Ethical banks: can you bank conscientiously?
Ethical banking is all about choosing a bank that not only makes managing your money easier, it also makes a positive impact to the world. This could be through investing in environmental or social policies or local community groups and projects. Here we explain how to bank conscientiously.
Key takeaways
Ethical banking focuses on positive social and environmental impacts
It can support projects like renewable energy and social justice
Banks like Triodos, Ecology Building Society, Nationwide, and The Charity Bank have been recognised for their ethical operations
Some banks have been criticised for promoting themselves as ethical without showing any proof
In an age where consumers are increasingly conscious of their impact on the world, ethical banking is becoming more popular. But what exactly is ethical banking, and how does it translate into the everyday management of your finances?
What is ethical banking?
Ethical banking is not just about where you store your money; it's about ensuring that your financial activities have a positive societal and environmental impact.
There’s no one-size-fits all when it comes to ethical banking, one person may choose a bank which helps local community projects while another may prefer a bank investing in environmental schemes.
Ethical banks prioritise investments that have a positive impact on the world, such as supporting renewable energy projects, social justice initiatives, and charitable organisations.
They operate on the principle that finance should be a force for good, creating a ripple effect of positive change through the economy.
Is ethical banking right for me?
If you are interested in making a positive change to the planet, ethical banking could be a good option. It allows you a place to manage your money while at the same time making a positive change to the world.
Ethical banking has become more popular in recent years and there are lots of options to choose from.
Several specialist ethical banks offer market-leading financial products too which many of the mainstream high street banks are starting to offer ethical banking now too.
What is an ethical bank?
What constitutes an ethical bank is subjective, as it often reflects personal values. However, there are common threads that bind ethical banks together, including:
Charitable contributions
Paying a living wage to employees
Transparency over investments and profit
Avoiding investing in certain industries
Reduced carbon footprints
Advocacy for social justice
Efforts to combat climate change
Promotion of sustainability
Upholding human rights
What products are available from ethical banks?
Ethical banks work in the same way as standard banks and most provide the following financial products:
Current accounts
Savings accounts
Investment products
Credit and overdraft facilities
Loans
Mortgages
How to find an ethical bank in the UK
It can be hard to find out exactly how ethical a bank really is. While a bank may say it’s promoting ethical policies and giving money to charities, for example, it may also be invested in controversial companies.
There are several ratings services in the UK which can give you an idea as to how ethical a bank is. They include the following:
Good with Money awards the Good Egg mark to banks that make a positive impact. B Corporation certifies companies committed to social and environmental excellence.
The Good Shopping Guide rates banks on ethical criteria, providing consumers with a clear picture of where banks stand on issues that matter.
What are the best ethical banks?
The best bank for you will depend on lots of different things, from the products on offer and how much they cost to the areas where the bank invests. Here are some which have been awarded for their ethical practices:
Best ethical banks
Triodos Bank
Known for its transparency, Triodos finances a wide array of projects that align with its ethical stance.
Ecology Building Society
This institution focuses on supporting environmentally friendly businesses and offers green mortgages and savings.
The Charity Bank
With a perfect score on the Good Shopping Guide, it provides loans to charities and social enterprises.
Some banks are on the path to becoming fully ethical but aren't quite there yet. These include:
Other banks with ethical values
Co-operative Bank
Despite its ethical claims, the bank's buyout by US hedge funds has cast doubt on its commitments.
Monzo
One of the popular digital banks, Monzo is celebrated for its accessibility and environmental efforts. However, its ethical status is questioned due to its use of third-party banks for certain savings products.
Revolut
This app-based bank is praised for its user-friendly platform and cost-effective currency conversions. Yet, a lack of transparency and the absence of FSCS protection puts its ethical credentials in a grey area.
Other useful guides
To deepen your understanding of ethical banking and related topics, consider exploring additional guides on:
Compare current accounts with MoneySuperMarket
Understanding ethical banking can be complex, but MoneySuperMarket simplifies the process by allowing you to compare current accounts from various providers.
Highlighting essential information such as overdraft facilities, rewards, and incentives for switching, MoneySuperMarket empowers you to make informed decisions and apply directly to the provider that best aligns with your ethical standards.
Author
Rebecca Goodman
Personal Finance & Insurance Expert
Rebecca is an award-winning financial journalist with over a decade of experience writing for print and online media. Her mission is to take the jargon out of personal finance and to help everyone...
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Collette Shackleton
Content Writer
Collette Shackleton is a highly skilled Content Writer who has over nine years’ experience creating helpful and engaging personal finance content for consumers. Collette shares her experience as a...