I’m currently looking into moving my money to the most ethical and eco-friendly bank operating in the UK. I’ve been with my current bank for almost 30 years but it’s time to look into the unethical / unsustainable businesses each bank invests in. Banks have, in the recent past, been linked to the arms trade, bomb making, oil and gas industries and tar sands mining, amongst other things. I don’t support these things so why would I want my money to be used to support them?
It should be easy to find out what your bank invests in and who they give loans to; for transparency you’d think the information would be on their website. If this information is in fact on their websites the majority of them hide it very well.
What is an Ethical Bank?
This is a difficult thing to answer because it depends on what your own values are. What’s more important to you? The environment, the financing of arms manufacturers, human rights, animal rights, dodgy tax practices, political lobbying…
All of the listed things are important and it’s a good idea to look at each company as a whole. With this website being about eco-friendly practises my primary concern is of course to the environment but I will take everything into account. There is definitely a massive improvement in carbon emission reporting on banking websites and the majority of them now have a ‘sustainability’ page and modern slavery statement. What is more difficult is finding out whether a company donates to political parties or invests in environmentally destructive businesses. Who they invest in, or fund, is the primary reason a bank could be classed as unethical. I’ve listed the least ethical banks in the UK towards the end of this article.
As far as I’m concerned the less transparent a website is the more likely it’s trying to hide something.
The Difference between Banks and Building Societies
Firstly, let’s talk about the difference between banks and building societies because building societies are classed as ethical by The Ethical Consumer, writing for The Guardian…
“(Building societies) are judged to be ethical by virtue of the fact that strict regulations limit the amount of money building societies can invest in certain industries. The other plus point is that building societies profits are ploughed back into the business for the benefit of borrowers and savers rather than shareholders.” – The Guardian
- A bank is a business, and works for its shareholders.
- A building society works for their customers.
“Because banks are listed on the stock market, they are businesses and therefore work in the favour of those who invest in them, specifically their shareholders. Building societies, however, are not commercial businesses, they are ‘mutual institutions’ – owned by, and working for, their customers.
As a result, building societies’ interest rates generally tend to be a lot higher than banks as they are not required to pay dividends to any shareholders.” – Finance Monthly
I’ve already learnt something, and I’m embarrassed that at my advanced years I didn’t know the difference between them.
Credit Unions
We haven’t mentioned credit unions yet but for some people these might be a better option than a bank or a building society.
What is a credit union?
- A credit union is a form of co-operative. It’s “run by the members, for the members”.
- Credit unions are not-for-profit, and are formed by people who have something in common.
- Credit unions offer a range of savings accounts, current accounts and loans to members, much like traditional banks and building societies
To join a Credit Union you normally have to either live locally, be part of a local group or have a certain employer. i.e. have something in common with them. Use https://www.findyourcreditunion.co.uk/ to find out the Credit Union options available to you and your circumstances. Having looked into it my current circumstances show that I don’t personally have any options to join a credit union.
Most Ethical Banks UK?
When doing research about the most ethical banks in the UK there are a few that crop up quite a lot – The Co-operative Bank, Triodos Bank and Charity Bank.
Co-operative Bank
What they say about themselves
“We’re proud to be the only UK high street bank with a customer-led Ethical Policy. Our customers know their money will be kept safe and not be used in a way that conflicts with their values and ethics.”
What others say about them
“The first example of ethical banking in the UK was the Co-operative which, while still an option as an ethical UK high street bank, arguably ceased to be ethical when it became majority-owned by US hedge funds in 2013.” – gocompare
Triodos Bank
What they say about themselves
“We publish details of every organisation we finance on our website, so you can see for yourself how your money is delivering positive change for people and planet”
What others say about them
“Ethical banks such as (…) Triodos Bank, are pioneers for sustainable banking that gives customers what they need whilst also giving back to the people and planet.” – The Good Shopping Guide
Charity Bank
What they say about themselves
“Charity Bank is a savings and loans bank with a mission to use money for good. We use the money our savers entrust to us to make loans to charities, social enterprises and organisations with charitable purposes.
Our community of borrowers, savers, shareholders and staff are all working towards one goal – helping to create lasting social change in our communities.”
What others say about them
“if you save with Charity Bank, your money will be used to fund its loans, which go to charities and ethical projects.
While the interest you get may not be the most competitive, you can be happy in the knowledge that your money is being invested in social improvement projects and initiatives.” – gocompare
At this point I feel like Triodos and Charity Bank are the better 2 options, but of course there are always some drawbacks and all 3 banks have something going against them.
- Co-operative Bank is majority-owned by US hedge funds.
- Triodos Bank current accounts cost £3 per month.
- Charity Bank doesn’t offer current accounts.
