Here’s how green investing can be used to save the planet and help you live a richer life.
Green investing is not something you might have thought of when tackling climate change. While we’ve all moved to use sustainable beauty brands, embrace veganism and recycle more, the real power is with your cash.
Did you know that the money in your current or savings account is often used to support industries such as fossil fuels or even the arms trade? If you’re not happy with that, then moving to an ethical bank and moving your savings into green investments can help, allowing you to support causes you really care about.
The good news is, you don’t have to make any financial sacrifices or overhaul your finances to help. There are simple actions that, once done, you’ll never have to think about again.
Green investing: your guide
Here are four simple ways to help you make your money go green.
1. Invest ethically
Investing is a great way to help your money grow, but green investing lets you invest in causes you feel passionate about, such as protecting wildlife or promoting social housing.
These platforms offer ready-made ethical investment accounts, and choose funds for you, depending on your goals.
Nutmeg’s portfolios exclude tobacco, arms, fossil fuels, mining and alcohol while Wealthify’s ethical scheme invests in companies that have a positive impact through their environmental, social and governance (ESG) practices.
An investment app Climbing8 only offers ethical funds managed by a team of in-house fund managers. The Great Exchangeco-founded by The Big Issueis an online investment supermarket that only lists funds proven to make a positive difference to the planet.
2. Green your pension
If you have a pension, then you are already investing and it can also be used to do good by making sure it is invested in the way you would like.
Getting a green pension is 21 times more powerful in reducing your carbon footprint than giving up flying, going vegetarian and switching energy with your provider, according to research by a campaign group Make My Money Matterlaunched by Love Actually director Richard Curtis.
The average UK pension funds a staggering 23 tonnes of CO2 emissions each year through the businesses it invests in, according to a pension provider Cushion – so, it’s time to take a stand and let your provider know how you feel.
Most workplace pensions should offer an ‘ethical’ option that you can easily switch to. If they don’t, write to them and let them know it’s important to you. Make My Money Matter has a useful email template to encourage pension providers to move to net zero and a template to request ethical funds.
If you are self-employed, the pension provider Nest offers an ethical fund that you can pay into with a regular direct debit.
“Your pension may be the most money you’ll ever have to your name, so if you have an ethical option available to you either with your current or previous workplace pensions, it can be a great way to move mountains to the planet, just by changing money,” Becky O’Connor, head of pensions and savings at investment platform Interactive Investor.
3. Choose an ethical bank account
Don’t just give up on pensions and green investing, make sure your bank account also uses your money to tackle climate change and help society.
A staggering £150bn was invested in fossil fuels by UK banks between December 2015 when the Paris Agreement (an international agreement on climate change) was agreed and September 2019.
Not happy with that? Take a look at these green banks:
Triodos is an ethical bank that invests exclusively in a wide range of impact businesses, from eco-tourism and social housing to environmental technology. Even its debit card is made using plant-based recyclable materials such as leaves.
Digital bank only Starling committed not to do business with companies that promote harmful behavior – such as arms dealers and tobacco companies. Co-op Bank has also reaffirmed its commitment to ethical banking in recent years.
For savings, the Charity Bank lends money to worthwhile causes in the UK, including over £11m to environmental projects since 2002. Ecology Building Society bankrolls green initiatives while offering a variety of savings accounts.
“If you only have time to do one thing, then switching current accounts is probably the one to go for as you can do this independently and quickly,” says O’Connor. “And it means your salary every month supports positive impact businesses.”
Changing your bank account is easy thanks to the Current Account Change Service, where the transfer to a new bank is made within seven working days.
These banks also come with the same level of protection as other banks with the Financial Services Compensation Schemewhich means that if it goes bust, then you are protected for up to £85,000 of your savings.
4. Avoid greenwashing
When making ethical choices, beware of greenwashing – this is when a company or organization claims to be more environmentally friendly than it actually is. Don’t be fooled and do some research around it – for example, if a beauty brand says it’s cruelty-free, check to see if it has the right certification, like the leaping bunny logo.
Likewise, when it comes to your money, do some research – just because a fund is labeled ethical, doesn’t necessarily mean it is.
Before you invest, a good starting point is to look at the companies the fund invests in – not just the top ten.
Katie Binns is a Staff Writer for The Silver Edition.