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Ethical Bank Accounts

Is there an ethical bank? Rating the ethical and environmental record of 31 UK current accounts, with recommended buys. 

We also look at app-based banking, which banks own which brands, fossil fuel investments, tax avoidance, unequal pay, and how to switch accounts. Plus we shine a spotlight on Barclays.

About Ethical Consumer

This is a product guide from Ethical Consumer, the UK's leading alternative consumer organisation. Since 1989 we've been researching and recording the social and environmental records of companies, and making the results available to you in a simple format.

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What to buy

What to look for when choosing an ethical bank account:

  • Is it lending ethically? Have a look at your bank’s lending policies, in particular the restrictions it places on the projects it will finance, to make sure your money isn’t funding unethical activities.

  • Does it pay its fair share of tax? Tax avoidance is a big issue in this sector with many banks operating in tax havens. Use our guides to find a company that is paying its fair share of tax.

Subscribe to see which companies we recommend as Best Buys and why 

What not to buy

What to avoid when choosing an ethical bank account:

  • Is it opaque about its investments? If you can’t find out what a bank is doing with your money, it’s probably better to bank elsewhere.

  • Is it financing climate change? All of the big banks have extensive investments in fossil fuels, and most are still financing expansion into new oil and gas fields which is incompatible with net zero by 2050.

  • Is it funding the arms trade? All of the big banks fund nuclear weapons producers and some have funded arms companies exporting to countries in conflict, particularly those involved in the Yemen war.

Subscribe to see which companies to avoid and why

Score table

Updated live from our research database

← Swipe left / right to view table contents →
Brand Score(out of 20) Ratings Categories Positive Scores

Our Analysis

The current account market is dominated by seven banks and building societies: Barclays, Lloyds, Halifax, Santander, NatWest, Nationwide, and HSBC. Between them they account for four out of five main current accounts in the UK.

Barclays is the most popular provider with 16% of main accounts and 12% of second accounts. Lloyds Bank and Halifax are both owned by Lloyds Group and together take 24% of the main account market. The remainder of the market is shared between around 20 providers who are very small by comparison. These include foreign banks, such as new entrant Chase, building societies, digital disruptor banks and also the Post Office.

How do you rate a bank’s ethics?

In this guide we scored banks against our core ratings on climate and the environment, and on financial issues such as director pay and tax avoidance. But banks aren’t like the companies we normally rate. They don’t make things that we can eat or wear and don't have the corresponding supply chains. That means we can’t score them directly for things like workers’ rights or palm oil sourcing. However, banks have a massive impact on the world through their loans and investments.

And it’s their choices about where they put their money that largely determine how ethical they are. We looked at the kinds of activities they’re funding and the ethical policies they have in place to prevent the financing of harmful practices.

Banks are funding harmful practices

Banks don't just passively process money but actively reshape industries, communities and ecosystems through their lending and investment choices. Their decisions about whether or not to finance a company should not, therefore, be purely economic.

We have separate forthcoming feature articles highlighting work by external NGOs documenting the relationships between the finance sector and a range of unethical practices, from Amazon deforestation to nuclear weapons production, and from fossil fuel extraction to animal cruelty.

Of the banks in this guide, HSBC, Barclays, Santander and JPMorgan Chase appear frequently in these reports.

Banks' ethical policies: are they worth the paper they’re written on?

Many banks now have policies that restrict their funding to exclude activities such as fossil fuel extraction or arms manufacture. But there is considerable variety in the strength and scope of those policies.

Triodos and the Co-operative Bank lead the field on ethical lending and investment policies.

Triodos’ standards are detailed and comprehensive, covering everything from fossil fuels to genetic modification, and are published on the bank’s website.

The same is true of the Co-op Bank, which has polled its customers and stakeholders regularly since 1992 to shape its customer-led ethical policy.

Yet, the presence of policy is no guarantee of good practice and the need for scrutiny is demonstrated by the example of NatWest. Its environmental, social and governance policies prohibit the bank from financing certain activities, yet list others as merely “restricted”. NatWest can still lend to or invest in companies engaged in these restricted activities so long as it carries out annual or bi-annual due diligence audits.