It’s also worth considering Monzo and Starling as well. Both, like Triodos, are app-based banks meaning their carbon footprint is much lower due to having no actual branches and are completely paperless.
Ethical Building Societies UK
As stated at the beginning of the article building societies can be classed as ethical due to restrictions on how much money they can invest in certain industries. However you would have to look into whether their ethics align with your own values.
When doing research Nationwide, Cumberland and Ecology building societies are often mentioned as ethical alternatives to banks. Ecology Building Society only offers savings accounts and mortgages, but they are certainly worth looking into if you aren’t looking for a new current account.
- You may have to be close to a local branch in order to join a building society.
- If you have a mortgage with them (or transfer your mortgage to them) you can normally gain access to all their products.
Most Ethical Banks & Building Societies in the UK
There are certain things I’m looking for when determining which is the most ethical bank in the UK. I’m only one person so I unfortunately don’t have the time or resources to fully investigate everything I’d like to (such as who a company invests in, who donates to political parties etc). However as I said before, the more transparent a website is the less they have to hide, and the more willing they are to be held accountable. Being honest about things that need improvement and the measures being taken to make those improvements is far better than not providing any information whatsoever.
With that in mind there are 4 things I’m focussing on, all of which, I believe, are not too much to ask for as a potential customer.
Ethical Bank Basics
Sustainability Page (or statement) – A page talking about how the bank itself is aiming to be sustainable, even if that’s about conserving energy and water in their offices.
Modern Slavery Statement – It’s rare to find a website in the UK that does not have a modern slavery statement somewhere on their website, but it shouldn’t be hard to find. If it is too difficult to find I can’t give them credit for having one.
Carbon Emission & Reduction Target – A self-proclaimed ethical bank or building society should absolutely have information regarding their current carbon emissions and the date they hope to achieve net zero or carbon neutrality.
Investment Transparency – A good example of being completely transparent about who and what is being invested in is this statement on the front page of the Triodos website. “We publish details of every organisation we finance on our website, so you can see for yourself how your money is delivering positive change for people and planet”.
All of these things should be relatively easy to find on a website. If they are not in the main menu (they rarely are), take a look at the links at the foot of the website, this is the most common place to find the information. Not all websites have specific pages for each of the above. If I’ve found the information somewhere on their website (and it wasn’t too hard to find) then they have been given a check mark.
Please note:
Being transparent doesn’t mean you are ethical. Having a statement about modern slavery or a page about sustainability doesn’t mean that there aren’t things that should be improved. The Co-operative bank is a prime example of this. On paper they seem very ethical and their website talks about their ethical values, but being majority owned by US Hedge Funds really doesn’t sit well with me. Whereas Nationwide being a building society
Least Ethical Banks UK
Let’s begin with a startling fact from bankingonclimatechaos.org, followed by information from their in depth fossil fuel financing report 2023.
- Fossil fuel financing from the world’s 60 largest banks has reached USD $5.5 trillion in the seven years since the adoption of the Paris Agreement (04/11/16), with $669 billion in fossil fuel financing in 2022 alone.
The following figures are all in USD and relate to bank financing from 2016 to 2022 in companies that are involved in the extraction, transportation, transmission, distribution, combustion, trade, or storage of any fossil fuels or fossil-based electricity. The full report from the banking on climate change website includes the largest 60 banks globally, but I’ve focussed on the banks we see and know in the UK. I’ve included how they rank globally as well. Barclays is the 7th worst bank for fossil fuel financing in the world for this time period.
UK banks – fossil fuel financing
This can be broken down further…
My recommendation? Try to move away from these 5 banks.
Best Ethical & Green Banks UK
It’s quite clear that Triodos is the most environmentally friendly bank and the most ethical bank currently operating in the UK especially for those looking for a current account. Triodos is very transparent on their website and is open about every business and company they invest in. Triodos ‘only finance companies that focus on people, the environment or culture.’ Also being an app based bank their carbon footprint is already much lower than many of the others. Monzo seems to come a close second.
Ecology Building Society is a great option if you’re looking for a mortgage or savings account.
Update 07/07/22:
I wanted to sign up with Triodos, however £3 a month does add up. And I currently don’t have a full time job and am pinching pennies. However, as they themselves state, that’s only the price of a coffee and most banks fund free accounts with hidden costs and high overdraft charges. The biggest drawback for me was they don’t appear to offer cheque books. (Nationwide do and I have to pay my rent by cheque!) I ended up moving from HSBC to Nationwide Building Society, and I have no complaints so far.
If you find any incorrect information in this article please let me know. If a website has been updated and now the information is much easier to find then please let me know where it is so I can update this article for everyone. Thank you.
Changing who you bank with really makes a difference but so does where you buy your food. Check out the most ethical UK supermarkets.
If you like what I do and want to support this website, you can buy me a ‘coffee’ which helps with the running costs of the website. Alternatively come and say hello on facebook, twitter or pinterest.
