This Good Money Week, Zoe Brett of ethical financial planners EQ Investors, rounds up three easy ways to make your money good.
As we grow ever more concerned about the world around us and our impact on it, many of us are turning our attention to how we can play our part. We donate old clothes, we recycle our waste, some of us even grow our own food. But is there a way of putting your money to work in this battle for a sustainable future?
Not all of us have millions of pounds to donate to the endless list of causes that need support. However, that doesn’t make us powerless. Here are three things you can do to manage your finances in a sustainable way.
Ethical Banking
In today’s world, everyone needs a bank or building society account so this can be a great place to start with managing your finances in a sustainable way. When you pay money into your current or savings account the bank doesn’t just leave it be, they effectively borrow the money until you need to withdraw it and lend it to other people and businesses.
A key consideration is where your bank or building society is lending your money. The benefactors of such loans may not be in line with your sustainability views. For example, perhaps a bank is lending to oil companies or the tobacco industry. Thankfully, finding a sustainable bank or building society is fairly easy with the likes of Good With Money doing the hard work for you and compiling a list of banks and building societies that have committed to either avoiding lending to certain harmful industries or specifically lending to particular causes.
Ethical Investing
Banking is not the only way you can put your money to good use until you need it. Investing for your future can also be aligned to your sustainability goals. Almost any investment type now has access to some form of ethical investment mandate, even many workplace pensions. Unfortunately, sustainable investment funds have been in the limelight recently for greenwashing. However, the Financial Conduct Authority has been hot on the tail of this issue and recently introduced regulations aiming to stamp this practice out.
That said, the process of selecting truly sustainable investments that will also provide a good return can be overwhelming. A good financial adviser will be able to cut through the noise for you and source a portfolio that you can have confidence in. These can range from a single fund through to well diversified portfolios of funds targeting a range of issues. Some of this may focus on a particular agenda such as climate change and others may be broader, driving positive impact across many sustainability concerns.
Ethical Spending
Of course, managing your finances is not just about the wealth you build but also the wealth you spend. It can be difficult to know what products and companies are good eggs and which are bad, but there are now a number of ethical certifications awarded to companies products that are meeting certain ethical standards. Below are a few to look out for but there are many more depending on the cause.
B Corp companies are assessed and ranked by B Lab on their social and environmental standards, transparency, and accountability. The purpose of B Corp is not just to be a profitable business but also be a force for good across many categories including workers, communities, customers, and the planet.
Fairtrade aims for a fair deal for all in the supply chain of products, as well as working with businesses and governments to raise workers’ standards.
Leaping Bunny certifies a product as ‘animal cruelty free’, meaning that in no stage of the process have products or their ingredients been tested on animals.
Rainforest Alliance focuses on products that are derived from practices that protect against deforestation and protects the rights of farmers and communities.
There are many more of these certifications to help provide consumers reassurance on the products they buy and encourage companies to move to a more sustainable model. Whether you’re moving energy suppliers, booking a holiday or grabbing your morning coffee, a quick google can help find certifications to ensure you are not unwittingly supporting something that breaches your ethical values.
The world is changing. We are much more informed about how our money is used, what it supports, where our products are sourced and the impact of our life on this beautiful planet. Being informed and able to make meaningful choices about our time here has never been more accessible and empowering. As savers, as investors, as consumers and as humans we have the collective power to force change for the good of our planet and its inhabitants.
