Eco-friendly money

See below the Eco-friendly money Sub-Actions. Click or tap the sections further below to reveal a summary of the benefits of eco-friendly money, future-gazing to help visualise how this would work for you, a thought-provoking video, a step-by-step guide outlining how to achieve this Top Action, expert tips, and useful links and references.

It is recommended that you pick one or two of the Sub-Actions to progress at a time rather than try and complete them all at once. Visit our Approach page for other tips on how to set yourself up to minimise your environmental impact and get to net zero carbon.

Have you completed this Top Action already? You would need to complete:

• all the Halfway (0.5) Sub-Actions to complete half of the Top Action.
• all the Halfway (0.5) and Full (1.0) Sub-Actions to fully complete the Top Action.

The money we have invested with financial institutions, whether that is through our bank account, savings, pension, other investments or even our mortgage is re-invested by the financial institution into enterprises which in turn impact upon the environment.

Moving our money can be a low cost and effective way of changing typical negative environmental impacts linked to our hard-earned money into positive impacts. Many providers do not charge to open or close a personal account or to move money, and moving our money might also improve financial returns over the long-term.

Passive investment of our money puts it at risk. By considering where it is invested and moving it to align with our beliefs and goals, we can support the green economy and the transition away from fossil fuels. Moving money out of current investments is known as divestment; look out for periodic news stories about various organisations or investor groups divesting from damaging industries.

Historically, environmentally damaging enterprises such as fossil fuel extraction have been a significant part of the economy and very profitable. Financial institutions have heavily invested in such industries and most continue to do so. A typical UK pension will include a large investment into companies such as BP and Shell in the fossil fuel industry.

Such companies continue to invest money in exploring for fossil fuel resources that will never be able to be extracted and burned if global climate change targets are to be achieved. Unless Governments propose to miss climate targets (or rely on unproven technology such as carbon capture and storage), such resources are essentially “stranded assets” that will not generate a financial income. The industries and stock market appears to not have fully accounted for this yet, and so a long term reduction in the share price of investments in fossil fuel companies would be likely unless they transition their activities away from fossil fuel. Investment in such companies could therefore be perceived as risky and many individuals are currently exposed to this risk, as evidenced by Semieniuk et al (2022) and reported by the Guardian. The use of fossil fuel also contributes to the significant air pollution issues in cities, causing health risks for everyone that are increasingly being recognised. A study by Vohra et al (2021), described in the Guardian, attribute a huge 8.7million global excess deaths in 2018 to air pollution from the burning of fossil fuels, one in five of the people who died that year. The use of fossil fuels can also, in some cases, help to fund wars and social injustices.

Meanwhile, it is widely recognised that renewable energy and other sustainable technologies are required to meet the future needs of humanity and such industries will be supported by governments around the world in coming decades.

It is not just fossil fuel based investments that should be considered; other unsustainable activities may include heavily polluting industries or the over-exploitation of natural resources for instance through unsuitable mineral extraction, deforestation for timber or to make space for farming, or industries that use large quantities of products associated with the ecosystem destruction, such as palm oil (see the Use eco-friendly products and services (and reduce waste) EcoTracker Top Action). Environmental considerations have historically been secondary to the core aim of most companies and countries to simply exploit natural resources and maximise monetary profits.

Thankfully, some financial institutions and funds are recognising such issues and look to only invest in enterprises that meet certain criteria, giving us more choice in where our money is invested. Furthermore, companies are increasingly accounting for environmental issues.

By taking more interest in where our money is invested, we can actually learn a lot about the world economy and exciting new enterprises that are developing. If we choose to we can find a way to invest in most types of exciting new enterprises.

Try and imagine how your life will be and how you will feel when you complete this EcoTracker Top Action. This may feel like a big change or a small change, but really focus on how the benefits of the change could impact and improve your life and the lives of others.

For instance try and imagine how you will feel about:

• your reduced environmental impact which will help avoid the worst effects of climate change and ecological breakdown within your lifetime, helping to ensure you and others can live a long and full life.
• improved long term prospects for your children and future generations, who will have a much greater opportunity to avoid climate change and ecological breakdown during their lives. They will be much safer than in the alternative future of extreme climate change and ecological breakdown and many lives will be saved. Will you be able to look your child in the eye in years to come and say that you have done everything you can to protect their future?
• improved opportunities and social justice (climate justice) for those around the world who are currently struggling with the early impacts of climate change and ecological breakdown, with many lives and livelihoods saved.
• maintaining your lifestyle whilst reducing your environmental impact.
• improving your long-term financial gains e.g. from your pension (although there is no guarantee eco-friendly money will improve your gains).
• avoiding large financial losses if the fossil fuel industry declines (although there is no guarantee eco-friendly money will avoid losses).
• supporting companies and industries that are helping to tackle climate change and ecological breakdown.
• avoiding supporting companies and industries that are contributing to climate change and ecological breakdown.
• learning more about how the world economy works.
• some of the above may be really life-changing for you and your overall standard of living.

An effective way of developing a commitment and ongoing motivation to progressing this EcoTracker Top Action is to work out which of the themes above generate the most powerful emotional responses for you personally. Then try to capture this in some way and store it for when you might need motivation later.

You might be able to create a strong image in your memory, or a link to existing memories. You might want to write down how you feel say on a post-it note or in a diary as a reminder; perhaps somewhere that you will regularly see the message or somewhere you can come back to when you want to. You might even want to share this on your ‘progress thread’ on social media. If you are feeling creative, perhaps even draw an image to represent your future. Also, consider whether you might already have an object which could trigger your motivation e.g. a picture of your children.

These steps are generic because this is your unique personal journey and you will need to explore the details for yourself, using this process and the Expert Tips below as a guide and support.

