Want to be secure in the knowledge that your chosen bank isn’t using your money unethically, investing in harmful industries such as mining fossil fuels, deforestation and arms dealing? With our guide to understanding ethical banking in the UK, you can choose to bank better, with an institution that best aligns with your principles and objectives – be it reducing climate impact, paying staff a real living wage or avoiding investing in gambling websites, you can rest assured that your money is being used to support the causes you feel most passionate about.

Breaking the bad

Sadly, being able to ascertain which banks operate ethically is not always easy. Many of the mainstream banks have become incredibly adept at hiding their unethical practices through various strategies that mitigate scrutiny. These might include avoiding accountability by citing client confidentiality or employing complex financial structures to make it difficult to know where money is invested.

Greenwashing is another problematic factor, with some banks using misleading information, marketing materials and pledges that overstate their environmental credentials.

It’s therefore vital that a rating system is in place that can cut through the obfuscation, which is where etheco comes in. We have built a thorough, independent ratings system based on trusted data sources.

If I switch to an ethical bank, will my money still be safe?

Generally a legitimate UK bank or building society, regardless of its ethical status, will be part of the Financial Services Compensation Scheme (FSCS), which protects your money up to £85,000 per person, per institution, in the unlikely event the bank goes out of business. However, this is general information only and does not constitute financial advice. Check the FSCS website for the latest protection limits and eligibility criteria.

Is ethical banking more expensive?

Not necessarily, as many offer competitive rates that rival the mainstream banks. However, costs and features may vary between providers, so always check the details before making any decision about financial products.

Is a bank with a B Corp status the same as an ethical bank?

No, not all ethical banks have B Corp status, but B Corp certification is a strong indicator of high ethical and sustainable standards. Many ethical banks are B Corps but others might use different certifications or prefer to operate without the label.

Surely ethical banking is an oxymoron?

Ethical banking is increasingly seen as an important and growing sector within the market and not a contradiction in terms. Growing consumer demand coupled with a genuine desire by certain companies to operate a more ethical and sustainable business model has meant a growing recognition that finance doesn’t preclude positive social impact.

Is ethical banking the same as sustainable banking?

While not being exactly the same, they do overlap quite considerably. Sustainable banking focuses on the impact on the environment, while ethical banks are equally as concerned with the impact on society.