Activities listed as “restricted” include: “the manufacture, trade or sale of semi- or fully-autonomous armed unmanned aerial vehicles and depleted uranium weapons”; “non-harmful child labour”; and projects involving the “direct displacement of indigenous peoples without free prior and informed consent or resettlement of large numbers of people relating to a single project”. One could speculate that this final clause would allow for the $24 million provided by NatWest to Cargill Inc between 2015 and 2020. Cargill’s subsidiaries have been implicated in the seizure of indigenous lands across Brazil and Indonesia.

More apparently robust commitments can also prove insincere. HSBC promised to stop financing deforestation in 2017 yet in 2021 Global Witness estimated that HSBC had received over $20 million in proceeds from investment in deforestation-linked businesses since that commitment was made. Global Witness stated: “a starker illustration of why voluntary policies and commitments will not keep rainforests standing could scarcely be imagined”.

Why does the Co-op Bank score so high in ethical ratings?

For many years, the Co-operative Bank has been an Ethical Consumer Best Buy for bank accounts, despite its Ethiscore falling below those of other banks that we have not recommended. This was because of its leading ethical policy.

In the past it lost marks because it was owned by other organisations. Initially this was the Co-operative Group, the supermarket group whose farming and other activities reduced the Bank's score. More recently it was because the Bank came into the ownership of a group of US-based hedge funds following a financial crisis in 2013.

It scores highly this time because Ethical Consumer changed the way that we score complex company groups in 2021. We no longer take account of shareholdings of less than 25% in our scoring. We do, of course, discuss smaller shareholdings in our articles if we think they are important. Because no single hedge fund currently holds over 25% of the Co-operative Bank’s shares, it is no-longer picking up marks for the activities of its owners.

The Co-operative Bank has a Co-operative Union of Customers linked to Ethical Consumer. The union campaigns to return the Bank to full co-operative ownership, and keeps the Co-op Bank's ownership details updated. If you hold a Co-op Bank account and are interested in being a member of the union you can find more on the Save Our Bank website.

Banking on climate change

HSBC advert on shop front 'Climate change doesn't do borders'.
Image of HSBC's marketing slogan 'Climate change doesn't do borders', courtesy of AdFree Cities, taken in Glasgow November 2021, around the time of COP26.

Banks and greenwashing – a turn in the tide?

In their own advertising, banks paint a rosier picture of their activities, but a recent judgement might make them think twice about their greenwashing tendencies. In a significant milestone, in October 2022 the Advertising Standards Authority (ASA) banned a series of HSBC adverts (similar to the one above) because of their misleading environmental claims.

One of the banned adverts boasted of HSBC’s involvement in a tree-planting programme that claimed to “lock in 1.25 million tonnes of carbon”. The bank did not, however, advertise its far more substantial contribution to global deforestation, having provided some £5.25 billion worth of financing to some of the world’s worst deforesters since the 2015 Paris Agreement.

The ASA told HSBC that future adverts featuring environmental claims should be adequately qualified and not omit material information about its contribution to carbon dioxide and greenhouse gas emissions. The regulator’s ruling will therefore have consequences for other banks with similar investments in fossil fuels, such as Barclays.

Robbie Gilbert from AdFree Cities, which brought the complaint, welcomed the ruling:

“HSBC can no longer ply us with ads pretending they are green while continuing to bankroll climate breakdown in the background.”

This controversy comes in the wake of another climate-related PR headache for HSBC earlier this year, when their now ex-head of sustainable investment Stuart Kirk gave a talk titled “Why investors need not worry about climate risk”. Kirk was suspended, and later resigned, following a public uproar.

Much of the media focus, and resultant outrage, centred on Kirk’s deliberately provocative, joke-styled soundbites, which included him asking “who cares if Miami is six metres underwater in 100 years?” This distracted from the substance of his talk, which displayed real scepticism about the financial sector’s ability – and crucially, responsibility – to mitigate climate change.

