Last updated: July 2016
Banking on Climate Change
A significant amount of finance for new fossil fuel extraction comes from our own banking sector, and campaigners around the world are beginning to measure and compare involvement and to name and shame the worst offenders.
The five biggest players
The top five banking groups – HSBC, Lloyds, Barclays, RBS and Santander – control 89% of small business accounts.
As we say in our current accounts guide these ‘big five’ banks have been criticised by civil society over a range of issues including investment in fossil fuels, tax avoidance, excessive directors’ pay, and for lending to nuclear weapons companies.
Are there ethical alternatives?
The good news is that there are three ‘super-ethical’ choices for current accounts in this sector not available to individual consumers. They are:
- CAF Bank – specially for charities and not-for-profits.
- Triodos – for charities or businesses with a social purpose.
- Unity Trust – for social enterprises, co-operatives and trade unions.
It may help to know, when choosing between them, that the CAF Bank is more focused on charities, Triodos on environmentally sustainable projects, and Unity Trust on social enterprise, but each crosses over into all these areas to some degree. Although Triodos is the only one to have a formal no-carbon policy, all three, because of their business models, will be effectively carbon divested.
The Charities Aid Foundation also offers investment products to charities via third-party ‘partners’. Disappointingly, not all of these are via ethically-screened funds. However CAF Bank’s own lending remains exclusively to charities and individuals.
What about The Co-op Bank?
Of the other, more mid-table choices, The Co-operative Bank is the main stand-out option. As the only company with a highly developed ethical policy, formally ruling out investing in a whole range of areas from fossil fuels to factory farming, you definitely know where your money is going. Its well publicised tricky patch seems to be behind it and it now even has a ‘Customer Union for Ethical Banking’ to keep it on track. More info >
Also worth considering are the two mutual building societies, Norwich and Peterborough or Cumberland, which, because of their business models, only invest in residential and other property and will also be effectively divested from carbon.
Company behind the brand
The Clydesdale Bank and Yorkshire Bank lost marks for the activities of their parent company National Australia Bank (NAB), which is 17.96% owned by a subsidiary of HSBC, and 12.3% owned by JP Morgan, the second biggest financier of fossil fuels according to the ‘Undermining our Future’ report.
Both shareholders caused NAB to lose marks for likely tax avoidance, investments in nuclear weapons, and membership of several free trade lobby groups.
Want to know more?
If you want to find out detailed information about a company and more about its ethical rating, then click on a brand name in the Score table.
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1. Mintel - Small Business Banking - UK - June 2015
This product guide is part of the special report into ethical money. See what else is in the report.