Many of us are already choosing for the environment when we decide what to eat or how to travel. But how you manage your money also makes a big difference. From who you bank with to your pension plan, personal investments and even home loans, there’s a lot you can do to make your finances cleaner and greener.
Choose your bank with care
Banks use the money you deposit with them to fund all sorts of things, including fossil fuel extraction. In fact the world’s biggest banks invested €1.7 trillion into fossil fuels between 2016 and 2019, according to research published recently by The Rainforest Action Network.
In the UK, you can look up your bank on Your Ethical Money to find out if your money is inadvertently pumping oil and gas out of the ground. Another way to work out whether your bank is green, wherever you are in the world, is to find out if it’s a B Corp. These are companies that have to adhere to strict ethical standards relating to people, planet and profit.
In the US, banks registered as B Corps include Aspiration, City First Bank, Amalgamated Bank, Beneficial State Bank and Spring Bank among others. The UK has Charity Bank and Triodos, a green retail bank which has been around since the 1980s. It now boasts 728,000 customers living in five European countries and offers current accounts, savings and investment options. To find out which banks are registered as B Corps where you live, visit bcorporation.net.
Many ordinary banks also offer green savings accounts with a variety of environmental benefits attached, from planting trees to using recycled plastic to make cards. Another specific example is Saffron Building Society, which launched its Enviro Saver last year. It pays just 0.15 per cent but is an online savings account that generates money for an environmental charity. You still receive interest on your savings but forego a small percentage, which they match and donate to charity annually as a lump sum payment.
Put your pension to work
When it comes to the environment you could say that the most important of all your money choices is where you put your pension savings. Globally, there are trillions of dollars locked up in pension assets and that money is invested around the world.
Over the past year, many big schemes have committed to divesting high carbon polluters from their portfolios – for example Pension Bee offers a fossil-free plan to its private customers in the UK.
Nest, the UK’s largest pension scheme, was the first to commit to stop funding fossil fuels, but global firms such as BlackRock and Aviva are also making their own commitments on tackling climate change.
While most of us will have a pension of some description 9 out of 10 don’t realise they can choose where it’s invested. Find out what pension savings you have, consolidate old pension pots and choose a provider whose values tally with your own.
Company pension schemes often limit your fund choices, but if there’s no ethical or green option, ask your HR department.
Invest in people and planet
Investing in line with good environmental, social and corporate governance (ESG) has exploded in popularity over the past 12 months, fuelled in part by greater public awareness of climate change and its consequences. The global pandemic, wildfires and floods have jolted people into action.
While nearly all major fund managers and investment platforms now offer some sort of ESG options, there are also increasing numbers of newer, focused players offering targeted investment options for the ethically and environmentally conscientious.
Tickr, for example, launched in 2019 to offer investors more information on the carbon footprint their money has. Its carbon offsetting subscription service allows investors to put their cash into impact projects and measure the volume of greenhouse gases they reduce or remove.
Clim8 is an even newer investment app whose mission is “to have a positive impact on climate change by moving billions of pounds of investments into clean energy and truly green, sustainable companies”. Sectors covered by Clim8 include clean energy, clean technology, sustainable food, smart mobility and recycling.
Make your mortgage matter
Research from E.ON found that 89% of prospective homeowners are interested in finding sustainable homes. Four out of five said they would choose solar panels and efficient boilers over having a garden. Lucky then, that more mortgage deals are emerging to support that move.
Banks around the world are beginning to offer green mortgages to customers keen to help the planet. Each works slightly differently – some offset carbon, some will give borrowers a discounted mortgage rate if they make certain energy efficiency improvements to their homes, and others will allow you to borrow more to fund carbon cutting refurbishment on your home.
The UK’s Nationwide Building Society for example, offers existing borrowers a Green Additional Borrowing Mortgage, which rewards you with a lower initial rate if at least 50 per cent of the new advance is spent on energy-efficient home improvements such as double glazing and installing wall insulation. The lender has also created a £1 billion (€1.16 billion) fund to subsidise lower mortgage rates for customers buying a new-build property that has an A-rated energy performance certificate.
It’s also worth looking at NatWest, Ecology Building Society and Newbury Building Society’s Go Green Further Advance.
In Europe, there is a standard definition of an energy-efficient mortgage loan with banks such as Nordea offering green mortgage loans in Sweden for customers with energy-efficient homes.
The Global Alliance for Banking on Values is an independent network of banks using finance to deliver sustainable economic, social and environmental development – you can find member banks here.