Banking Overview
How much do you know about your bank? Do you know what type of businesses it lends to?
Does it refuse to lend to companies with poor human rights records, that sell arms or pollute the environment, for example? Does your bank offer services to those on low incomes or the unemployed? And how many women sit on its board?
Such questions often go unasked of the banking sector. But the same caring principles that make you buy Fairtrade goods and recycle household waste can be applied to how you bank too.
Key green and ethical issues to consider
Finding a green or ethical banking option
How banks use your money
The money that you deposit in your current or savings account doesn't just sit there untouched until you require it again - your bank lends it on to others at interest.
Banks don't just lend money to current account-holding customers either, they lend to large corporations, public institutions and even governments.
As many banks are listed on the stock exchange, they are answerable to external shareholders who expect healthy returns on their investments.
While the Treasury hands down some prohibitions as to who banks can and can't do business with, it still leaves them relatively free to engage with companies that you might not approve of and they use your money to do it.
Would you approve if your bank was lending money to heavy polluting industries or even to an oppressive regime?
Key green and ethical issues to consider
Responsible Lending
The recent global economic downturn is often attributed to the 'sub prime crisis'.
Sub prime lending means giving loans to people who are considered to be in higher risk categories - those more likely to default or who have a poor credit history, for example.
This type of lending is not problematic in itself - credit unions and community development finance institutions regularly lend to sub prime candidates. Instead, irresponsible lending to customers in the sub prime category is the problem.
In the build up to the 'crunch' some financial institutions were lending 100% mortgages (and in some cases more) to people who would not be able to make their repayments in the long term.
Lending responsibly shouldn't be limited to just mortgages - it applies to all loans, big and small, and to the provision of credit cards too. Figures from the Bank of England show that UK residents owe £233bn on credit cards, overdrafts and other loans.
Key questions to ask: Does your bank have responsible lending policies that ensure that its products are targeted in an appropriate manner? And does it provide advice or debt management services to customers who fall into financial difficulty?
Climate Change and the Environment
Banks have an impact in these areas, not just in terms of who they lend to or invest in, but how they run their own operations. It is important to find out what your bank is doing to improve its environmental performance as a business: have they pledged to go carbon neutral for example? Or do they offer any green products to their customers?
Financial Exclusion
There are an estimated two million people in the UK without even the most basic bank account. Is your bank doing anything to address this situation?
For more details see our Financial Exclusion section.
Project Finance
In its most basic form, this type of financing is for companies and governments where lenders are repaid through the revenues generated, i.e. the lender has a vested interest in the success of a project.
Common projects receiving finance are petrochemical and chemical plants, power plants, telecommunications and infrastructure. But do lenders ensure that these projects are conducted in a green or ethical way?
Use our search facility to find out about your bank's policy on the environment, ethical lending, responsibility towards its customers, equal opportunities and other issues.
Finding a green or ethical banking option
Building Societies and Credit Unions
Mutual building societies and credit unions are generally smaller, customer-owned operations that primarily lend to individuals and so are less likely to have the same exposure to issues like the arms trade, for example.
Green and Ethical Alternatives
There are a number of banks and building societies with prominent green and ethical credentials.
- Co-operative Bank: this bank's robust green and ethical policies govern its current accounts, savings and investment products.
- Smile: this internet arm of the Co-operative Bank shares the parent company's ethical policy.
- Triodos Bank: this bank offers green and ethical savings accounts and investments. The bank was established in 1980 in the Netherlands and now has significant operations in the UK.
- Ecology Building Society: this mutual building society offers a range of green savings accounts and mortgage options.
- Charity Bank: this bank invests through loans to benefit charities and communities. It offers saving accounts and cash ISAs to consumers.
You can use the banking section search to find the banks that perform best against our green and ethical criteria.
Your next steps
What do you do now? Check out our guide Next Steps - Banking for information on how to give your bank account a green and ethical makeover.
Useful links to know
The Financial Conduct Authority (FCA) regulates the financial services industry in the UK. The FCA aims to protect consumers, ensure the industry remains stable and promote healthy competition between financial services providers. The FCA has a useful guide to your banking rights. Visit www.fca.org.uk or call the FCA consumer hotline 0800 111 6768 for more information on your rights and the FCA's work.
The Prudential Regulation Authority (PRA) www.bankofengland.co.uk is part of the Bank of England and is responsible for the prudential regulation and supervision of banks, building societies, credit unions, insurers and investment firms. It supervises financial institutions at the level of the individual firm.
The Financial Ombudsman Service www.financial-ombudsman.org.uk is a service set up by the UK Parliament to sort out individual complaints that consumers and financial businesses are not able to sort out themselves.
Banking Search
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Bank / Building Society Profile
Bank of Scotland
Green/Ethical Products
- Cash Account,
- It offers banking initiatives for the not for profit sector, e.g. Bank of Scotland Interest First Account, a charity account which offers an advance payment of up to 12 months’ interest, at a guaranteed fixed rate.
Ethical Lending or Insurance
Since 2011 Bank of Scotland’s parent company Lloyds Banking Group has used its Environmental Risk Screening Tool (ERST) to assess its environmental risk in its transactions. Transactions are dealt with on a case-by-case basis, with over 13,700 transactions assessed since the introduction of ERST.
