Whether you think COP28 is a step in the right direction for the climate or more of a cop out, there are ways you can align your own money with the goal of keeping global temperature rises below 1.5C.
As we turn into 2024, how about making a commitment to choose how financial institutions use your money by moving to climate-friendly options?
Here are 9 powerful (but easy) ways to make your money climate-friendly.
You might also find some of our Good Guides useful: see the Good Guide to Net Zero, Good Guide to Going Green at Home, Good Guide to Pensions and the latest Good Investment Review.
1. Green your pension!
This is big. Greening your pension is 21 times more powerful at fighting climate change than going vegan, cutting out flying and switching to a green energy provider combined, according to Make My Money Matter. So if you only take one step on this list – this is the one.
If you have a workplace or private pension fund, find out where your money is invested and ask to shift your investments out of heavy carbon polluting industries to more climate-friendly alternatives. You don’t have to sacrifice your returns for the sake of ethics – new analysis by pensions provider PensionBee reveals fossil fuel-free investment plans can in fact be more profitable.
For more, check out our Good Guide to Pensions, produced in partnership with PensionBee. Other pension providers with ethical options to consider include Nest (particularly if you are self-employed), Penfold and the Sustainable Pension Company. You’ll also find loads of useful information on Make My Money Matter.
Four ways to make your pension ethical
2. Choose a greener bank
One of the most significant (and easiest) steps you can take as an individual to fight climate change is to move your money to a provider that shares your ethical values. The average Brit sticks with their bank for 17 years – and for the majority (62 per cent), that means continuing to choose one of Big Five UK high street banks… aka the UK’s least ethical banks.
Since the landmark Paris Climate Agreement was struck, these five banks – HSBC, Barclays, Santander, NatWest and Lloyds – have collectively funnelled a massive $367.6 billion (£311.3 billion) towards the fossil fuel sector, and $141 billion (£120 billion) towards companies at the forefront of oil and gas expansion. This is despite them having made net zero pledges.
By switching to an ethical bank or building society, your money can have a more positive environmental or social impact – or at the very least, NOT invest in activities that destroy the planet.
For a bank that’s as green as you get, go for Good Egg firm Triodos Bank. We also like The Co-operative Bank, Nationwide (which is currently offering £200 for new customers opening accounts), Cumberland Building Society and digital banks Starling and Monzo.
Top 7 ethical current accounts
3. Switch your savings
Ethical savings providers will use the power of your good. They are also committed to treating their customers fairly, which means passing on Bank of England interest rate rises to savers.
Providers like Good Eggs Ecology Building Society and Triodos Bank as well as Charity Bank use their customers’ deposits to fund only those organisations delivering positive environmental or social impacts. We also like Tandem Bank, Coventry Building Society, and Sharia bank, Gatehouse.
Top 7 ethical savings accounts
4. Look at the carbon impact of your investments
Apps and websites like Sugi and MotherTree allow you to see the carbon emissions of your investment portfolio.
Carbon analysis app Sugi compares carbon data across thousands of companies, investment funds and ETFs. It offers a ‘temperature check’ on your portfolio, to see how your investments are contributing to global warming and makes suggestions for alternatives to lower your carbon impact.
MotherTree calculates the carbon impact of your money and also helps you switch to greener, FSCS-protected providers.
Top 5 LEAST ethical banks – and where to move for good
5. Choose sustainable investments
It’s not as tricky as you might think to choose sustainable investments for your ISA. A good place to start is our Good Investment Review, which looks at a growing universe of impact funds.
Platforms like The Big Exchange (A Good Egg) and Interactive Investor, as well as wealth managers like EQ Investors (a Good Egg), all offer sustainable portfolios and are a really good place to start.
The Financial Conduct Authority (FCA) recently revealed new rules aimed at clamping down on greenwashing. This includes four clear sustainable investment labels, disclosure requirements and restrictions on the use of sustainability-related terms in product naming and marketing. The rules will come into effect in 2024 and should make it much easier to choose to invest your money for good.
Top sustainable investment platforms
6. Invest in the UK’s renewable energy revolution
With the recent spike in energy prices, and massive oil company profits, it’s no wonder the more sustainably-minded among us are increasingly inspired to look for more natural energy sources.
Investment platforms such as Good Egg companies Thrive Renewables and Abundance Investment, as well as crowdfunding platforms Ethex, Energise Africa and Triodos Crowd all offer various options to access investment in renewable energy including onshore and offshore wind, solar, hydro and more.
7. If you need help to get your finances in order, choose an ethical IFA
Advisers who understand how to invest sustainably are experts in picking the right green and ethical funds to make a positive difference to the planet and society, while also achieving attractive returns.
Path Financial, Bluesphere, Pennine Wealth Solutions and EQ Investors all hold the Good Egg accreditation, and Ethical Futures is listed in our Good Directory. For higher net worth investors, Castlefield offers a range of advisory services.
Top 10 ethical financial advisers
8. Find help to make your home green
Reading our Good Guide to Going Green at Home is a great place to start. The C-Change mortgage from guide sponsor and Good Egg company Ecology Building Society offers borrowers savings of up to 1.50 per cent on the standard variable rate. The discounts reward borrowers for creating an energy-efficient home, bringing reduced energy bills and a lower mortgage rate at the same time.
Naturesave offers green home and travel insurance by allocating 10 per cent of customers’ premiums to environmental projects. Tandem Bank, through its Allium home lending arm, offers green home improvement loans. Charity Bank is offering £1000 or £2000 cashback when you buy or build an energy-efficient building with its Sustainable Buildings Loan.
The Good Guide to Going Green at Home
9. Consider a green energy provider
While the choice is not as broad as it was a few years ago, there are still a number of green energy providers to choose from. We like Octopus, 100 Green, Ecotricity, Good Energy and GEUK.
These suppliers strive to source as much of their electricity and gas as possible from sustainable sources and GEUK is the UK’s only supplier of 100 per cent green gas and renewable electricity.
For your complete guide to the top-rated ethical and sustainable investment funds available to UK investors, see the latest Good Investment Review, produced in partnership with Square Mile Research and The Big Exchange.
