It can be easy to forget that where we keep our money has consequences far beyond our own saving and spending potential.
Research shows that the UK’s ‘Big Five’ banks – HSBC, Barclays, Santander, NatWest and Lloyds – are still pumping BILLIONS into fossil fuel projects. This is despite them having made net zero pledges.
A new campaign from Make My Money Matter reveals that in 2021 alone, these banks provided almost $16 billion (£12.9 billion) in finance to the 50 largest oil and gas companies that were expanding production.
Meanwhile, ethical banks and building societies avoid investing in environmentally harmful or otherwise unethical industries. A minority – such as Triodos Bank – go much further by investing your money to make a positive impact on the planet and society.
One of the most significant things you can do as an individual to fight climate change and help create a better, safer, more sustainable world is to move your money to a provider that shares your ethical values.
The Current Account Switching Service takes care of transferring all your direct debits to your new account and closing your old one, so it’s easier than ever to move your money for Good.
These six providers rank highly on the ethical stakes.
1. Triodos Bank
Triodos Bank, a regifted B-Corp company, sits firmly at the top of our list of ethical current accounts. Founded in 1980, Triodos believes that banks should be an active source for good and will only lend your money to organisations that are committed to making a positive social, environmental or cultural impact.
It also publishes a map with details of each investment it makes on its website in the name of total transparency.
Find out why Triodos is a Good With Money ‘Good Egg’ company
The Triodos mobile banking app allows you to monitor your balance and spending, including alerting you when you’re down to your last £100; when you have insufficient funds to make a payment and can help keep track of your daily card use at home and abroad.
It also has a biodegradable contactless card made from renewable resources like plant leaves and corn.
Triodos was granted a UK banking license in 2019, so current account holders assets are protected under Financial Services Compensation Scheme (FSCS), which covers up to £85,000 per person. In 2022 Triodos was awarded ‘Best Buy’ status for its personal current accounts by Ethical Consumer magazine – the only bank to do so – alongside joint Best Buy status for its savings accounts.
There is a £3 monthly for its current account, and a competitive 18 per cent (variable) interest rate on an agreed overdraft up to a maximum of £2,000.
As Britain’s biggest mutual, Nationwide says “the fact that we are owned by our members and run for their benefit, makes us fundamentally different from our big competitors.”
The building society continues to offer a competitive package for those looking to switch their current account. Its FlexPlus current account comes with a £13 per month fee, but if you make use of the free insurance that comes with it (the travel, mobile and breakdown insurance could be worth more than £500 a year in total) it’s an attractive option.
Nationwide also offers a FlexDirect current account, which has no monthly fee and comes with an attractive five per cent (AER) interest on balances for the first 12 months on balances up to £1,500 before reducing to 0.25 per cent (AER). To qualify for this account, you must pay in at least £1,000 per month. You’ll pay no overdraft interest for the first 12 months, followed by a steep 39.9 per cent (as with all its current accounts) so it pays to stay in credit.
3. Cumberland Building Society
The Cumberland is a building society based in Cumbria. It offers current accounts, as well as mortgages and savings accounts, to customers living in Cumbria, South West Scotland, West Northumberland and North Lancashire.
It does not invest its members’ money in stocks and shares, so many of the issues normally associated with ethical investment do not apply to it. Its Cumberland Community Fund provides grants of up to £25,000 to organisations promoting the financial wellbeing to people within its operating radius.
The Cumberland Plus Current Account has no monthly fee and the interest on an arranged overdraft is 14.99 per cent, which is low compared to its competitors. To be eligible, you must pay at least £750 per month into your account.
Cumberland also offers a Freedom Apprentice Current Account, designed for young people on apprentice schemes, and a Day2Day Account, which has has no overdraft facility and no amount of funding required for younger people.
The Engage current account acts like a bank account, but is run by credit unions, supporting local communities and those who might otherwise be unable to open a bank account. It is free to open for anyone over the age of 16. There are some fees on the account, which include a “monthly maintenance fee” of £2, charges for cash withdrawals (75 pence on the classic account) and international purchases (£1 plus 2 per cent of the transaction). There is also no overdraft facility, which reflects its responsible lending policy.
