BE the change you want to see in the world. A good human lifestyle.

What is an ethical bank account?

What is an ethical bank account?

Being reflective about what I’m spending my money on has forced me to think about ‘where’ I am putting my money too. I’ve never really put much thought into banks. I honestly had no idea where to start with this. I didn’t even realise that I could be more sustainable by simple switching my bank account.

From a young age, I remember going to the high street bank with my parents, standing in a queue to pay money in and then every now and again we’d withdraw money from a hole in the wall. When I was 16, my mum took me to open a bank account with Natwest, because that is where she’d always banked. When I closed my Natwest account in 2020, I felt an odd sensation – I’d banked with them for years and it was all I had known.

I hadn’t thought about ethics in relation to banking, all I’d thought about is that the bank was where my money was sitting when I wasn’t using it. If you’re a Harry Potter fan then you’ll remember the vaults at Gringotts? Or the old school bank vaults that were the target for robberies in Cowboy movies. But what’s important to remember is that it’s not just sitting there – my money is being used, but where it’s being used is hidden from view. Would I consent to where it’s being used? I’m not sure I would.

(A small disclaimer is needed. I am not a banking expert, I am basing this post on research that I’ve done and my own experience.)

What is Ethical Banking?

Surprisingly, or unsurprisingly actually ‘Ethical Banking’ in not a term that is strictly defined. It essentially describes what a bank ‘doesn’t do’. Ethical banks don’t invest in commodities like oil, tobacco, or weapons, or in businesses whose services might be considered harmful to society, like casinos.

Greenpeace says Barclays has poured $85.2 billion into the fossil fuel sector. When I consider the fact that banks essentially run off our money – knowing that banks can be using ‘my’ money on activities that don’t align with my values – that really got me thinking.

Typically, an ethical bank will use its customers’ money to invest in sectors like green energy, and in projects that benefit local communities. Some ethical banks are more focused on transparency and excellent customer service than reshaping investment practices, but are still considered ethical. 

The biggest ethical impact that banks make on the world comes from the companies and projects to which they provide capital, loans, and insurance.

When I consider my own banking experiences… I’ve had accounts at the major UK banks – NatWest, Barclays and Lloyds. I can’t believe the more that I delved into all of this.. the more I realised that I was completely oblivious.

Lloyds Bank: Invests in arms and military equipment

NatWest (part of RBS): Invests in arms and military equipment

Barclays: Big investor in fossil fuels – the biggest in Europe, as well as fracking, and coal power as well as arms.

Which UK banks can be classed as Ethical?

I didn’t realise that there are a lot of options when it comes to ethical banking in the UK. I’ve listed out some options below. The one’s that I have chosen are protected by the Financial Services Compensation Scheme (FSCS), which safeguards your money in the event that your bank fails. The options I’ve chosen can be identified as ethical for different reasons but if you are looking for a bank that I truly see as ethical, I’d choose Triodos.

All the information below is taking from their websites and my own third-party research. This post is not sponsored in any way. I’ve chosen the banks/apps that I’ve had experience with rather than discussing ones that I have not used.

  1. Triodos

    They refer to themselves as ‘sustainable banking’.

    Every action, no matter how small, sets something in motion. What you do with your money every day makes a difference.” – I mean if that doesn’t get your attention, then I don’t know what will.

    Founded in the 1980s, Triodos Bank’s mission is to help create a society that protects and promotes quality of life and human dignity for all. Their sustainable financial products have enabled individuals and organisations to use their money in ways that benefit people and the environment.

    They refuse to invest money in the following commodities or industries:

    – coal and other fossil fuels,
    – mining,
    – arctic drilling,
    – fracking,
    – arms and military technology.

    They also publish the details of each investment they do make on their website in the name of total transparency.

    I love the fact that I can find out where my money goes too:

2. Starling Bank

App-based banks one of the fastest growing areas of finance. I wouldn’t say that Starling is ethical in the same sense as Triodos but it certainly puts transparency and good customer service at it’s core. Starling offers both business and personal accounts.

Having had a read of their ethics statementStarling Bank grew out of a desire to create a new kind of bank and to make banking more inclusive by putting customer needs first.

Their core values are transparency, fairness and inclusion. This means no hidden or rip-off fees and no hard sell. It also means listening to their customers.

They do not provide banking services to organisations that use excessive power to systemically promote public behaviour that is harmful to individuals, groups or to the whole of society in order to maximise their own profits. This may include, for example, arms manufacturers and tobacco companies. They do not invest in such organisations or take investment from them.

3. Monzo

Monzo is another app based bank account. I applied for Monzo account back in 2017. It’s simple and easy to use and it puts the consumer first.

Have a read of their transparency section. While again, I would not say that they are ethical in the same way as Triodos, I think they put the needs of the consumer first and focus in on that.

One of our core tenets is transparency. We want to get rid of punitive fees that hit when you’re most vulnerable, show you exactly what you can expect to pay for an overdraft, and give you instant insight and control over where and how you spend your money.” – this statement really makes you feel like the consumer is at their heart.

I really appreciate the tone of voice that Monzo uses. They explain things simply, so that I understand.

4. Ecology Building Society

On their site, they state that “When you save with us, you know your money is being used to help build a more sustainable future. We’re a building society dedicated to improving the environment by supporting and promoting ecological building practices and sustainable communities.

“Our accounts are simple and transparent – giving you the benefit of knowing where your money goes. We use your savings to make a positive environmental impact and give you a fair financial return.”

They are a green banking option!

I’ve not used so I can’t comment on them specifically, but if you want to read up on them further, I’ve included the links below – they have been listed on other articles discussing ethical banks:

Charity Bank
The Co-op

If you want to switch your account then I’d recommend using this: Current Account Switch. It’s free of charge and makes the process of switching easy. If you’re not ready to switch then please do think about how your money is being used and if you’re okay with where it is being invested. The idea of switching can be quite daunting but it is an easy process once it is started.