Green Banking: How To Save Your Money To Save The Planet
Green banking is something to tackle this year if you want to be an ethical consumer. Read on for expert advice about how you can bank better.
Sun 1 Mar 2020
Green banking might sound like an oxymoron. Do any banks really care about the environment? Any besides, if you spend your money ethically, why does it matter where you store it?
Ruby Reed works for the Advaya Initiative, a systems change platform which explores the connection between the economy and systematic change for people and planet. Here is her advice about how we can store our money to secure a greener future for ourselves as well as the environment.
Reconsidering your investments is another key step on the path to getting your money greener. Check out our feature all about ethical investing for more info.
How Do Banks Use Our Money?
So much power lies with banks. This means they have a huge amount of influence over the detriment or the betterment of society, depending on how ethical they are.
There is no fixed amount of money in the economy, and they are creating it from nothing all the time. As it stands, 95-97% of money is created by commercial banks when they issue loans in the form of bank deposits. The remaining 3% is government-owned Bank of England paper money. Positive Money explains this in more depth.
Wealth distribution goes on to dictate relationships of power: those who have more money have more power, and the ones that manage the money supply have the most power of all.
Uncontrolled lending leads to uncontrolled debt and financial crises that often end in expensive government bailouts – as we have seen.
Why Are So Many Banks Not Green?
When we open a current account at the bank, take out an ISA, a pension, a loan, some insurance or a mortgage (to name a few) our money doesn’t just sit there innocently.
In many cases, these providers re-invest our funds in highly unethical industries. Often, this means the hugely wealthy, but climate- destroying players like fossil fuels industries and oil companies.
Most of us would never dream of willingly putting our money towards these projects. However, because many banks are not transparent about their investments, and many customers are unaware of their practices and drawn to them because of deals and benefits, this happens all the time.
So, if you pay for your zero waste essentials and slow travel getaways using unethical funds, they might not be as eco friendly as they feel.
Did you know that British paper money is actually not vegan either?
Does Green Banking Exist?
So, is green banking even possible? A successful economy needs a transparent banking system that can support a fair and sustainable economy. We need to find an economic system where ecological sustainability, social justice and financial stability go hand in hand: an economy that meets the needs of all, not just the privileged few, and allows us to thrive.
This has to happen on a personal as well as a commercial level. As individuals, we need to simply slow our rate of consumption. We also need to bank our money in a way that steers our economy back in sync with our planet's ecology.
People everywhere are starting to realise that we have a right to demand a fair system in alignment with our personal values and ethics, and green banking is a way to do this.
Alternatives to mainstream banks are becoming increasingly available, and the time is ripe to be part of the green money movement.
Green Banking: How You Can Do It
Your Green Bank Account
If you want to be clear about what your bank is doing with your money, then a general rule of thumb is to avoid the ‘big banks’. They have a bad track record when it comes to lending and investments.
More alternative banks have progressive investment policies. In order to decide on a bank that will suit you, it is important to do a little research and find out which ones marry up with your personal principles and causes you support.
They list Charity Bank as the most ethical. It has gained official ethical accreditation, since it lends to charities, social enterprises and organisations that tackle social and environmental issues.
Take a look at Positive Money for some further information and practical solutions too.
Greener Savings, Loans And Mortgages
This is how most people unwittingly find their money going towards some shockingly unethical projects. Many mainstream savings accounts are based around the FTSE 100, which is largely made up of oil companies, big banks and defence stocks. Luckily, there are now loads of great alternatives that are outperforming the FTSE 100.
Banking With Green Building Societies And Co-ops
It’s definitely worth looking into Mutuals, local Building Societies and Cooperatives too. Some of the best ones are:
- Ecology Building Society
- Charity Bank offers great ethical savings and loans as well.
These organisations are owned by their members, who subscribe to a common fund. So, rather than the interest you pay going towards your bank manager’s bonus, it’ll be going back to other members of the public who share your bank.
Plus, building societies are prohibited from taking part in commodities or foreign exchange trading, and they must ensure that at least 75% of their lending goes into residential property (i.e. mortgages).
"We need to slow our rate of consumption and production and bring our economy back in sync with our planet's ecology"
Taking Out Green Insurance And Green Pensions
The average pension in the UK is £50,000, and there are millions of pensioners with schemes with much of this money going to fossil fuel investments and unethical practices such as land grabbing, oil and tobacco.
Friends of the Earth have a report with more information on this problem.
When it comes to general insurance, Naturesave covers homes, businesses and charities, and places 10% of premiums into an environmental fund.
Likewise, ETA provides travel, bicycle insurance and breakdown cover, and aims to create positive changes in Britain’s travel habits by raising awareness about the impact of excessive car use.
Let’s Talk About Green Banking
Talk to people about ethical banking! Money can be a taboo topic, but you don’t have to divulge too many personal details to discuss this topic that needs to make its way into the mainstream.
Many of your friends and family may well be totally unaware that they are unable to trust their bank to use their money responsibly and ethically, and would want to know that they are inadvertently furthering causes they are avidly morally against. Open discussion and keeping abreast of media like ‘new economy’ and through magazines like pebble is the way to go.