The scheme offers cashback on spending with supported partners, including Marks and Spencer, Argos, Pizza Express, Debenhams, New Look and B&Q. While your funds are ring-fenced, they aren’t part of the UK compensation scheme.
Engage’s ‘virtual savings envelopes’ feature can help you budget for things like utility bills, rent or mortgage, council tax or big purchases. When your payments are due, Engage will automatically pay them by standing order or direct debit, or release your saved funds back into your account to spend by debit card or to withdraw cash.
Another app-based bank, Monzo says it takes pride in being a socially responsible business. It invests its customer deposits “safely and ethically”, does not engage in any artificial tax planning, and we has “a zero tolerance approach to modern slavery and human trafficking“.
Monzo is transparent about where it invests customers’ money. The majority of deposits are held at central banks. It says: “Our investments are only in safe, high quality government bonds and quasi-government bonds (such as development banks).
Crucially, it does not invest in fossil-fuel based energy companies, arms companies or tobacco companies. Monzo lends out a proportion of deposits (currently 3.5 per cent of) in the form of unsecured personal overdrafts and loans.
As a branchless, digital bank, Monzo has a relatively low carbon footprint. It has a goal of reaching net zero carbon emissions by 2030.
Monzo offers overdrafts up to £2,000 for eligible customers. As well as a free current account, there are Monzo Plus and Monzo Premium options which offer additional features.
However, it is worth noting that Monzo has partnered with other financial providers such as Shawbrook Bank – which has a poor ethical rating from Ethical Consumer Magazine – to offer savings accounts.
6. Starling Bank
App-based bank Starling – voted ‘Best Current Account Provider’ at the British Bank Awards 2022 – says it expressly avoids funding fossil fuels, mining, arms and military, and instead invests in “government securities and other high quality liquid assets”. It is also a founding member of the TechZero taskforce, a small group of UK tech companies working towards net zero emissions.
Starling also says: “We will not do anything in our tax affairs that runs contrary to either the letter or spirit of tax legislation in the UK and any other country in which we are liable for tax.”
However, it is worth noting that despite its longstanding opposition to fossil fuels, in March 2021 Starling accepted funding from Qatar’s sovereign wealth fund. The fund was set up in 2005 to invest Qatar’s substantial oil and natural gas revenues around the world.
A spokesman for Starling Bank said that “one of the key roles of QIA is to reduce Qatar’s dependence on revenues derived from oil and gas and to expand investment into non-hydrocarbon sectors. That’s one reason why it has been investing in a range of well-known British brands in addition to Starling.”
In April 2022, Starling raised £130.5 million from previous backers, including Goldman Sachs Growth Equity and the Qatar Investment Authority to build an “acquisitions war chest”
Since Starling is a paperless, branchless bank, its carbon footprint is significantly lower than some of its competitors. It uses renewable energy to power its four offices and its debit card is made from recycled PVC plastic. Starling will plant a tree for every friend you refer – so far it says it’s planted 60,000 trees.
There are no monthly fees and arranged overdraft interest is charged at 15 per cent, 25 per cent and 35 per cent EAR (variable) based on factors such as your credit rating.
Read our full review of Starling Bank
If you want to have a savings account, insurance policy, investment fund or mortgage from companies that do the right thing, check out our Good Eggs.
These are companies that have passed strict (independent) criteria to prove they make a positive impact – to the planet, society, and you.
If you’d like to find out more about the above providers, a Which? membership gives you access to in-depth, expert reviews, ‘Best Buys’ and ‘Don’t Buys’ so you can buy with confidence and make quicker, more informed decisions. Subscribe to Which? today and save 50 per cent on an annual subscription for your first year. Offer ends 28th February 2023. This offer is only available for new Which? annual subscriptions (excluding Gardening, Travel, Computing or Money packages).
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