How to Find an Ethical Bank – The UK
Scandal and Wrong Use of Resources
We’ve witnessed banking scandals for many years now. The 2008 monetary situation resulted in an “overhaul” of the banking system, but has anything really changed? Large banks have been found out out for mis-selling items, breaking regulations, and also controlling rates of gold, silver, currencies, as well as fixing libor rates of interest. In addition, many are responsible for directly or indirectly financing wars and the arms trade. Many also fund projects that kill nature and degenerate the environment, pollute our water supplies, and encourage growth of the fossil fuels industries.
There is also tax evasion, excess bonuses and general unethical behaviour which leads to an exacerbation of the problems we face.
But we are seeing an increase in more ethical investment opportunities and the growth of more green banking options. We, as consumers, have the power to change the way money is used by voting with our feet. We can all be activists simply by switching bank accounts. But first, we need to inform ourselves about which banks are ethical and how they operate.
How to Find an Ethical Bank –
Where does your bank use your money?
Banks make use of our savings to offer loans as well as financing projects. They earn money from funding, and providing finance to companies globally. Whenever we bank our money with them, it enables them to raise “funds” to provide these loans. Banks attract deposits from customers like us and pays very little interest on the money we deposit. In some cases we pay the bank! The amount they can raise as a result of our deposit varies from country to country, but for example, if a person deposits £100 into an account, the bank can, hypothetically, create £1,000 out of thin air. And they do. Of course, this is the most simplistic of explanation but you can get the idea. Where we bank matters.
We are not Powerless
In the UK the “Big 5” banks occupy about 80% market share. These banks are Barclays, HSBC, Lloyds, RBS, and Santander. They include other brand names like NatWest, First Direct, Halifax, and M&S Bank. Some invest in nuclear, others support ecologically damaging projects. (Think Barclays and their financing of Third Energy, which was given planning permission in May 2016 to frack for shale gas in Ryedale, North Yorkshire.) In fact Barclays is their parent company. Both Lloyds and HSBC have or have had ties to fracking also).
How to Find an Ethical Bank
The Cooperative Bank
An ethical bank will certainly choose not to fund business in certain sectors. The Co-operative Bank claims that, to-date, they have turned away £1.4 billion of business since first puuting in their ethics policy in 1992. They promise customers that they will not fund businesses or groups that operate policies that fail to match the values and ethics of the bank – environmental, human-rights, and animal welfare-wise. It has actually pledged not offer banking to the non-renewable fuel sources sector, which is a step in the right direction. If you feel powerless to stop fossil fuels or fracking, ethical banking may be for you.
The Triodos Bank
Many claim that Triodos Bank is the most ethical choice. It freely publishes the financings it’s made with clients’ cash on its internet site (most banks will not divulge this). As an ethical bank for over 30 years, they have plenty of history. And we can see which companies they have invested in or provided finance for. Yeo Valley and Neal’s Yard are two examples. They are consistently ranked highly on ethical banking scorecards. They also invest in a lot of social and environmental projects and have an emphasis on renewable energy.
Charity Bank is another choice we can make. 15 years old, it makes use of funds to offer cash to not-for-profits and also social ventures. We can even see their data on social impact on their website. You can follow the money from sector to sector. According to their website, they “were 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” For the ninth year running Charity Bank got top spot in an index of ethical banks and building societies, according to research carried out by The Good Shopping Guide in 2016.
Nationwide Building Society
As a building society, Nationwide does not invest its customers’ money in fossil fuel extraction, with the majority of its assets going into property and customer loans, rather than lending to businesses. Nationwide does not invest in tobacco, arms, alcohol, gambling – or coal, oil & gas, Like most building societies, the absence of shareholders means that their investments are not subject to short-term financing pressures. In fact, other building societies fare better than Nationwide on ethical scorecards but perhaps Nationwide, as the largest, offers the widest choice of services. Here’s a link to a recent ethical bank scorecard. At the top of the above scorecard – at number one – you will see Ecology Building Society.
Ecology Building Society
As a building society, again, Ecology Building Society has no shareholders and this makes ethical investment much easier. On their website they say that they offer “sustainable mortgages” and “ethical savings accounts”. With lending criteria that has an emphasis on environmental and social impact, they focus on long-term value and being transparent. Like a cooperative, members of building societies can vote on what is ethical and what is not. Just how the Save the Earth Cooperative works.
We can’t emphasize enough how important ethical banking can be. Particularly if you feel powerless to act. By voting with your feet and switching to a more ethical bank, you are sending signals to “the management” that it is time for a sea-change.