Put your money where you want the world to go.
Christiana Figueres, Former Executive Secretary UNFCC
What's green finance?
Green finance is when money is used to help projects and businesses that protect the environment and fight against climate change, instead of funding fossil fuels.
Switching your bank account, savings, pension or ISA to a greener financial provider could make a huge difference to the fight against climate breakdown. In fact, research suggests that greening your pension alone could reduce your carbon footprint up to 21x more than stopping flying, going vegetarian and changing energy provider combined.
Green banking providers
Did you know, the UK’s leading banks (Barclays, HSBC, Lloyds, NatWest and Santander) still pour billions into fossil fuel projects? Thankfully, switching bank accounts is one of the easiest and most effective ways to green your money.
The financial journalists at Good With Money aim to help people do good with their money and avoid causing harm. So, whether it’s a current account, savings account or credit card you’re looking to switch, check out their annual guides on the top ethical banks to choose from:
- Top 7 ethical providers for current accounts
- Top 9 ethical providers for savings accounts
- Top 4 ethical providers for credit cards
- Top 7 ethical providers for business current accounts.
And if you decide to move your current account, you can make use of the Current Account Switch Service, which helps individuals and businesses change their bank accounts for free.
Ethical pensions
The pensions sector is huge, with nearly £3 trillion invested in pensions in the UK. Most pension funds invest straight into big stock markets, which include oil and gas companies.
In fact, investments from UK pension schemes enable the release of 330 million tonnes of carbon every year… more than the country’s entire carbon footprint.
The good news? Many of the UK’s biggest workplace pension providers have ethical or sustainable funds you can switch to, including NEST, Aviva, Standard Life and Scottish Widows.
Alternatively, Make My Money Matter has lots of accessible resources for organisations and employers as well as individuals looking to green their pensions.
If you’re self-employed or can’t shift a company pension scheme, consider opening a self-invested personal pension (SIPP) and ask your employer to pay into a sustainable fund of your choice instead. We’d suggest getting expert advice on SIPPs unless you’re an experienced investor.
Green investment
Investing isn’t just for the rich – you can start small. One of the most common forms of investment is an ISA (Individual Savings Account). An ISA allows you to save or invest up to £20,000 annually tax-free. There are different types of ISAs available, including:
- Stocks and Shares ISAs: an investment account where the money you pay in is invested in stocks and shares, bonds, gilts and property on the stock market. Be warned, there’s a higher level of risk as the amount you put in could go up or down!
- Innovative Finance ISAs: a type of peer-to-peer lending where your money is loaned to other individuals and organisations. Borrowers then pay you back with interest on top, which is your return.
We suggest you look for actively managed funds, as passively managed funds have less human oversight and are more likely to invest in unethical companies. Good With Money publishes frequent sustainable fund reports. And platforms like Ethex and The Big Exchange are committed to giving ordinary people access to investments that are rated for their positive impact on people and the planet.
Just remember: no matter how much you invest, always make sure you research and understand the risks involved.
Ethical insurance providers
If you own a house or a car, odds are you’ve got insurance. Insurers invest policyholders’ money (“premiums”) in a variety of assets which they can then use to pay out claims or increase their reserves.
That means your provider could have an investment portfolio that’s unethical. Green options do exist, where providers plough some of their profits back into green initiatives.
The Good Shopping Guide produces a user-friendly ethical comparison table of the country’s big insurance providers which can help you decide who to go for.
Extra resources
- Beginner’s advice: if moving your money feels daunting and you’re looking for more basic advice, the government’s Money Helper site can help clarify everything from budgeting to bank accounts and benefits.
- Financial advice: for larger sums of money – such as an inheritance or a pension lump sum – you may want to consider consulting a financial adviser. UK Sustainable Investment and Finance Association can help you find an adviser in your region.
- Guide to ethical finance: if you’re looking for a more detailed overview of ethical finance alongside recommendations, then check out Ethical Consumer’s Ethical Money guide.
- Insurance providers and fossil fuel investments: “Insure our Future” is a global campaign to draw attention to how insurance companies are supporting fossil fuel expansion.
- Global campaign: #MoveTheMoney is a global campaign from US-based climate action platform We Don't Have Time, with the support of the United Nations Development Programme. It has several guides and videos for individuals, companies and investors on how to move money.
