While small individual choices will hardly save the world by themselves, there are little things you can do to live a more ethical life and be a better consumer, starting with recycling your rubbish, buying less cheap clothes… and getting the right bank account.
That’s right, keeping your money with the right bank is a small step towards making the world a better place.
If you open an account with Monzo, you’ll have 4 different price plans to choose from, with one of these having no monthly fee. Monzo describes itself as a ‘socially responsible business’, investing customer deposits safely and ethically. Most deposits are held at central banks and investments are only in safe, high quality government bonds. It doesn’t invest in fossil-fuel based energy companies, arms companies or tobacco companies and states that it has a ‘zero tolerance’ approach to modern slavery and human trafficking in its business. What’s more, the bank is working to reduce its carbon emissions and is aiming to reach net zero emissions by 2030.
Representative example: If you use an arranged overdraft of £1,200, you'll be charged interest at 39% EAR variable.
Pros
Easy to set up
Good for budgeting and categorising spending
Automatic saving feature
Fee-free spending abroad
Slick app with face login
Overdrafts and loans available
Cons
Free ATM withdrawals outside the EEA limited to £200,
£1 fee for depositing cash at PayPoints,
Maximum cash deposit of £1,000 every 6 months
No rewards program
Minimum opening balance
£0
Switch service guarantee
Yes
Account fees
£0
Overseas card transactions
0%
Overseas cash withdrawals
0% conversion fee plus cash fee of 0% on up to £400 per 30 days (3% thereafter)
£75 cashback for accounts switched using the Current Account Switch Service.
The Co-operative is well known for being an ethical bank. It offers several different current accounts, one of which is designed for Ukrainian refugees. The bank will give you a say in how your money is used through its customer-led Ethical Policy, helping you to stand up for the causes that matter to you. The bank is committed to reducing global climate change, protecting animal welfare and working towards becoming a carbon neutral bank. It’s also committed to promoting human rights, being an ethical employer and treating customers fairly. It won’t provide banking services to any businesses and organisations that conflict with its Ethical Policy.
Representative example: If you use an arranged overdraft of £1,200, you'll be charged interest at 35.9% EAR variable.
Starling Bank offers a fee-free current account that can be easily opened via its app. The bank states that it doesn’t provide banking services to or invest in organisations such as arms manufacturers and tobacco companies. It will always be transparent about where it invests customers’ money and is committed to treating customers fairly. Further commitments from the bank include the promise that it will never donate to a political party or politician and that it is working to help combat climate change, with all of its offices running on renewable energy. Its debit cards are made from recycled plastic too.
Pros
Free ATM withdrawals and spending anywhere abroad
Can deposit both cash and cheques for free
Spending insights and saving tools
'Settle up' feature to split joint bills
Pays interest on current account balance
Overdrafts and loans available
Cons
Lower ATM withdrawal limit than some other digital challengers
Recommend a friend and £25 will be donated to the existing customers chosen charity for each successful recommendation.
The Triodos current account comes with a monthly fee that goes towards the cost of running your account. It also comes with a recycled PVC debit card. The bank only invests in businesses that have a positive impact on society and the environment, such as renewable energy, sustainable farming, education, charities and social housing. It won’t invest in fossil fuels, fast fashion, weapons and ammunition, tobacco or deforestation. By joining the Triodos community you can help make a more positive impact on the world. Triodos Bank is also regulated by the Financial Conduct Authority (FCA) and your money will be protected by the Financial Services Compensation Scheme (FSCS).
£175 cashback for accounts switched using the Current Account Switch Service, including at least 2 direct debits.
As Nationwide is a building society, it’s owned by its members. You’ll become a member when you open a current account (or another financial product) with Nationwide. The building society says it’s committed to contributing to a sustainable environment and being socially conscious. It does not lend to or invest in any industries related to arms that are subject to a treaty or convention, fossil fuel extraction or power generation from coal-fired power plants. Nationwide offers a variety of popular current accounts, including a packaged account, a student account and a youth account.
Pros
Pays interest on in-credit balances
Interest-free overdraft for the first 12 months
No monthly fee
Account can easily be opened online
Cons
Interest rate drops after the first 12 months
Interest is charged on overdrafts after the first 12 months
Generally speaking, an ethical bank account is an account at a bank that does not use its money for unethical purposes.
Since banks make money by investing into and lending money to businesses, choosing where to keep your money has a direct (albeit small) impact on which businesses are able to get capital and grow. This is a bit of an oversimplification, but for example, if we all refused to keep our money with banks that support oil companies, those firms would find it harder to get capital.
Naturally, “ethical” can mean different things for different people and there are various criteria that can be used to decide how ethical a bank is, including:
Whether it pays its taxes. Some banks are known to use subsidiaries based in tax havens to pay less tax on their profits.
How environmentally friendly it is. Ethical banks that focus on climate change avoid investing in companies that obviously harm the planet, such as fossil fuels companies.
Whether it supports non-profits. There are banks that use their money in a socially responsible way, for example by lending their money to charities.
Islamic banks. This is a slightly different type of ethical bank. Islamic banks respect the Sharia, the Islamic law, which sets a series of rules on how Muslims can and cannot use their money.
What are ethical savings accounts?