Kirk’s suspension shows that his rhetoric is an outlier in the financial sector, but is the same true of his ideology? The onus is now on HSBC to prove that his views are “inconsistent with HSBC’s strategy” and that it takes the substance of climate change seriously, not just the optics.

A short explainer on banks and their environmental impacts.

Banking groups and banking brands: who owns which banks?

There are several banking groups in this guide, owning multiple brands:

The Co-operative Bank: The Co-operative Bank, Smile, Britannia Building Society

Lloyds Banking Group: Lloyds, Bank of Scotland, Halifax, and others

HSBC Holdings: HSBC, First Direct, part-owns M&S Money

NatWest Group (part owned by the UK Government): NatWest, Coutts, Royal Bank of Scotland, Ulster Bank

Virgin Money: Virgin Money, Clydesdale Bank, Yorkshire Bank

Santander: Santander, Cater Allen, cahoot

Many of these also feature in our guide to ethical savings accounts

The rise of the digital banks

The last few years have seen digital banks like Monzo, Starling, and Revolut further cement themselves as household names in the UK. The neobank sector has expanded beyond its foundations in current accounts to offer mortgages, savings accounts and investment products in direct competition with ‘legacy’ high-street banks. This rapid expansion has, however, courted media controversy, focused primarily on the sector’s alleged vulnerabilities to fraud and money laundering.

Neobanks present as approachable and progressively minded, and in many ways this branding is reflected in their practice. Revolut’s ads, for example, pitch to ‘money underdogs’, whilst its Twitter account regularly mocks legacy banks for their elitism and lack of innovation.

How ethical are digital banks?

Neither Revolut, Monzo nor Starling appear to finance problematic industries such as fossil fuels or the defence sector at present.

Digging deeper, however, reveals that the policies underpinning neobanks’ progressive claims are often patchy.

For example, neither Revolut, Monzo nor Starling publish dedicated environmental, social and governance (ESG) policies or reports, instead choosing to parade their ethical credentials via bitesize information chunks and impressive sounding stats on their respective websites.

This absence of firm policy could leave the door open to more problematic lending practices as these banks continue to expand. For example, whilst Monzo’s lending eligibility criteria currently excludes industries involved in mining and weapons manufacture, these exclusions are justified on pragmatic, rather than moral grounds. In Monzo’s words, “certain industries have higher risks, where we need to put extra checks and controls in place. We’re currently focusing on industries that don’t need these”. So what happens when Monzo grows?

A cynic might suspect that neobanks’ progressive, socially-conscious branding primarily serves to undercut conventional high-street banks on ethical issues. Consumers are increasingly aware of big-name banks’ dodgy practices, whilst newer and smaller challengers are yet to accumulate the same baggage.

Are digital banks better than high-street banks?

For the time being, several neobanks generally score well in our ethical table, but it will be interesting to see if their principles evolve should they capture more of the banking market.

However, banking digitally is no guarantee of banking ethically: consider newcomer Chase UK, which launched in September 2021. Chase is owned by US behemoth JPMorgan Chase, the world’s largest investor in fossil fuels and amongst the lowest scoring banks in our table.

Credit union current accounts

Credit unions specialise in savings and loans but some, such as the London Mutual Credit Union, now offer current accounts with direct debit facilities and debit cards. (Not all do, so contact your local credit union and ask). There may be a small charge but as credit unions are not-for-profit and owned by their members, they’re a good ethical alternative to mainstream banks.

Our savings account guide has more details about credit unions.

Campaigns: what can consumers do?

The last couple of years have seen a growing wave of activist action aimed at holding the financial sector to account. HSBC and Barclays have faced the most widespread protests in response to their financing of anti-planet, anti-animal and anti-human activities.

Money Rebellion, a group within Extinction Rebellion that specifically targets financial institutions, protested the 2022 AGMs of both banks, demanding they end fossil fuel investment. It is seeking new volunteers to join its campaigns, and you can find details of its campaign strategies on the Money Rebellion website.