PIN ME
A fairly good article, apart from the section about Building Societies. You don’t even mention the most ethical BS, The Ecology. You also say you have to be close to a branch to join. We have had accounts with The Ecology since around 1985. They have one branch in Keighley, Yorkshire, a zero carbon building. We used to do all transactions with them by phone, or post and now it’s all online. No problem with that ever. They have an incredibly good pay policy for their staff and only lend to Eco friendly projects, so organic farms, zero carbon buildings, alternative technology projects etc. Can’t fault them in 35 years.
To be fair I’ve never heard of that Building Society, probably because it was so small and only had one branch. However I’ll look into it.
Hi Sue, I’ve just been updating the article and looked into The Ecology Bank, however they don’t appear to do current accounts, just savings and mortgages, so they aren’t appropriate for this particular article, as I’ve focussed on current accounts (that was what I was looking for at the time). If I write about the best banks for savings or mortgages, they will be included.
Thank you. This was very helpful and I have never known the difference between a bank and building society! 🙂
I enjoy telling people to consider Nationwide as an accessible bank with all the facilities any banking customer would need as well as excellent ethical credentials.
Just a correction re the Monzo statement – you can use cheques to pay in but have to post them. You can’t issue cheques. Thought it was worthwhile mentioning as theyare really good
Thanks a lot, this helped me understand in which direction to go with regards to my banking…away from Barclays and HSBC! PS at first glance, the last pic with Barclays and HSBC buildings visually suggests that they are the Most ethical banks, maybe you want to check and re-do it! Thanks again.
You *can* have cheque books with Triodos – I am just switching to them and have ordered one
Ah that’s good to know. They certainly didn’t offer them when I was looking to switch. I’ll do a bit more research and update the article. Thank you
Agreed with Marco, that picture is really misleading, please change! Thanks
Otherwise helpful info.
Unfortunately it’s quite difficult to find free to use images of banks, but I am trying
We are in the process of switching to Triodos. They have been extremely pleasant and helpful over the phone. We have also ordered two cheque books
Hi Sujatin, how is your banking experience with Triodos with regards to a current account for eg customer service, online banking, Fraud etc. I am looking to open an account with Triodos as its ethical as well as environment friendly and need some advice. Thank you in advance.
How does Starling rank against the top 3?
Our switch to Triodos went very smoothly. Very happy with the changeover.
I’ve been with Triodos since around 2014, first with their savings account and then current account too. You can order cheque books and Freeport cheques to them too. The bank card is sustainable to and I love how the card makes people ask which bank ok with because they haven’t seen that card before. It starts a conversation and maybe a switch for them…
The advert at the bottom of the article called, the most ethical banks, shows images of HSBC and Barclays. Does this mean that greencofriend agree that these are the two most ethical banks?
No, and the the image at the end of the article isn’t an advert as such. If you’d read the article I think you’d see that I don’t think HSBC and Barclays are the 2 most ethical banks. I had to find an image (a free to use one) that was relevant to the article. I agree it’s not the most appropriate image, but unfortunately it was the only one I could find at the time that related to banking (i.e. a picture of well known banks).
The ex-CEO of Triados, Peter Blom, belongs the infamous Club of Rome. The Club of Rome was created in 1968 by the Morgenthau Group, its original purpose was to create a New World Order by the year 2000. The Club of Rome has an hidden agenda of depopulation and to divide the entire world into ten regions or kingdoms. They are also linked to the Bilderbergers. No such thing as an “ethical” bank.
Cath, your comments are fact-free and can only be based on conspiracy theorists looking for a conspiracy that they can claim to uncover. The Club of Rome does nothing along the lines of your suggestions of hidden agendas or depopulation. Read Club of Rome publications and research what they actually do rather than listening to conspiracy theorists and religious doomsayers. I am sad that you can not see the good that “ethical banks” can do.
Totally agree, I was shocked to see Barclays and HSBC in the picture with that heading (and “share” underneath!!). Really needs to be changed. Great article otherwise.
It’s difficult to find appropriate photos that are copyright free, and unfortunately my camera is not good enough to take photos suitable for a website. I’m on a search for a better photo but feel free to find one that I can use instead.
I tried to switch to Triodos from the Cooperative Bank for the reasons already mentioned in your article. Triodos seemed perfect but unfortunately I had a list of questions which, a week later, they still hadn’t replied to. One of the reasons for leaving Coop bank was their terrible wait time. Like most companies today, they say “we are currently experiencing unusually high call volumes”! All the time? They are not unusual then!
Additionally, they don’t offer contactless via phone (Google pay, apple pay) which I have come to rely on. I was prepared to overlook this inconvenience but with their lack of communication and the £3 fee I decided to look elsewhere.