The time required to complete steps may vary quite a lot depending on your resources or skill level, or whether or not you do the work yourself or pay a professional to do it. It is recommended that you pick one or two of the Sub-Actions to progress at a time rather than try and do them all at once, and so you may go through steps multiple times for the different Sub-Actions before you have completed the Top Action.

1. Build motivation from within to complete this EcoTracker Top Action, assisted by reading the Benefits and Future-gazing to imagine how your life will improve (10 minutes)
2. Make a personal commitment and share this to social media (5 minutes)
3. Book a time in your diary for progressing your EcoTracker actions – you may wish to set up a regular slot for taking actions (5 minutes)
4. Research – read the guidance on this EcoTracker Top Action page such as the Expert Tips and you may wish to visit your community for support (30 minutes +)
5. Discuss with others in your household and agree broadly what you will do (15-30 minutes)
6. Get the resources lined up e.g. find what you need online, locate or borrow/rent/buy the materials and tools (2-3 hours)
7. Make a final decision on exactly what you will do and book in a date (15 minutes)
8. Complete all Sub-Actions to enable you to complete the Full Top Action (5 + hours)
9. Visit our Tracker page, and share your progress to social media (5 minutes). You may want to share your progress as you go through the steps for each Sub-Action.
10. Once you’ve mastered this Top Action, why not also help others in the community complete their’s, with tips and support (1 minute, periodically)

As advised by Make My Money Matter, start by educating yourself and finding out where your money is currently invested. Read Make My Money Matter and other relevant resources including Ethical Consumer.

Your current provider may have a green product available that you could switch to, or you may need to investigate and consider switching your money to a different provider with products highly-rated for eco-friendly money, such as Triodos Bank, Ecology Building Society and Abundance Investments.

Ask your providers to go green if not already; even if you plan to switch providers this is highly recommended so that they know their customers care about green issues.

Start with your largest amount of money; for many people this will be your pension. Also review your bank accounts including current and savings accounts and, when it’s time to get a mortgage/remortgage, consider your mortgage provider (and also whether they offer ‘green mortgages’, which may provide financial benefits where you have installed home energy efficiency measures – see the Reduce my home energy use EcoTracker Top Action). Review the guidance at UK Divest which may have further information specific to your circumstances.

For pensions and stocks and shares investments, there are often a wide variety of funds that you can choose to invest in, including an increasing number which broadly align with our aim to make money Eco-friendly. Funds that are branded as being eco-friendly or sustainable are not all equal, so it is important to research their investment criteria as well as their financial performance; Hargreaves Lansdown provide a beginner’s guide to the types of funds available and terminology used, Ethical Consumer outline some fossil fuel free investment funds to consider, and Good with Money recommend some pension funds. For more control, you may wish to choose to invest in specific company shares, although this involves a higher level of research and also greater risk than investing in funds and is not for everyone; also bear in mind that investment in emerging industries, smaller and less established companies can be more risky (but may potentially offer greater long term rewards). There are various rating systems for companies including those from CDP, Sustainalytics and Share Action, allowing you to choose companies that are highly rated. You might also want to consider investing in companies with business that aligns with meeting the other EcoTracker Top Actions e.g. a company that manufacturers bicycles. For employer pension schemes, investigate whether you can switch your funds to eco-friendly options; ask your employer about this. Please note this page isn’t tailored personal financial advice. If you’re not sure what’s right for you, ask a financial adviser. Investments and any income they produce can rise as well as fall in value, so you could get back less than you invest.

Switching your bank account is very easy, as outlined by the Money Advice Service. Use Switch It which rates many of the major UK banks and building societies, allowing you to choose those that are highly rated.

If you have achieved the EcoTracker Eco-friendly money Top Action and moved at least 75% of your bank account / savings / pension / investments to a provider/account/fund with eco-friendly credentials, you could go even further and aim for 100% to ensure all your money is eco-friendly. However, the target has not been set at 100% to enable some flexibility accounting for factors such as:

• many savings and investment opportunities cannot be clearly evaluated for eco-friendliness at present due to variable data quality and lack of common standards.
• lack of opportunities for some people, for instance, if your pension is fixed by your employer.
• it is worth considering retaining some diversity of investments in order to flatten out market fluctuations and stabilise returns. Some flexibility and diversity may also enable investment into countries that need investment but don’t fully demonstrate eco-friendly credentials.

Ethical Consumer: https://www.ethicalconsumer.org/money-finance

Make My Money Matter: https://makemymoneymatter.co.uk/how-to/

UK Divest: https://www.divest.org.uk/ways-to-divest

The Money Advice Service: https://www.moneyadviceservice.org.uk/en/articles/how-to-open-switch-or-close-your-bank-account

Pensions:

Good With Money: https://good-with-money.com/2020/12/22/top-5-ethical-pension-funds/

Investments

Hargreaves Lansdown: https://www.hl.co.uk/beginners-guides/responsible-investment

Ethical Consumer: https://www.ethicalconsumer.org/money-finance/shopping-guide/fossil-fuel-free-investment-funds

CDP: https://www.cdp.net/en/companies/companies-scores

Sustainalytics: https://www.sustainalytics.com/esg-ratings?industry=Energy%20Services&currentpage=2

Share Action: https://shareaction.org/research-resources/point-of-no-returns/#ranking-heatmap

Bank Accounts:

Switch It: https://switchit.money/#switch

Providers with products highly-rated for eco-friendly money:

Triodos Bank: https://www.triodos.co.uk/  

Ecology Building Society: https://www.ecology.co.uk/

Abundance Investments: https://www.abundanceinvestment.com/invest-now