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Three ways to make your money more eco-friendly

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Go green with your money — from banking to investments and pension pots, this is how to make your finances more sustainable and support both climate and social justice while you’re at it.

In recent years there’s been a growing shift to more sustainable financial offerings, from the rise of ethical investments to the growing chorus for the pensions industry to be net zero by 2050, and with the COP26 summit taking place in just a few weeks, now’s a great time to see how you can bring some sustainability into your own financial dealings.

A man inputs his credit card details online on a laptop
Managing finances online
Green banking

Taking a look at your everyday banking practices could be a great place to start, and here, you want to make sure that your chosen bank aligns with your green principles – does it steer clear of investing in fossil fuels, is it actively working to bring down its carbon footprint, and has it put environmental, social and governance (ESG) considerations front and centre?

The Co-operative Bank could fit the bill, not only for its long-held Ethical Policy but also for it recently achieving the best ESG rating of any UK high street bank, alongside a track record of being beyond carbon neutral for over a decade.

Triodos Bank could be worth a look, too, with a clear focus on sustainability and a commitment to only finance companies that focus on people, the environment or culture. Then there are digital-only banks, such as Starling, which have the distinct advantage that their lack of branches and paperless way of operating instantly lowers their carbon footprint.

Analysing a hard copy of investments with a calculator to see if they are worth the value
Banking. © Steve Buissinne.
Invest ethically

The same considerations apply when it comes to investing, and with 46% of respondents to Prudential’s recent survey considering ESG investments, such focus looks set to continue. “The desire to live more sustainably is accelerating,” said Catriona McInally, investment expert at Prudential UK. “Whether that’s making small changes daily such as recycling through to altering their investment portfolio to support more socially responsible funds … [it’s] become a growing trend which more and more individuals are now attuned to.”

Yet taking an eco-friendly approach with your investment decisions doesn’t mean you’ll be sacrificing returns. In fact it’s quite the opposite, with evidence showing that ethical funds continue to outperform their non-ethical counterparts, and it’s a track record that holds true whether you’re looking at short or long-term investment horizons.

According to data from, ethical funds returned 19.87% over the past year compared with 17.89% from their non-ethical equivalents, and this gap widens further when looking at returns over the last five years (73.51% vs. 51.79%), 10 years (142.50% vs. 109.59%) and 15 years (253.97% vs. 170.27%).

Rachel Springall, finance expert at the data provider, is at pains to point out that past performance is no guarantee of future returns, but the results are nonetheless stark. “It is encouraging to witness the resilience of ethical funds,” she said. “This may not just entice those keen to invest more responsibly, but also those chasing good returns.”

A row of coins with plants sprouting from the top of each row to illustrate how successful green banking can be
Investing in green banking © Nattanan Kanchanaprat.
Be smart with your pension

It can be a little more difficult to create a green pension, particularly with many pension funds continuing to invest in the oil and gas industries. Yet this may not be the case for long, with an increasing number of the largest pension funds pledging to halve their portfolio emissions by 2030 and reach full net zero by 2050, and some – such as Nest – are already divesting from fossil fuels.

There’s even one pension provider that’s already hit the target, with Cushon announcing the launch of a net zero pension earlier this year. “We know that people want their retirement saving to help tackle climate change without sacrificing returns,” said Ben Pollard, Founder and CEO of Cushon. “We wanted to find a very real way of making this work by delivering a pension that is Net Zero now. By choosing a Net Zero pension, employers are helping their employees have a direct and significant impact on climate change.”

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