Barclays is also facing increasing scrutiny over its shareholdings in, and loans and financial services provided to, companies selling weapons to Israel. In October 2022, campaigners picketed dozens of Barclays branches across the UK, highlighting the bank’s complicity in Israel’s regime of military occupation.

Palestine Solidarity Campaign’s campaigns officer, Lewis Backon, told Ethical Consumer:

“Research by Palestine Solidarity Campaign, Campaign Against Arms Trade, and War on Want has identified that Barclays invests over £1 billion in companies supplying weapons and military technology to Israel, used in militarised repression of Palestinians. Routine militarised repression is at the heart of Israel’s system of settlercolonialism, military occupation, and apartheid against Palestinians. We are calling on Barclays to stop facilitating Israel’s violence by ending all financial ties with companies arming Israel.

Palestinians are resisting Israel’s oppression, and calling for international solidarity with their struggle, including through campaigns targeting complicit financial institutions, like Barclays. By taking co-ordinated action, including through protests and pickets at Barclays branches, we can force Barclays to end its complicity in Israeli apartheid."

Palestine Solidarity Campaign provides a range of resources for campaigners on their website, including a template letter for Barclays customers to print and hand in to their bank managers. The website also features an online action encouraging members of the public to write to Barclays’ senior management about these issues.

Protestors holding banner 'Stop funding fossil fuel's in front of Barclays Bank building
Extinction Rebellion protestors outside Barclays Bank. Image credit: Tim Dennel.

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Banks and problematic loans and investments

Because so much of the impact banks have on the world is a result of their lending and investments we created special ratings to consider how ethical these are. We looked at how transparent banks were about who they were lending to, and how strong their policies were (see forthcoming feature article for our transparency, ethics and engagement rating table).

Where we found they were lending to particularly problematic sectors such as mining or forestry, and they did not have policies to ensure they were not funding harmful practices within those sectors, we deducted half marks in relevant categories.

For example, if a bank lent to the mining sector, we deducted marks for pollution and toxics, human rights, workers’ rights, and habitats and resources; and if a bank lent to the agriculture sector, we deducted marks for animal rights and factory farming.

Most lost marks in this way apart from Triodos, Co-op, Nationwide, and Cumberland which did not lend to problematic sectors. As Revolut and Monzo did no or minimal commercial lending they did not lose any marks.

Many banks hold shares in companies as well providing them with loans. This gives them a degree of control over those companies and means that they profit from their activities. We therefore also deducted marks for investments in companies that we have previously rated for their unethical practices.

For example, if banks held shares in poor-scoring companies such as Amazon, Walmart and Coca-Cola we deducted marks in our environment, animals and people categories. Where no information could be found about the companies a bank was invested in, we deducted the same marks in order to produce a rating that did not penalise transparency.

Banks, tax and directors’ pay

Apart from the impact of their lending, there are two other significant areas in which banks lost marks: excessive director remuneration and likely tax avoidance. All banks and building societies in the current account guide lost marks for excessive directors' pay. We have a separate feature about excessive pay coming shortly.

The highest scoring banks and building societies in our table did not lose any marks for their tax conduct but all of the big banks were marked down for likely use of tax avoidance strategies. Of the smaller banks, the tech start-up Revolut and Al Rayan lost full marks.

Political activity and banks

All of the big banks lost marks for political activity for donating to political parties or for membership of multiple lobbying groups. For example, in 2022, JPMorgan, owner of Chase, donated over US$1.6 million to both the Republican and Democrat parties in the United States.

Map of world made out of coins, with person holding magnifying glass over part of the worldy

Transparency is complicated

Top scorer and Best Buy Triodos is a leader in ethical banking. It scored 95 out of 100 in our transparency, ethics and engagement rating as it publishes information about every organisation that it lends to and has a comprehensive ethical lending and investment policy. Its transparency means that any of us can hold it to account and challenge it on its lending and investments.