Lloyds Banking Group is also a signatory to the Equator Principles, in order to support its approach to assessing and managing environmental and social issues in project finance transactions.
However, it does not disclose the lending exclusion criteria.
The Group’s specialised Environmental Risk team apply detailed focus to the transactions ERST identifies with potentially heightened environmental risks. They are also supported by the Group’s Panel of environmental consultants.
Lloyds Banking Group is also a signatory to the Equator Principles, in order to support its approach to assessing and managing environmental and social issues in project finance transactions. The Group report publically on the transactions, their categorisation and outcomes that fell in to the scope of this framework. In 2012, no transactions were declined or approved with exceptions as a result of this process
Human Rights
Bank of Scotland’s parent company Lloyds Banking Group has a human rights policy which applies across all its business practices worldwide. (See Here). This according to their 2012 Code of Business Responsibility applies to their investment, lending and service operations.
Applies the Equator Principles to applicable projects which includes an assessment in respect of Human Rights.
Financial Exclusion
Offers:
- Cash Account.
- Community Finance.
- Basic Bank Accounts
The Bank of Scotland supports around 40 remote communities in Scotland by providing seven Bank of Scotland mobile branches. The bank's staff also makes home visits to disabled customers who cannot gain entry to the mobile branches.
Bank of Scotland provides the following in its branches:
- Ramps, clearer signage and the installation of power-assisted doors.
- Where branches have split-level banking halls, they provide internal ramps or wheelchair lifts.
- Low-level counters and counter queue rails.
- Leaflets in large print, Braille or on audio tape. These can be ordered in branches to be sent direct to the customer.
- Cheque book templates to simplify the writing of cheques.
- Bank note guide to help identify the value of bank notes.
- A raised dot on number 5 of the keypad to help identify surrounding keys.
- You can contact them via Typetalk or by using BT Textdirect.
- Induction Loops.
- Interpreting Service.
- SignVideo Interpreting System.
- Telephone/Online Banking.
Parent Company Lloyds Banking Group has:
- Aims to create a ‘Dementia Friendly Financial Services Charter’
- Made a commitment to not close a single branch if it is the last in the town.
Lloyds Banking Group's Wholesale Division has raised funds to build a new branch of Opportunity International Savings and Loans Ltd, a provider of microfinance services, in Mankessim, Ghana. The Group’s Wholesale Division has also had a long-term partnership with the charity Opportunity International over three years. As well as financial support, representatives from the Group have also provided their skills and expertise.
Financial Inclusion Report (2010)
No evidence found that the company invests in or lends at lower rates to financially excluded communities.
Environment
Lloyds TSB’s parent company Lloyds Banking Group’s environmental policies cover the areas of: climate change, energy efficiency, waste management and water usage.
Lloyds Banking Group is committed to continued improvement through its targets for 2013.
Carbon Neutral
No commitment to become fully carbon neutral was found.
Equal Opportunities
Bank of Scotland’s parent company Lloyds Banking Group has a diversity policy which takes into consideration the key equality issues of race, gender, sexuality and disability 2012 Responsible Business Report.
Women on the Board
Parent Company:
3/10 women hold top level board positions (30%).
Voluntary Standards & Initiatives
Bank of Scotland is not a member / signatory by itself of any relevant initiatives, but its parent company Lloyds Banking Group is a member of or signatory to the following relevant charter or initiatives:
- Carbon Disclosure Project
- Equator Principles
- The Prince of Wales's Corporate Leaders Group on Climate Change
- Natural Capital Leaders Platform
- The London Benchmarking Group (LBG) (a group of over 100 companies working together to measure Corporate Community Investment)
- The Banking Environment Initiative of the University of Cambridge (convened in 2010 to identify ways in which banks can collectively redirect capital away from environmentally damaging activities towards environmentally beneficial ones)
- UKSIF
- Business in the Community (a business-led charity focused on promoting responsible business practice) and its initiative Race for Opportunity, and Scottish Business in the Community
- Climatewise
- Employers Forum on Age and Employers Forum on Disability.
- Dementia Friendly Financial Services Charter.
- Go ON UK.
Charitable Giving
- Invested £85 million last year in grassroots charities, financial inclusion and capability and sports for young people.
- Much of Lloyds Banking Group’s community investment initiatives are through the Lloyds TSB Foundations and Bank of Scotland Foundation – five independent charitable Foundations supported solely by the Group.
- The Charity of the Year programme is the Group's key fundraising initiative. Lloyds Banking Group’s Charity of the Year for 2012 was Save the Children. The project raised £3.6 million to help over 12,000 children in local communities through Schools Together (FAST) projects in some of the UK’s most disadvantaged communities.
- Lloyds Banking Group has a range of community programmes supported through direct investment and encouragement of colleagues to support communities with their skills and knowledge.
- Time contributions were made by 32,000 employees in 2012 which can include supporting their existing programmes such as Money for Life and Business Connectors, or some other community project.
- In kind contributions including using company premises, their in house training or recruitment resources for community benefit.
Bank of Scotland
- Current Accounts
- Savings
- Investments
- Credit Cards
- Loans
- Mortgages
- Insurance (Car, Life, Critical Illness, Home, Income Protection).
- Student Current Account
Bank of Scotland
Bank of Scotland Plc.
PO Box 23581,
Edinburgh,
EH1 1WH.