Working on the same principles as an ethical bank account, ethical savings accounts are accounts with financial institutions that are committed to making sure the money deposited with them isn’t having a negative impact on the environment or society.
When you deposit your money into a savings account, this is then lent out to various companies. What an ethical savings account does is lend your money to businesses that tackle climate change or are concerned about social responsibility. They also avoid lending your money to companies that use child labour or invest in fossil fuels.
Here are some ethical savings account providers in the UK and the causes they support:
Triodos Bank. A key player in ethical banking, Triodos only invests in businesses that have a positive positive impact on society and/or the environment.
Ecology Building Society. A provider of mortgages for eco-friendly new builds and renovation projects, your savings deposits will be used to make Britain’s housing stock more energy efficient.
Nationwide. As a mutual, Nationwide’s profits are invested back into the business for the benefit of its members. It is also required to hold at least 75% of its assets on loans secured on residential property, so it is less likely to be lending to unsustainable firms.
The Charity Bank. This bank uses its savings deposits to lend to charities and social enterprises.
Most ethical banks in the UK
So, what’s the most ethical bank in the UK? It’s hard to answer with one single name when there are so many things to take into account, but here we try to give you some options to consider.
Most environmentally friendly bank
In absolute terms, that’s probably Triodos. Triodos is an ethical bank that operates in the Netherlands, Belgium, UK, Spain and Germany. It supports businesses in three areas: environment, culture and social.
Its policy is that it does not lend money to businesses that trade in non-sustainable products and services (weapons, tobacco, pornography, fur, environmentally hazardous substances, fossil fuels, gambling) or that have non-sustainable working practices (in the bank’s words: “this covers everything from animal testing and inhumane farming methods, through corruption and support for dictatorial regimes, to breaches of fundamental labour rights”).
Triodos is also mindful of the small things, even its debit card is environmentally friendly (made from renewable resources, biodegradable and recyclable).
The main problem with it is that sustainability obviously comes at a price, so for example the current account has a monthly fee and the savings accounts’ interest rates aren’t overly competitive. Triodos is for people who are really committed and ready to put the environment before their immediate interests.
Building societies
If you are not ready to go all in with an ethical bank like Triodos, a building society is a decent alternative. Building societies are owned by their members, so they don’t have to generate big profits for their shareholders. All earnings are given back to members, for example through interest on savings accounts.
This doesn’t make them perfect, of course, but certainly makes them better than most of the big banks.
Nationwide is the biggest building society in the UK and the only national one. Here is an overview of its current accounts. There are also more than 40 other building societies in the UK which operate locally.
App-based banks
Small, digital-only banks also tend to be more ethical compared to traditional ones, because they focus on supporting individuals and small businesses rather than big corporations. Like with building societies, this is not a universal rule, but it helps.
Being digital, their operations are also intrinsically less harmful to the planet, and some of them even have decent although not overly specific ethical policies (see Starling Bank’s, for example).
There are tons of digital-only banks in the UK these days, but some of our favourite are Starling (you can read the review here) and Monzo (review here).
Other
Another couple of banks you can consider are The Co-operative Bank and Charity Bank.
Charity Bank only lends money to charities and social enterprises, so you can be pretty confident that your cash is helping a good cause. However, it only offers savings accounts and loans, not current accounts.
The Co-operative Bank has a decent ethical policy that prevents it from offering banking services to a series of businesses, including those trading in weapons, gambling, payday loans, fossil fuels and a number of others.
Islamic banks
The Islamic law sets a series of principles that Muslims should follow. Receiving interest from a loan, for example, is not permitted, because money is not considered to have intrinsic value and cannot generate income. Instead of receiving interest from their deposits, savers can receive income in the form of an expected profit rate.
Islamic banks are not allowed to invest in companies that deal in interest, gambling, pornography, speculation and tobacco, among others. The biggest Islamic bank in the UK is Al Rayan Bank. Learn more about Sharia banking and Islamic bank accounts here.
Bottom line
Ethical banks offer consumers the chance to positively shape the world around them by exercising choice about where their money goes. There are a range of banking options for customers who want to ensure that their money is not used to invest in companies or industries that do not match their values.
The term “ethical” can mean slightly different things to different people, but in general these banks try to ensure that their customers’ money is not used for loans and investments to companies that behave in ways that can be considered unsustainable or negative.
Banks and building societies that cater to more socially and environmentally conscious consumers are not usually as competitive as their high street counterparts when it comes to interest rates paid on savings.
Frequently asked questions
As long as the bank you are considering is a fully registered bank in the UK, your deposits will be protected by the FSCS. This makes a current or a savings account with an ethical bank just as safe as one with your average high-street bank.
It depends on the bank. Generally speaking, truly ethical accounts might be more expensive than regular ones, and savings account not as competitive. But it is not a universal truth and you can often find a decent middle ground. Nationwide, for example, is known to offer pretty good prices and products.
Try and look up its ethical policy online. If you can’t find one, or if it’s very generic and thin, you have your answer.
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Valentina Cipriani was a writer at Finder UK. She wrote news, features and guides about banking and credit cards, helping people to improve their financial lives. She holds an MA in International Journalism. See full bio
You can open and use a Monese account in the UK and across Europe. We round up the fees and features of this app-based current account.
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