In recent years, it’s likely that you’ve made changes to your lifestyle to become more eco-friendly. From taking out the recycling to driving a hybrid or electric car, there are lots of steps you can take at home (and at work) to reduce your impact on the environment.
One area where it is possible to make a positive difference is through your finances.
Over the last year we have seen an increase in demand for investments that consider the Environmental, Social and Governance (ESG) impact on society. Providers are increasingly offering more ethical or sustainable alternatives to traditional investments – indeed, we’re intending to launch a suite of investment portfolios in this space later in 2021.
Read on to discover five other ways you can make your finances more eco-friendly.
There is a small but growing number of providers who offer “green” savings accounts.
For example, if you save with Gatehouse Bank, they will automatically plant a tree whose carbon credits will be registered on behalf of its customers.
The Ecology Building Society has long been a leader when it comes to this type of account, offering a range of savings accounts including a Cash ISA and a monthly savings account. Other providers with green savings products include Saffron and Triodos Bank, where you forego a small amount of interest, which the bank matches and donates to charity annually as a lump sum payment.
When you choose an ethical bank, you have the peace of mind that your money isn’t being used to fund anything that could have a negative impact on society.
Ethical banks don’t invest in, or lend to, companies that trade in sectors such as arms, tobacco, or fossil fuels. Rather, they lend to firms that do good, such as renewable energy companies or community projects.
Triodos, the Co-operative Bank and Ecology Building Society are the stalwarts of green and ethical banking. Indeed, Triodos even offers an eco-friendly debit card that is made from 100% renewable resources.
Green pensions and investments
Choosing to invest or to move your pension to a “green” fund can have a profound effect. There has been a huge surge in interest in “ESG” investing in recent years – the ESG standing for:
- Environmental – companies that are committed to reducing their carbon footprint, tackling climate change and who don’t damage the natural world through pollution or waste.
- Social – firms who improve their social impact, both internally and on the local community. This might include companies with strong equality and diversity policies, those enterprises who advocate for positive social change, and those who maintain a good human rights record in their supply chain.
- Governance – companies whose board and management drive positive change. It focuses on issues such as diversity in the boardroom, avoiding conflicts of interest, aligning management and shareholder views, and being transparent.
According to the FT, global ESG-linked funds took in nearly $350 billion in 2020, compared with $165 billion in the previous year.
The choice of these investments is growing. As of August 2020, the FT reports that there were about 300 sustainable and responsible funds available to retail investors in the UK.
In the last few years there has been a rise in the choice of mortgage deals designed to help people buy more sustainable homes.
For example, Barclays offers its customers lower mortgage rates if the home you want to purchase has an energy efficiency rating of 81 or above, or is in energy efficiency bands A or B.
Nationwide offers a similar scheme, where you benefit from a lower initial rate if you spend at least 50% of any additional borrowing you are taking out on energy efficient home improvements.
In addition, the mutual lender has created a £1 billion fund that will allow it to offer lower mortgage rates to customers buying a new-build property that has an A-rated energy performance certificate.
The Monmouthshire Building Society has even gone as far as running a research project with the Royal Institution of Chartered Surveyors and Rightmove to design the first UK mortgage that recognises home energy efficiency in its affordability calculations.
Other lenders who offer green mortgages include the Ecology Building Society – the original green lender – and the Saffron Building Society.
It’s never been easier to go green by choosing an energy provider that supplies your power from renewable sources.
There is a wide choice of tariffs that source 100% of their energy from wind, water, and solar power from “big six” providers to smaller firms who specialise in renewable energy.
Get in touch
If you’d like more information on how to “green” your finances, please get in touch. Contact us by email at email@example.com or call us on 01189 876655.