It’s nearly the end of 2020 and people still don’t realise the impacts the top banks are having on our climate. Investing in fossil fuels etc. Now I am not a banking expert or anything but I do know the impacts the top banks have on climate. The interest we pay, and monthly charges for having certain accounts all contribute to climate change and we don’t know it. Why do you think the banks don’t tell us where our money is invested? Because they know they are doing wrong. If you look at the top ethical banks, they are open and honest about where our money will be invested, some even allow you to track their investments. So, I thought I would do some more research into ethical banking and why you should consider switching to one of the listed ethical banks.
What is an Ethical Bank?
Ethical banks, as they are known, are banks whose sole goal is making sure they have no negative impact on the environment or on society.
This means that they will have certain rules and policies in place determining where they will invest your money, if you choose to bank with them.
For example, they won’t invest in any companies that test their products on animals for example, companies that trade in fur or world leading fossil fuel users.
However, it is not just about withholding money from industries or companies whose practise is against the ethical code of the bank. Ethical banks like to take positive action as well, where possible, promoting environmental and social progression for example. They might not have any branches and be solely online and/or they might have a recycled debit card.
Should you join an ethical bank?
In short, Yes! If only you knew exactly where your money was being invested, I guarantee, it would make you think twice. If you want to help be the change, then making this switch is one step forward in doing that. Once you have switched, use the current account comparison service to browse for the best ethical accounts for you.
Remember to check where the bank invests their money.
And check that they pay their taxes. Ethical Consumer Magazine’s advice is very good for you to have read before switching.
7 Best Ethical Banks in the UK
Finally! Onto the ethical banks, I recently switched to Starling bank, they were ranked best bank in the UK in 2020 and have excellent 24-hour customer service, which is why I ranked them at the top along with Triodos. All listed banks are protected by the Financial Services Compensation Scheme (FSCS) except Revolut.
1. Triodos Bank: Sustainable bank started in 1980 that only uses money in ways that benefit people and the environment. They provide current accounts (with a £3/month charge) as well as savings accounts, investment management, business accounts, and charity banking. They also give you eco-friendly debit cards.
They do not invest in fossil fuels, coal power, mining, arctic drilling, tar sands fracking, arms, or military activities, and have outlined their minimum standards for lending criteria plainly on their website.
Triodos is also the only bank on this list to recognise the climate emergency, with CEO Bevis Watts signing an open letter to The Times in support of Extinction Rebellion last year.
2. Starling Bank: App-based bank that started with business accounts and has recently rolled out current accounts too. The Starling Bank team confirmed to me that they do not invest in fossil fuels, coal power, energy companies, mining, arctic drilling, tar sands, fracking, arms, or military activities. Instead, they invest in “government securities and other high quality liquid assets. [They] do not take investment from energy companies.” They also do not lend to companies involved in extracting fossil fuels.
As a paperless, branchless bank hosted in the cloud, they also have a smaller carbon footprint than most. However, should you want to deposit a cheque or cash, you can do so at Royal Mail Post Offices, max of £20,000. They were transparent enough to also detail their hosting provider – Amazon Web Services (AWS) Dublin – which is carbon neutral.
3. Monzo: App-based bank that provides personal current accounts and newly-introduced overdrafts. Often used to limit spending, and provides good conversion rates when travelling abroad.
4. Co-operative Bank: Banking arm of Co-operative, that does not invest in arms and military equipment.
5. Charity Bank: Charitable bank that provides personal savings accounts and business loans. They use the money saved to provide loans exclusively to charities, social enterprises and organisations with charitable purposes.
6. Atom Bank: App-based bank that provides personal savings accounts, mortgages, and business loans.
7. Revolut: App-based bank that also focuses on low-cost currency conversions. Revolut is the only bank on this list that is not protected by FSCS, so bare that in mind before switching.
If you are interested in the worst ethical banks in the UK, here is a list.
Bank of Scotland: Part of Lloyds, see below.
Barclays: Biggest investor in fossil fuels, fracking, and coal power out of all European banks, and also invests in arms and military equipment.
First Direct: Part of HSBC, see below.
Halifax: Part of Lloyds, see below.
HSBC: Second-biggest investor in fossil fuels out of all European banks, and also invests in fracking, arms, and military equipment. They are highly likely to use tax avoidance schemes.
Lloyds Bank: Invests in arms and military equipment, and is highly likely to use tax avoidance schemes.
M&S Bank: Part of HSBC, see above.
NatWest: Part of RBS, see below.
RBS: Invests in arms and military equipment, and previously invested heavily in fossil fuels but has reduced this significantly since 2016.
Santander: Invests in fossil fuels, and is highly likely to use tax avoidance schemes.
Tesco Bank: Highly likely to use tax avoidance schemes.
TSB: Highly likely to use tax avoidance schemes.
Ulster Bank: Part of RBS, see above.
Virgin Money: Highly likely to use tax avoidance schemes.
I hope you find this guide useful and informative. Let me know in the comments who you bank with and whether you will be making the switch!
Thank you for reading.