The UK’s most ethical banks and building societies

Written by Lori Campbell on 29th Jan 2024

When you deposit money with a bank or building society, it lends it out to other customers and businesses to make a profit.

With the Big Five banks, it is likely your hard-earned money is being used to fund things you may not be happy with such as fossil fuels and deforestation.

Meanwhile, ethical banks believe that profitability should not only be measured in financial terms, but also in social and environmental terms.

They make a point of not lending money to the most controversial businesses, such as weapon or gambling firms. And some go even further by only lending to companies and organisations making a positive impact on the world.

You don’t need to have millions of pounds, or even thousands, in the bank to make a meaningful change. A typical monthly salary removed from one of the Big Five and instead banked with a more ethical provider ultimately means reducing the flow of finance to destructive industries.

The positive choice of a bank or building society with a better environmental record means increasing pressure on those that support the more environmentally destructive industries to reduce these investments.

Putting your money with a sustainable bank also supports a wider ecosystem of green finance that brings about real change. It can be an influential form of democracy and a relatively simple and quick green choice we can all make.

Here are our top nine ethical banks and building societies in 2024:

1. Triodos Bank

What’s on offer? A range of current, savings and investment accounts for individuals, and loans for positive impact businesses and charities.

How is it ethical? With a mission to “make money work for positive change,” Triodos, a B-Corp company, sets the industry standard when it comes to sustainable banking.

The bank offers a range of everyday ethical banking services for individuals. These include a current account, savings accounts and individual savings accounts (ISAs). Note that Triodos no longer offers current or savings accounts to new business or charity customers. It was the first (and is still the only) bank to be awarded a Good With Money ‘Good Egg’ mark.

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. Sectors Triodos invests in include renewable energy, sustainable farming, education, charities and social housing. You won’t find it investing in fossil fuels or other destructive industries such as fast fashion, weapons, tobacco or deforestation.

Triodos has a £3 charge on its current account, which might seem unusual. However, while most big name high street banks make money from their customers through high-interest overdrafts and extortionate fees, Triodos believes a £3 flat charge is fairer and more transparent.


The Good Egg mark


2. Charity Bank

What’s on offer? A range of savings accounts for individuals, and ethical loans to organisations and charities with a social purpose.

How is it ethical? Charity Bank offers a range of ethical loans and savings accounts. It was founded to support charities with loans that they couldn’t find elsewhere and to show people how their savings could be invested ethically and in ways that would make them happy.

Charity Bank invests its customers’ savings into smalls and large charities and social enterprises around the country. Therefore, your money might be used to build affordable homes, launch renewable energy projects or to foster peace among young people in divided communities – while also earning interest for you.

The bank, which is wholly owned by charities, trusts, and social enterprises, says on its website: “Charities have never been more needed, but also more challenged. That’s why our promise – of supporting charitable activities and helping people to save and do good – is more important than ever.”

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3. Ecology Building Society

What’s on offer? Savings accounts and ethical mortgages.

How is it ethical? Ecology Building Society is dedicated to building a greener society by providing mortgages for properties and projects that respect the environment and support sustainable communities, funded through its range of simple, transparent savings accounts. Ecology is another Good With Money ‘Good Egg’ firm.

It was founded in 1981 through the efforts of a group of like-minded people committed to building a more sustainable future. To achieve this they decided to form a building society that could help finance environmental building renovations and support sustainable development.

Ecology funds its ethical mortgages with its range of savings accounts.

The building society specialises in financing self-build, renovations and conversion projects that are residential, commercial and community. They are discounted for those making their homes more energy efficient – which is 95 per cent of Ecology customers. The discount varies depending on the scale of the energy improvement.


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4. The Co-operative Bank

What’s on offer? A full suite of everyday banking services including current and savings accounts, insurance and loans for individuals and businesses.

How is it ethical? The Co-op Bank has a long history of ethical banking, having launched its first ethical policy back in 1992. Now, it is committed to carbon neutral operations, and won’t fund or invest in companies that manufacture or market destructive products like weapons and tobacco. It says it won’t support businesses or organisations that have business relationships with oppressive regimes and will promote human rights and equality across the world.

However, in 2017 the bank was bailed out by international hedge funds. Although they continue to proclaim it as an ethical bank, for many the sale put a question mark over the integrity of its ethical policy.

 

5. Coventry Building Society

What’s on offer? Savings accounts and mortgages.

How is it ethical? Coventry Building Society recently became the first building society to achieve B Corp status. It won’t lend to or invest in businesses that have a negative impact on the environment, such as those in the fossil fuel industry. As well as setting net zero emissions targets for 2040, the society is also committed to sustainable energy, reduced paper use, and waste disposal.


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6. Nationwide Building Society

What’s on offer? A full suite of everyday banking services including current and savings accounts, insurance and loans for individuals and businesses.

How is it ethical? As a building society, Nationwide must hold at least 75 per cent of its assets in residential property, making it far less likely than its big bank competitors to be lending to unsustainable firms.

Its profits are also invested back into the business for the benefit of borrowers and savers (it’s “members”) rather than shareholders. In June 2023, Nationwide handed back £100 each to 3.4 million eligible members after its annual profits rocketed 40 per cent to £2.22 billion.

However, the society has been criticised by Ethical Consumer magazine for excessive remuneration of its top staff. In 2022, its highest paid director received over £3.45 million in total compensation. It also has a low customer service score of 1.9 on Trustpilot, with customers citing long waiting times and unhelpful staff.

 

7. Starling Bank

What’s on offer? Full UK current and business accounts, and a fixed-rate savings account.

How is it ethical? Starling Bank says it is committed to creating a new kind of bank that puts customers first and is aware of its impact on society and the planet.

Its mission statement says: “We do not provide banking services to organisations that use excessive power to systemically promote public behaviour that is harmful to individuals, groups or to the whole of society in order to maximise their own profits. This may include, for example, arms manufacturers and tobacco companies. We do not invest in such organisations or take investment from them.”

However, the privately-owned bank does receive investment from less-than-ethical backers including US banking giant Goldman Sachs and the Qatar Investment Authority.

8. Gatehouse Bank

What’s on offer? Savings accounts and green home finance.

How is it ethical? As an Islamic Bank, Gatehouse avoids investing in industries considered unethical under Shariah principles, which in practice are the same as those frowned upon under Christianity.

The firm states it will “only invest funds in ethical goods and services and, for example, does not invest in gambling, alcohol, tobacco or arms”. It invests in real estate and construction as well as sukuk, which are sometimes known as Islamic Bonds.

Gatehouse Bank offers a range of fixed and easy access savings account as well as reduced-rate loans for energy-efficient homes.

 

9. Tandem Bank

What’s on offer? Savings accounts, mortgages, home loans, greener car insurance and green home improvement loans.

How is it ethical? A digital challenger bank, Tandem aims to be a “greener, more accessible bank for people across the UK”. The bank guarantees that your savings are never used to fund fossil fuel extraction and production or similar destructive industries. Instead, money held in its savings accounts is used solely to fund its lending products.

Tandem’s home improvement loans finance energy-efficient improvements such as solar panels and air source heat pumps, saving people money on energy bills while also helping to save the planet. ​​Tandem’s EPC mortgages reward customers who own energy-efficient homes.

 

More options

Other good options for ethical banking include Reliance Bank, Skipton Building Society and Leeds Building Society.

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