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When we think about climate change, most of us think about reducing single-use plastic, turning lights off, and walking more. But have you ever considered the impact that your money is having on the planet?
When you deposit money into a bank account, it doesn’t just sit in a virtual vault, untouched until you want to withdraw it. Banks use your money to fund their activities, from loans to investments – the number on your account is simply a promise that you can get that amount back from your bank at any time. Unfortunately, this means your money could be funding projects you don’t agree with – fossil fuels, arms sales, or gambling sites, to name a few.
Money makes the world go around, and being aware of where you’re putting yours can make a huge difference. In this post, we share three tips for being more sustainable with your finances, so that you can support a fairer future.
Think about who you bank with
The first thing you can do is to learn more about who you currently bank with. Look on their website, and see if they have a sustainability policy freely available, or any information about their commitment to the planet and the community. Whilst there is a risk of greenwashing, many banks who are doing the right thing will make this information easily available and checkable.
You can also use independent consumer guides to find a list of verified ethical banks, and uncover any information about problems with your existing bank. Armed with this information, you can then make a choice about whether to switch.
Consider sustainable investing
If you have money in investment funds, such as a stocks and shares ISA, you have the choice about what sort of companies you’re investing with. If you manage your own investments, then make sure you do your research before making any commitments, looking for red flags such as:
- Investing in fossil fuels
- Investing in harmful industries such as gambling, arms dealing, animal testing and fast fashion
- Any history of human rights concerns
- History of unfair charges, money laundering or tax evasion
- No commitment to carbon reduction or other sustainability measures
If you have a managed fund, check to see if you can switch to a sustainable portfolio. This means that the bank has a responsibility to ensure that your money is only used for ethical investments. In comparison to the red flags above, these businesses will:
- Treat their staff, customers and suppliers fairly
- Have sustainability targets and commitments
- Protect wildlife and the planet
- Be transparent about their policies
- Support community projects
If your current ISA holder doesn’t offer a sustainable option, then consider switching to a provider who does.
Switch your pension
Research shows that UK pension schemes invest £88 billion in fossil fuels, equating to £3,00 per person. Additionally, £2 out of every £10 in a pension is linked to deforestation. These statistics are shocking, but yet this is an area of sustainability that you’ve probably never thought about, despite so many of us having a pension.
Just like investigating your bank, you can do some research to see if your pension supplier has sustainable credentials. This money could be put to use for funding climate solutions like renewable energy, yet most of us leave it in problematic funds without ever realising it. You might not even need to switch providers – you might have a sustainable fund option, just like an ISA.
Use your money for good
You might be saving up your money for something big in your own life, but whilst it’s sitting there, it might as well be doing some good. By understanding the impact that your finances have, and making the most sustainable choices you can, you’re helping create a better future for everyone.