Real-life horror stories are everywhere this Halloween. No, not poltergeists – the investment decisions of banks and fund managers operating sans conscience.
The money in your bank account doesn’t just sit in a locked vault gathering cobwebs until you push your pin number into the hole in the wall. Your chosen financial provider puts that money to work, for bad as well as good.
Of course, not all banks invest devilishly, some are practically angelic. Triodos Bank – a Good With Money ‘Good Egg’ firm – offers the gold standard in ethical banking (it is committed to only investing your money to make a positive difference), whereas others are on the road to spiritual recovery.
Recent figures from the Current Account Switching Service show the number of switches was up 76 per cent to 340,000 (the highest ever) in April-June 2023 compared to the same period in 2022 – but mournfully, the SCARIEST banks are gaining the most customers.
There’s no need to get completely spooked. If you’re not happy about any of the investments below, then simply challenge your bank, or vote with your feet and switch for GOOD.
Triodos says that even a small amount in an account with a sustainable provider can make a big difference.
Bevis Watts, chief executive of Triodos Bank UK, said: “We need a banking system that is sustainable, transparent and diverse. Picking a financial provider that offers transparency in how it uses your money and adheres to strict ethical and sustainable standards means you can be sure your money will be used in a way you’re happy with.
“This could be supporting only companies that meet human rights standards, or investing only in environmentally-friendly sectors. You don’t need to have millions, or even thousands, in the bank to make a change. Collectively, even a small amount in an account with a sustainable provider adds up to a significant amount that’s being rerouted from harmful sectors into positive ones.”
Other ethical current account providers we like include Nationwide Building Society, Cumberland Building Society, Engage, Monzo and Starling.
For an easy-to-navigate summary of which bank’s invested where, and what may be potentially ‘dodgy deals’ as they call them, take a look at Bank Track, which publishes a global list of banks, sorted by country; the companies they invest in, and the focus of those companies.
1. Fossil fuels
This is the biggie. Since the landmark Paris Climate Agreement was struck, the Big Five UK high street banks – HSBC, Barclays, Santander, NatWest and Lloyds – have collectively funnelled a massive $367.6 billion (£311.3 billion) towards the fossil fuel sector. They have also invested $141 billion (£120 billion) in companies at the forefront of oil and gas expansion, according to Make My Money Matter.
The majority (77 per cent) of customers surveyed at HSBC, Barclays, Santander, NatWest and Lloyds said they had no idea that their banks finance fossil fuel expansion, which is driving us ever closer towards catastrophic climate scenarios.
2. Rainforest destruction
High-street bank HSBC is the UK’s biggest financier of deforestation and the second largest in the world after JP Morgan (owner of UK investment platform Nutmeg), according to Ethical Consumer magazine.
Between 2016 and 2020, HSBC provided $6.85 billion (£5.25 billion) of financing to some of the world’s worst deforesters – and likely pocketed more than $36.4 million (£27.8 million) in revenues along the way. The banking giant received $20.2 million (£15.5 million) of that total income in the years following its public ‘no deforestation’ commitment in 2017.
Recent research by BankTrack, Feedback, and Mighty Earth reveals Barclays was the biggest financier of the world’s highest-emitting meat company, JBS, from 2015 to 2022. JBS is linked to the destruction and degradation of vast swathes of rainforests and ecosystems.
The data estimates that Barclays provided over $6 billion (£4.94 billion) in finance to JBS in that time despite the bank’s commitment to become net zero by 2050, and its claim that it takes a ‘zero-tolerance’ approach to corruption.
3. Human rights abuses
Banks are pumping money into corporations behind some of the worst human rights abuses in the world. Through their loans, insurance and other financial services, they are funding companies involved in arms production, the exploitation of indigenous lands, and the support of oppressive regimes.
The Facing Finance ‘Dirty Profits’ report in May 2022 stated that these institutions “not only profit themselves” from supporting companies involved in abuses, “in many cases [they] make such business models possible in the first place through the capital provided.”
Most high street banks are likely to be implicated in some human rights abuses, according to Ethical Consumer magazine. It says Lloyds, Santander, HSBC and Allianz have all been named and shamed in NGO reports for their links to specific human rights abuses.
If these three areas haven’t spooked you enough already, you can use the BankTrack website to explore more, including:
4. Destruction of Australia’s Great Barrier Reef
5. Oil production from tar sands
6. Deforestation, habitat degradation, animal cruelty and indigenous rights abuses in the production of palm oil
7. Animal testing
8. Controversial iron ore mining
9. High-frequency trading (dark pools)