Ethical banking

From ethical savings and current accounts, to socially responsible investment opportunities – learn which products are available to you and how your banking choices can make a difference.

From ethical savings and current accounts, to socially responsible investment opportunities – learn which products are available to you and how your banking choices can make a difference.

Anelda Knoesen
From the Money team
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Posted 18 DECEMBER 2020

What is ethical banking?

Ethical banks are those that aim to have no negative impact on the environment and society. Some go further – investing in companies and charities that make a positive contribution to the world.

The model is popular with consumers who are concerned about how their money is used by banks. Financial service providers are also increasingly aware of the importance of reputation, and many want to distance themselves from what they consider to be the questionable investments of their competitors.

What are the most ethical banks in the UK?

Which of the UK banks are the most ethical is subject to opinion, but there are some banks out there that make a notable effort to ensure their investments have a positive impact.

Some banks were founded on their ethics, while others have introduced ethical practices over time. Some publish details of businesses they lend to; others have promised to cut ties with organisations that generate revenues from harmful industries.

There’s a number of institutions that champion fairness, and it’s useful to look at approval ratings when considering an ethical bank.

The Good Egg mark is dedicated to financial service providers that offer a good deal for people and the planet. Banks, insurance providers and mortgage lenders are assessed based on their environmental, social and customer impact.

Organisations that haven’t applied for the Good Egg mark, but perform well according to their criteria, are also listed on the accreditor’s website.

The Ethical Consumer and B Corporation also recognise and award financial institutions that make a positive social and environmental contribution.

Should I open an ethical bank account?

An ethical current account can give you peace of mind that your money’s safe and you’re banking responsibly. Whether or not you open one is a matter of choice. Each bank has different principles, so it’s important to check that their values match your own.

Many have tried to improve their image with charity donations and community schemes, but haven’t necessarily become ‘ethical’.

If you’re looking to open an ethical current or savings account, do a bit of research around the bank’s response to issues that concern you – and look out for independent accreditation.

Are ethical loans and mortgages available?

If you’re looking to borrow money in a socially responsible way, check the products on offer from ethical banks. A growing number of positive impact loans are available in the UK.

You could also use peer-to-peer lending or crowdfunding to avoid banks making investments that don’t reflect your values.

There are building societies in the UK who specialise in mortgages for environmentally friendly properties. Their savings accounts also help to support sustainable building projects.

Are ethical credit cards available?

Many ethical banks in the UK don’t offer credit cards. For a lot of consumers, the fees on late payments and high interest rates might be considered irresponsible.

What other ethical financial products are available?

A number of investment services offer socially responsible investing portfolios, managed with performance and ethics in mind. These portfolios are often weighted towards businesses that conduct themselves in a fair and progressive way.

Fossil-free and climate aware funds are also available through ethical pensions. Providers often work with other sustainable investment funds to provide a socially responsible pension pot.

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