Have you considered the impact your wallet is having on the environment?
Making the right financial decisions, from your mortgage right down to your pension provider, could accelerate a lower carbon footprint, but it’s vital to be absolutely certain that it is making the right difference. How you save, how you spend and how you invest can all contribute to the climate crisis without you realising.
Paying the bills without paying a heavy price needn’t be complicated either, provided you do your research. So, where can you start?
1. Switch banks
Now is the time to ensure your money isn’t funding the extraction of dirty fossil fuels.
Finding an ethical bank that aligns with the climate standards that you uphold isn’t too complex either. Triodos, Co-op Bank, Starling Bank and Nationwide all promote the fact they don’t lend to fossil fuel companies.
Triodos will not invest money in industries such as mining, fracking, coal and other fossil fuels. Last year, it provided 700,000 global households with green electricity from 561 energy projects and only finances companies that focus on people, the environment or culture. The Netherlands-based bank also offers various accounts and publishes the details of every organisation it finances.
Starling is a paperless bank without branches, immediately lowering its carbon footprint and has pledged to become a net zero company. The app-based bank aims to disrupt the world of banking, rather than the planet, and will never invest in fossil fuel firms.
It runs on 100 percent renewable energy and boasts recycled plastic credit cards. Last year, it started planting thousands of trees every month for each new bank account opened. They say money doesn’t grow on trees but it can certainly help to plant them, if you bank ethically.
2. Green mortgages
If you are buying an energy-efficient property, you may be eligible for a green mortgage. Benefits of this type of mortgage include lower interest rates and cashback offers, both designed to encourage greener standards of living.
Green mortgages in the UK are offered by several institutions including Natwest, Nationwide Building Society, Ecology Building Society and Just Group.
Just Group, a retirement specialist, introduced the UK’s first green lifetime mortgage last summer supporting Chancellor Rishi Sunak’s £2billion Green Homes Grant scheme, which enables homeowners and landlords to get grants of up to £5,000 for insulation and other energy efficiency measures.
Green mortgages are available for renovations, conversions, new self-build properties and new-build homes.
3. Responsible investing
Don’t put your money where your mouth is, put it where it will spark positive change instead, and align your investments with your values.
There is an increasing demand for clearer transparency about how money is invested, due to a closer focus on the environmental and social impacts of the companies invested in.
Impact investing, ESG (Environmental, Social & Governance) and Socially Responsible Investing (SRI) are the focus when deciding where to invest, to ensure your money is behaving ethically.
You may want to invest in a way that enables you to contribute to a community, or you may want to invest in cleaner fuels. There is plenty of scope for a responsible investor.
Companies like Nutmeg, the UK’s first online discretionary investment management company, can take the stress out of investing by monitoring your portfolio for you and regularly balancing it, ensuring you are constantly aligned with your long-term objectives.
Mirova, a social impact asset manager in France, develops innovative investment solutions for its clients to help shape a more sustainable economy. The mission-led company works to increase its positive impact on environmental and inequality issues.
Zurich-based responsAbility is a responsible investor chosen for ImpactAssets’ Top 50 Impact Funds 2021. The firm was founded to empower the developing world through microfinance.
4. Green loans
Taking out a green loan will enable you to afford energy-efficient home improvements, so you can borrow money on the proviso you are making environmentally friendly improvements to your property.
This could be anything from LED lighting to installing systems that save water but the proof has to be in the pudding, due to the Green Loan Principles (GLP), a set of guidelines and standards set up in 2018 to develop the green loan product and to reduce the risk of green washing.
Nationwide Building Society has set aside £1bn to help borrowers buy energy efficient properties as well as providing loans to homeowners wishing to make older houses more eco-friendly.
British challenger bank Tandem is a fully regulated UK bank that offers green loans. As part of its mission to be the ‘Good Green Bank’, its website offers tools to check whether your home’s energy rating can be improved.
5. Ethical pension
It’s one thing to be financially secure in your latter years but it’s another to ensure your pension pot is working for both yourself and the planet.
Today, many pension funds still support the gas and oil industries, although Nest, the UK’s biggest pension fund is divesting from fossil fuels.
The workplace pension scheme set up by the government, Nest (National Employment Savings Trust) looks at how sustainable a business is and its effect on planet resources. It has invested more in renewable energy companies and through its Climate Aware Fund, Nest has withdrawn more than £1.4bn from companies that are high contributors to climate change.
According to research, investing in organisations that are developing positive environmental and social practice will deliver the greatest returns over time, so it’s worth talking to your employer about where the work pension is being paid into.
Another option is to set up a Self-Invested Personal Pension (SIPP) to gain more control over your fund. A SIPP gives you freedom to make ethical choices, choosing from either a range of ready-made investment portfolios, or select your own.
As with most things in life, there are pros and cons. With a SIPP, there is the possibility you will get less than you put in, so it’s worth doing your homework first.
Cushon has launched the world’s first net zero pension to promote responsible investing which will engage employees with their pension and their future, when it comes to tackling the climate crisis.
Another option is The Path which invests money into clean, sustainable companies for a greater impact, working in alignment with the SDGs. The company has helped hundreds of investors to make the sustainable switch to help the UK reach its net zero goals.
6. Green energy
Green energy (or renewable/clean energy) halts the reliance on fossil fuels – and you can make savings on your energy bills.
Green energy is never going to run out, unlike fossil fuels, and choosing the environmentally friendly option is not necessarily more expensive.
Innovation in technology, bolstered by financial support from the government, means that there is an abundance of sustainable energy options, preventing pollution from clogging up the atmosphere.
Average annual UK household emissions can reach 20.2 tonnes of CO2 but by choosing a green energy supplier, such as Bulb, you could lessen your carbon impact by 3.4 tonnes.
You can find out which firms are able to provide green energy, via Ofgem’s Renewable Energy Guarantees of Origin (REGO) scheme. The energy regulator’s scheme offers transparency to consumers about the amount of electricity that suppliers source from renewable generation.
There are a number of UK domestic energy suppliers, each offering 100 percent renewable energy, including Bulb, Co-operative Energy, Ecotricity and Octopus Energy.
If greening your finances has been beneficial and helped lower your carbon footprint, I would love to hear from you to discuss it further. Contact me: firstname.lastname@example.org.
Kate O’Rourke is a Senior Consultant leading Acre’s permanent and contract hiring across pharmaceuticals, healthcare, consumer health, beauty and cosmetics across corporate sustainability and corporate affairs placements.