As most of the world has witnessed over the last couple of years, money makes the world go around. When we place our money in a bank it does not sit still in a vault somewhere. Instead, it goes out to play on the stock market, in loans and mortgages in all manner of deals and agreements. Banks have historically used their customer’s money and expected their customers to ask no question as long as the bank delivered the interest at the end of the quarter.
As customers we, however, should have the power to demand more from our money. Money represents the power to invest and what we invest in shapes the future. Ethical banking has the power to do this. By taking money out of banks that invest in oil companies, arms trades and airline companies and putting them into banks that invest into ethical environmental matters, such as renewable energy resources, it is possible to use our money to shape a better future, while still getting our promised interest. The Energy Saving Warehouse looks at which banks in the United Kingdom that invest their money in environmental matters.
It may be argued that there is only one high street bank in the U.K. that has a strict history of ethical policy, and that is the Co-operative. Having its roots in the co-operative movement that started in the 19th Century as a ways of creating a fairer model of capitalism through shared ownership, the bank still remains committed to those ideals. The bank’s strict ethical policy means no investment goes into companies that are involved in the arms trade, fossil fuels industry, and corporations that do environmental damage and breach human rights. Customers vote every year on how their money is used and concerns such as climate change are regularly included. Because the Co-operative is not on the stock market, it is much more stable than other banks and has actually grown during the economic crisis [1] & [2].
In November, 2007, the Co-operative Bank launched a new credit card called “think”, which offers a lower rate of interest for designated ethical purchases via a link-up with partners including Ikea, green electricity company Ecotricity, bikes giant Raleigh and the fair trade organisation Traidcraft. The first time the card is used, the bank will arrange for half an acre of Brazilian rainforest to be bought and protected in the customer’s name. Also, for every £100 spent on the card, 25p will be donated to the charity Cool Earth, which protects rainforests [3].
The Co-operative Bank’s ethical policy has been extended to include over £1 billion of investments. Since the Ethical Policy of the Co-operative was introduced in 1992, the Bank has stated that they will extend their commercial lending in the area of energy efficiency and renewable from £400 million to £1 billion [4].
Triodos
Another bank to note for its ethics is Triodos. Not only is Triodos Bank a specialist savings bank with a strong ethical policy, but they also declare that every loan they make is done in a unique transparent measure. Triodos sets out to use money for good and will only finance businesses that “add cultural value and benefit people and the environment.” They are best known for investing in wind power in the 1980s, long before this became a mainstream strategy. Currently, Triodos does not offer personal bank accounts, but they do have services targeted for charity accounts, personal savings and businesses. Loans for the latter, however, are only offered to organisations involved in sustainable development projects. Customers using personal savings services can target their money even further by choosing a partnership account where their money is used to finance a particular sector e.g. organic farming, nature conservation or solar and wind energy development. Triodos Bank was originally set up in the Netherlands in 1980 but also has branches in the U.K. [5].
Triodos Bank has recently launched a public share issue which is aimed at raising £15 million to invest in renewable energy projects. It is now possible to become shareholders in Triodos Renewables, an independent U.K. energy company managed by the Bristol branch of Triodos Bank. This is the Bank’s fourth public share offer with the last one being in 2008.
The issue price has been set at £1.80 per share, and the minimum investment at £540, with the aim of bringing in retail investors to join the 4,000 existing shareholders. The firm says that “proceeds will be invested directly into building new wind power assets to expand the company’s portfolio.”. There is thus potential for a decent return and the group’s long-term objective is to grow its portfolio of renewable energy operating project and to deliver between 9-10% annual returns on investments for shareholders. Triodos Renewables now owns and operates seven sites around the UK that can generate enough renewable power for up to 24,500 homes [6].
HSBC
HSBC has been attempting to green itself over the last couple of year. The bank’s environmental policy covers the key areas of climate change, energy efficiency and water management. The policy contains a commitment to continued improvement in performance and HSBC’s business operations went carbon neutral in 2005. HSBC was one of the banks that have signed up to the Climate Principles in December 2009. The Climate Principles is a group of major international financial institutions, such as Credit Agricole, Standard Chartered, Swiss Re, F&C Asset Management and BNP Paribas, which actively manage climate change across the full range of financial products and services, including: research activities, asset management, retail banking, insurance and re-insurance, corporate banking, investment banking and markets and project finance [7] & [8].
Conclusion
By putting your money with a bank that runs an ethical and environmental policy it is possible to help shape a future where renewable energy is given the investment and attention which is otherwise much needed. At the same time, banks that have an ethical policy, and are often not traded on the stock market, have been more stable and have even grown during the current financial crisis the world is facing. Not only will you be doing the environmental sector a favour, but you will also be securing a more reliable return on your investments and eliminate the risk of going bankrupt. By investing in Green Banks it is possible for money to grow on trees.
[1] http://makewealthhistory.org/2009/01/06/which-is-the-most-ethical-bank/
[2 ]http://www.ethicalinvestment.co.uk/Ethical_banking.htm]
[3] http://www.guardian.co.uk/money/2007/nov/03/savings.ethicalmoney?INTCMP=ILCNETTXT3487
[4] http://www.goodwithmoney.co.uk/ethical-banking/
[5] See [2]
[6] http://www.guardian.co.uk/money/2011/jul/08/triodos-shares-renewables
[7] http://www.theclimategroup.org/programs/the-climate-principles/
