who feel anxious about the climate crisis are taking action to reduce this feeling. When it comes to tackling these issues, collective action can be a great catalyst to bring about meaningful change to the political, societal and economic status quo. 

That said, the emphasis for making sustainable changes cannot just be on individuals, especially as people struggle through conflicting financial priorities and the cost of living crisis. This is where our financial system must step up. Despite a series of high-level commitments to making sweeping changes to how the financial industry is run, they are not being realised in practice. Recent reports from the international NGO Global Witness have shown that the UK financial sector still lends and invests billions of pounds in companies driving deforestation. The Make My Money Matter ‘Don’t Bank on It’ campaign points out that since the Paris Agreement was signed in 2016, our five biggest high street banks have collectively funnelled $367.6 billion (£303 billion) towards the fossil fuel sector.  

We need to continue putting pressure on the financial sector to make long-term strategic decisions that focus on a transition to a fairer, more sustainable system that thinks about the wellbeing of people and the planet instead of pure profit. We need more vision from our leaders and businesses beyond the next election or shareholder meeting. How the world’s finances are directed is a critical part of whether we can meet climate goals as well as our shared economic success.

For those who are in the fortunate position to take factors beyond the financial into account, it can be hard to cut through the noise. Nearly every bank now talks about sustainability and so it is important to watch out for ‘greenwashing’. The actual carbon emission savings of moving from one bank to another are now being compared by sites such as mymothertree.com. Others such as bank.green or switchit.green can help you to find out how your bank is using your money, and help you to consider switching to one with greener credentials.  

You don’t need to have millions, or even thousands, in the bank to make a change. Collectively, even a small amount with a sustainable provider all adds up to a significant amount that’s being rerouted from harmful sectors into positive ones. Putting your money with a sustainable bank also supports a wider ecosystem of green finance that brings about real change. It can be an influential form of democracy and potentially one of the simpler green choices we can make in our lives. 

Luckily independent consumer choice organisations like Which? and Ethical Consumer research financial products on offer and give independent, impartial recommendations, rating them on sustainable and ethical criteria, and signposting the best buys that you can trust.  

Only then will you end up getting the full picture, and hopefully entering into a relationship with a bank that you can trust to do the right thing. 

Bevis Watts is the CEO of Triodos Bank UK. Good Money Week runs from 2-8 October.

Do you have a story to tell or opinions to share about this? We want to hear from you. Get in touch and tell us more.
 

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