Saturday 22 April is Earth Day and this year’s theme is ‘Invest in our Planet’. The aim of this campaign is to engage governments, businesses and organisations to be more accountable for their environmental actions. Many of our clients play their part by focusing on sustainable, ethical options for pensions, savings and investments. Let’s look at how you can make positive, eco-conscious decisions when it comes to banking and your financial strategy.
At Balance:Wealth, our team believe strongly in reducing our impact on the planet and this includes how we provide our financial strategies. There are many ways you can contribute, from using sustainable finance to ESG investing (environmental, social and governance).
What is sustainable finance?
Many people are unaware of the fact that their bank account savings are often invested in companies producing fossil fuels, weapons or in other contentious areas. Due to growing demand, an increasing number of banks and providers are rethinking their investment strategies. There is an increasing trend towards investing in more sustainable areas, such as renewable energies, low-carbon solutions and waste reduction.
Below are a few ideas you could consider:
- Ethical and sustainable bank accounts. Most people avoid changing their bank account because they expect it will involve a lot of hassle. But there are a growing number of green banks offering an easy account switching service. Starling, Monzo, and Triodos are all UK banks with current accounts that don’t invest in fossil fuels.
- Environmentally friendly debit cards. Almost every product you buy will have its own carbon footprint. Ekko and Tred are debit cards that track the environment impact of your spend. Ekko has a mobile app so you can see your impact, and they offset your spend with tree planting and plastic bottle recycling.
- Ethical credit card. Nationwide was listed by ‘Good With Money’ as one of the UK’s most ethical credit cards in 2022. Nationwide is a building society and not a bank. As building societies are owned by their members, they have a stronger say in the ethical direction of the organisation.
Before switching to any type of account or financial product, please speak to our team. We can advise you on whether this is the right approach for your financial situation.
What is ethical investing?
An ethical and sustainable investment strategy considers certain financial factors when determining key decisions. Nowadays, there are a variety of terms being used in the ethical investment world, which can be confusing. ESG looks at ‘environmental, social and governance’ factors, while SRI focuses on ‘socially responsible investments’. Put simply, ethical investing helps you make a positive impact on the planet.
Your investment decisions would reflect your moral, social or religious values. An ethical investment, for example, might avoid companies that participate in animal testing or manufacture weapons or mine fossil fuels. Instead, you could invest in companies that contribute to climate change solutions or have good workers’ rights.
Below are two options you could consider:
- Ethical and sustainable investments. If you’re an existing investor, you could review your portfolio to see where your money is currently being invested. You can assess companies on a variety of factors, such as their carbon footprint or how they treat their workforce. There will be certain ethical characteristics which you can compare with your own set of values, and this will determine your choice of strategy.
- Ethical and eco-friendly pensions. The workplace pension provider NEST now offers an ethical strategy investing in good environmental strategies and human rights records. Likewise, Royal London also offers workplace pension plans, along with personal pensions, with a variety of ethical and sustainable funds. A SIPP (self-invested pension) might also offer you the chance to invest in areas of your choice.
Before changing your pension provider or investing strategy, please speak to our financial planners. We will review your portfolio and advise you on your options. ESG investments, for example, are subject to a rating system, so we can check and compare these for you. We can help you make an informed choice on where to invest with your preferred level of risk.
Our financial planning team will listen closely to you, so we can understand your values and investing objectives. Our aim will be to help you make the right decisions when it comes to your financial planning strategy.