What is Ethical Money?

Every consumer has a choice as to who they bank with, get their mortgage or insurance cover from or where they invest their money. However, these choices are not always informed by green or ethical considerations, as financial products tend not to be viewed in the same light as other consumer products.

But the very same principles that make you buy Fairtrade goods and recycle your household waste, principles of caring about other people and the environment, are just as relevant to who you get your financial products from. 

Ethical money is broadly about considering ethical issues as well as your own financial goals when making personal financial decisions. What those ethical issues might be depends on you and your values.

There are many pressing issues out there, such as climate change, arms dealing, human rights abuses, oppressive regimes and world poverty - for those issues you feel strongly about, why not express your views through your finances?

If you avoid a certain product on a supermarket shelf because you know it has been tested on animals you should consider asking your bank who it lends to – as it might just be helping to finance such testing. If you have switched to a green energy provider you might want to consider where your ISA is being invested – it may be in fossil fuels. If you don’t buy from a certain store because you suspect their clothes were produced in a sweat shop, consider who insures their premises or owns shares in their company. 

Questions you need to ask

Ethical money is not just about the companies your bank or other providers lend to or invest in, but also how they conduct their own operations and treat their staff and everyday customers. 

  • Big high street banks and insurance companies have thousands of branches and offices all over the country – are they doing anything to reduce their energy consumption or recycle their waste?
  • What are their policies on equal opportunities and how many women sit on their boards?
  • Do your financial providers offer debt advice services to their customers?
  • Do they offer basic bank accounts or services to low income or unemployed customers?
  • Do they run thorough checks before issuing credit cards, loans, overdrafts or mortgages to customers to ensure they can make their repayments?

How to use this site

This site aims to give consumers the resources they need to make informed choices about where to save, invest and borrow their money in line with their ethical views, and to shed some light on just how significant those choices are. 

To find out how your providers use your money or what they are doing to improve their performance in areas like the environment or carbon consumption or the type of questions you should be asking of them, check out our individual sections on each area of finance. 

Before you look for green and ethical financial products or product providers, it is also important to ask yourself some questions too. What are the most important green and ethical issues to you and what are you willing to compromise on? 

If you are concerned with climate change and the environment you need to consider financial institutions’ ethical lending or ethical insurance policies to ensure they don’t lend to or insure heavy polluters. You’ll also need to consider the environmental policies that govern individual institution’s business operations or the types of companies a fund invests in.

If you’re concerned with human rights you should look at the type of companies your pension fund or ISA invests in – might they be operating in countries known for human rights abuses or financing companies producing equipment to be used in torture? 

The unfortunate reality is that you will find it hard to find a financial institution or fund that addresses all of your concerns. It is important to prioritise the issues that matter to you as compromise may be inevitable. Some funds, for example, might invest in tobacco or oil companies while screening out arms manufacturers, while others might screen out alcohol production while investing in supermarkets that sell it.