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
NatWest
Green/Ethical Products
- Carbon offset payments
- Basic bank accounts
- Foundation Current Account
- Community Current Account
Ethical Lending or Insurance
Natwest is part of the RBS Group.
RBS Group. RBS Group’s Policy states:
“It is our responsibility to minimise these risks and to enter into lending relationships with companies who share our commitment to responsible business practices.”
Based on the information in its 2012 Sustainability Report, RBS Group places heavy restrictions and requires enhanced due diligence for higher Environmental, Social and Ethical (ESE) risk companies in specific sectors. These sectors include power generation, gambling, defence, oil and gas, mining and metals, and forestry.
The group refuses to provide financial services to “to companies involved in either the production, sale or stockpiling of highly controversial weapons including cluster munitions and anti-personnel landmines (including bespoke components) banned under international agreement ratified by the UK.” See page 32.
However, the group does not refuse outright to lend money to companies operating in other areas typically considered to be unethical.
RBS Group’s positions on Environmental, Social and Ethical (ESE) risk companies are approved by a Senior Risk Committee and are endorsed by the Group Sustainability Committee (GSC). These positions are reviewed at least every two years.
No evidence found of the Group’s ethical lending policy in action.
Human Rights
No policy was found to indicate that NatWest avoids lending to or insuring companies that directly contribute to human rights violations.
Its parent company, RBS Group’s position on human rights states that the group assesses each lending, investment and services decision on an individual basis through its defined risk and credit committee procedures and take into account relevant social, ethical and environmental issues as a part of that process. See RBS Group Position on Human Rights.
Regarding its supply chain, RBS Group’s Human Rights Policy expects that suppliers should support and respect the protection of internationally proclaimed human rights and make sure they are not complicit in human rights abuses. They should not be complicit in discrimination child labour, or any form of forced or compulsory labour.
Human rights modules have been built into relevant compulsory online training programmes for RBS Group employees. In addition, client specific human rights risk training is delivered to risk professionals and appropriate employees across the Group.
Financial Exclusion
NatWest Bank (UK) provides the following services for financially exlcuded individuals:
- MoneySense: a free online information resource to help individuals with better money management
- Basic Bank Account
- Funding for Lending Scheme (Business) – fee-free loans for businesses who qualify
No evidence that NatWest Bank provides direct financial support to or engages in partnerships with Credit Unions and CDFIs (Community Development Finance Institutions).
However, in 2011, RBS Group, NatWest Bank’s parent company, launched its sponsorship for the Community Development Finance Association (CDFA) “Change Matters 2” performance framework, aimed at raising professional standards in the Community Development Finance Institution (CDFI) sector. The framework is one of the CDFA’s five priority commitments to build the CDFI sector, attract more investment for their members and in doing so increase access to affordable finance across the UK.
In addition, the bank group provided £5 million in funding for a new 'Community Business Loan' which was launched in October 2011. CDFIs can apply for loans of between £200,000 and £1m.
NatWest and RBS plc maintain over 4,000 ATMs and 19 Mobile Branches which operate in Scotland, England and Wales (covering 7,000 miles, making 425 stops, and serving 357 communities. The banks also provide a flying air service to the Scottish Isles, where no other banking service is available.
NatWest Bank has fitted its branches to be handicap accessible and provide induction loops at counters and during interviews.
NatWest Bank cash machines have audible tone prompts and newer machines have been installed at height suitable for wheelchair access.
For telephone contact, the bank uses Text Relay and Minicom numbers.
For customers with visual impairments, NatWest Bank provides:
- Statements, brochures and general correspondence letters, information and other literature available in Braille, large print or audiotape
- PIN numbers provided in Braille
NatWest’s parent company, RBS Group, has launched RBS Inspiring Social Enterprise. The Group’s Micro Finance Fund is an independent charity that was set up to lend directly to the social enterprise sector. The fund approved over £3 million for loans in 2012. See page 29.
No evidence found that the bank invests in or lends at lower rates to financially excluded communities.
Environment
This RBS Group Environmental Policy, which applies to the whole of Royal Bank of Scotland Group and its subsidiaries, covers the key areas of climate change, energy efficiency, water use and waste management.
The bank appears to be committed to continued improvement of its environmental performance.
Carbon Neutral
No commitment to become fully carbon neutral was found for NatWest.
However, RBS Group launched a £200m Carbon Reduction Fund in 2012 to finance the introduction of energy efficiency measures for customers. See page 29.
Equal Opportunities
RBS plc’s parent company, the RBS Group, has a diversity policy takes into consideration the key equality issues of physical characteristics, such as gender, race, age or disability, sexual orientation, beliefs and opinions.
Women on the Board
RBS Group:
4/12 women hold top level board positions (33.3%)
Voluntary Standards & Initiatives
No membership of any relevant charters or initiatives found for NatWest Bank.
However, its parent company, RBS Group, is a member of or signatory to the following relevant charter or initiatives:
- UN Global Compact
- Equator Principles—member of Equator Principles Steering Committee
- UN Guiding Principles for Business and Human Rights (Ruggie Principles)
- Carbon Disclosure Project
- Dow Jones Sustainability Index
- FTSE4Good Index
Charitable Giving
NatWest Bank supports a number of charities throughout the year, through volunteering, fundraising in all its RBS branches and accepting donations from members of the public. The key charitable campaigns supported throughout 2012 were: Comic Relief, STV Appeal, Macmillan’s Biggest Coffee Morning, Wear it Pink and BBC Children.
In 2012, RBS Group reported that its community programmes are broadly focused around supporting enterprise, community engagement and financial education. Its key programme, MoneySense, is aimed at teaching young people how to manage their money and prepare for the financial decisions in life.
In 2012, RBS Group invested £57.2 million in the communities around the world through cash donations, staff volunteering, in kind contributions and management. See page 34 for a breakdown of figures.
NatWest
- Current Accounts
- Savings
- Investments
- Credit Cards
- Loans
- Mortgages
- Insurance (Home, Car, Life, Income)
- Private Pension Fund
- Students Contents Insurance
- Student Current Account
- Graduate Account
- International Student Account
- Student Credit Card
