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Can we afford to care about ethical finance?

Hand holding jar of money in green field

Just a year or two ago, all we’d hear was green this and ethical that. But are financial pressures now forcing us to forgo our environmental principles and make financial choices purely on who offers the best deal?

Climate change funds, paper-free bank accounts, ethical policies, environmental funds and green energy tariffs – green was cool, ethical was hip.

But as budget cuts kick in, savings rates stay shockingly low and lending rates high, it’s gone a bit quiet on the eco and ethical front. So can we afford to care?

Financial times are changing

A Which? Money survey earlier this year showed that 42% of members would accept a slightly lower rate of return on their investments if they knew the provider was investing ethically.

But as we enter National Ethical Investment Week on Sunday I’m not convinced this is still true. As we all have to tighten our belts, can we afford to take a hit on our wallet in order to act ethically?

The position is probably most stark with products like carbon offset. A couple of years ago it was all the rage. But unlike green banking or ethical investing, carbon offset has a clear price tag with no financial return for the consumer.

When I investigated the carbon offset market for a Which? report last year, my initial scepticism gave way to an acceptance that we need to take individual responsibility for our impact on the environment. But I admit, my environmental principles would be at risk of going out of the window if I had to make significant cuts to my spending.

Do your bit in your own way

My own answer is to separate the two issues. One of my passions is the preservation of forests and woodland. So I support offset projects in this area, splitting my donations between two of my favourite charities – the Woodland Trust working in the UK and the World Land Trust preserving the rainforest.

As for my finances, I’ll be hunting for the best returns on my savings and investments. If a provider with a clear ethical policy (such as Co-operative Bank) comes out top on rate, then great.

If not, I’ll be chasing the highest rate and putting my efforts into reducing my environmental and social impact in ways that don’t cost me cash, whether that’s through Amnesty International’s urgent action network, donating old clothes to charity or simply making more effort to recycle.

I’m still open-minded though – if you’ve found an account or a fund that both beats the market and leaves you with a clear conscience, we’d love to hear about it.


I’d love to be ethical in my banking, but I can only find 2 banks that seem to offer ethical accounts and which offer accounts that would suit my type of transactions / amounts of savings, and both have service issues which mean they are simply not PRACTICAL for me, rather than unaffordable.
The Co-Operatiove Bank offers ethical (and indeed “green”) banking, but their service is shockingly bad. In the first place I had an account with them some years ago and they made a huge **** up over a standing payment form one of my accounts with them to another of my accounts with them. For over a year they recorded a negative credit reference agency entry every month against me, but never alerted me to the issue let alone put it right, which as it was entirely of their own making you’d think they might. I discovered the error and the trail of negative records quite by change and then had to argue for several weeks with them. IN the end they put things right only when I wrote to their then MD, Mervyn Pedalty and copied my letter to the Guardian and the Banking Ombudsman.
By that time I had closed my accounts in protest.
More recently I considered returning to them on purely ethical grounds, but discovered that whilst my present bank and two other credit card companies are more than happy to issue to me a card that does not use a PIN, due to a sight disability, the Co-Op refuses point blank to do this, even when they have been presented with a letter from my optician. Various staff there have said that this is “not a valid enough reason” and even that “such cards don’t exist” (they have been a bit embarrassed when I have used my existing cards in their card readers and found that they most certainly DO exist!). That alone makes it impractical for me to operate a current account with them, but a chronic shortage of branches means that even saving with them would be impractical for me as most of my savings are paid in in the form of quite small cash sums. (I did point out that they were contravening the Disability Discrimination Act over the card issue, but they claimed that as I was not currently a customer they were not breaking the terms of the act at all, so they obviously don’t care about gaining new customers much either.)

The other bank that I have looked at is Tridos. As far as I am aware they don’t offer a current account – if they do I would consider that seriously, provided that they can deal with the non-PIN card OK, but the same issue of no branch network makes them impractical for me for savings.

I wish that I could bank ethically, but it seems as if to do so you have to be able to carry out all of your transactions over the telephone or The Internet, and have A1 vision so you can use a PIN card.

Does anyone else know of an ethical bank with branches and good customer service? I’d love to hear about it!

Michael Botterill says:
6 November 2010

Shared Intrest are well worth looking at for savings.

Arthur Jones says:
8 November 2010

RE “My own answer is to separate the two issues.” Sorry – you can’t seperate ethics from finance. While you’re supporting conservation with your offset projects, your money is being invested in the companies which are destroying rainforests and woodlands around the world – unless you’ve made a specific effort to ensure otherwise…

Sophie Gilbert says:
9 November 2010

Can we afford to care about ethical finance? In the long run, can we afford not to is the correct question.

I echo Saphie’s comment.

T Richardson says:
8 March 2012

I had a cold call from a company called Carbon Credit Solutions asking if I was interested in investing in carbon credits. An English voice with an english accent, so I asked for the paper work. It was difficult to follow all the arguments quoted but eventually the paperwork came – minimum invest £2000. No UK address or phone number given, an Agreement to sign and to be faxed to a number in USA. This firm is not registered with the FSA and their website seems to warn against the firm.
Their next phone call asked why the signed paperwork had not yet been faxed. We said we were not proceding with the purchase. They said we had agreed to buy over the phone and this was legally binding in US law? Is this a scam? And is what they are saying true? Help!

Hi Mr Richardson,
Thanks for letting us know about this – we’ve been aware that carbon credit trading one of the latest scams going. The FSA is fielding a lot of calls about this at the moment too, and you can find out more information about the schemes here:
We’re planning to do some work on this and other scams in a forthcoming report in Which?. Would you mind emailing over the paperwork you were given so that we can take a look at it?
The email address is money-letters@which.co.uk

Gerry says:
21 April 2013

Hello. 3 years ago I had a pensoin of £65,296.97 I took 25% cash free lump sum from this being £16,324.24. I have read on the internet, that I can take a 25% tax free lump sum from any new money saved into a pension. My SIPP will have £144,500 in a years time. So if we take the £65,296.97 from £145,500 which leaves £80,204 Am I then allowed to take 25% from the amount of £80,204? being £20,051? Thanks for your time Gerry

The amount of previous pension or tax free cash you have taken from it is irrelevant to the calculation for other pension schemes.

If you have a SIPP fund worth £144,500, you can take 25% of that as tax-free cash.

£144,500 / 4 = £36,125