Ethical Consumer and Spanish union SAT did just this in relation to ongoing allegations of workers’ rights abuses at Biosabor, a Spanish organic farming company which received financing from Triodos. Triodos reviewed the information but decided to maintain its relationship with Biosabor. As a result we deducted half a mark under the workers’ rights category.

We also received an email from a reader who, when looking at Triodos' website, noticed that it had investments in Israeli companies. One of these is a software company called Check Point with possible connections to the Israeli government. This isn't a clear case of an unethical investment or violation of the BDS call – the BDS movement doesn't explicitly call for a boycott of all Israeli companies. But it helps demonstrate why Triodos's transparency is so important.

It means that people like our readers can do their own research and make decisions based on a lot more information than most banks give.

This is not possible with any other bank, and for this reason we still think Triodos is a standout Best Buy.

Financial inclusion or exclusion: branch closures and the digital transition

Fewer than 5,000 bank branches remain in the UK, down from almost 15,000 in 2012.

The Yorkshire constituency of Wentworth and Yearne, home to 98,000 people, has been without a single bank branch since 2019, and the rate of closures shows no signs of slowing. At the same time, online and app-based banking has surged. Physical branches are closing under the growing expectation that consumers will embrace digital technologies just to participate in everyday life.

Digital proponents take it for granted that technology brings people closer together and improves their access to essential services. But this is, at best, only partially true for even the younger, urban demographics that app-based banks primarily target. In branding terms, Monzo, Starling and Revolut all place financial inclusion front and centre.

Monzo’s ‘mission’ is, apparently, to “make money work for everyone”. But banks that require a smartphone and a reasonable level of digital literacy to use are fundamentally exclusive.

Many cannot afford smartphones, and many in rural areas – the worst hit by branch closures – struggle for good signal. Older people are far more likely to feel left behind by the digital transition, whilst shuttered branches leave small communities alienated and high streets empty. The digital push for financial inclusion risks becoming a story of deepening exclusion for many across the UK.

Nationwide appears to have gone the furthest in addressing these concerns and has pledged to keep all of its 625 UK branches open until at least 2024.

How to switch to more ethical banking

Government regulation designed to reduce monopoly in the UK banking sector has forced banks to make switching accounts quick and easy, taking just seven working days.

When you open a new bank account, it will usually ask you during the application whether you want to switch. If you do, by providing the details of your old account, the switching service will move your money, direct debits and standing orders across, and close your previous account. It will also transfer any payments meant to go into your old accounts, for example your salary.

For at least three years, any money paid into the old account or wrongly down to come out of that account will be moved across into the new one. We asked about our readers’ experience.

Sarah, who recently switched from HSBC to a more ethical option, said that she was motivated to switch accounts by:

“The knowledge that my investments and any interest gained by the bank was ultimately being used (at least in part) to fund things/activities that I find abhorrent: Amazon rainforest destruction and other global warming/ecologically damaging companies. I did not previously know this. It couldn’t have been easier. The switch guarantee service was as easy as switching electric or Wi-Fi supplier.

Remortgaging is always hard but it wasn’t any harder moving banks. My only concern was why didn’t I do this sooner.”

If you are switching accounts for ethical reasons and want to write to your previous bank to let them know why, we have published a template letter for you to use.

Additional research for the guide by Shanta Bhavnani.

Company profile

Barclays Bank

It’s difficult to know where to start with Barclays. Its money has been linked to a full house of unethical activities including deforestation in West Africa, illegal mining on indigenous Amazon land, nuclear weapons, illegal Israeli settlements, and the Myanmar military.

It is one of the target companies of the Drop JBS campaign because of its funding for the Brazilian meat processor, whose cattle supply chain is consistently associated with illegal deforestation.

It also continues to be one of the top funders of oil and gas expansion despite being one of the founders of the Net Zero Banking Alliance.

As the most popular provider of main accounts in the UK, its customers have significant power if they switched, and told the bank the reasons why.

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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