Are you looking for an ethical business bank account? Do you want to be more sustainable with your company’s finances rather than banking with the traditional old boys?
Yes, me too.
In 2023, I started up my own business and went self-employed. The quest was on to find an ethical and sustainable business bank to lower my overall environmental impact.
This is because who you bank with – personal or business – has a huge impact on your carbon footprint. You might not think so, but it’s true.
A business might look highly sustainable on the surface – use renewable energy, offsets emissions and limits their use of plastic – but all this good work can be undone if they bank with one of the worst banks for sustainability.
So, I’m glad you’re here looking at the most ethical business bank options with me. I’ve been through the same process and come out of the other end. After we’ve discussed the best banks, I’ll let you know which business bank account I went with. I’ll also discuss a few other important areas all to do with ethical business banking.
- Top Ethical Business Bank Accounts
- How your business bank could be undermining your sustainability
- What do unethical business banks fund?
- What can you do about it?
- What Makes an Ethical Business Bank?
- The Unethical Business Accounts Not to Bank With
- So, who did I switch to?
Top Ethical Business Bank Accounts
So, let’s get straight to it.
In this section, we will discuss some of the most ethical business bank accounts available in the UK. These banks prioritise social and environmental responsibility while providing essential banking services to businesses.
1. Triodos Bank
Triodos Bank is well-known for its dedication to ethical and sustainable banking. Founded in 1980 in the Netherlands, Triodos was granted a UK banking licence in 2019.
Rather than just avoiding the negative business, Triodos’ policy is to actively help create a better society and fight the environmental disaster by backing businesses who are aiming to have a positive change. Triodos Bank will only invest in companies and projects that have a positive impact on society and the environment. You can read my full Triodos Bank review here.
Although top of the list, there’s a big caveat with Triodos. Unless you already have a current account, they are no longer (at the time of writing) accepting new applications for business or charity bank accounts.
This is very much a shame. For that reason, I won’t get into the details of the business bank offering. If anything changes in future, I will of course update.
You can take a look at the Triodos business bank account section here.
2. Monzo Business Bank
Monzo is one of my favourite banks. I’ve been using their personal current account for a number of years now and it’s been great. But what about their business bank account?
The business bank account from Monzo is equally as good. This was backed up in 2022 as Monzo won the 2022 Best Business Banking Provider at the British Bank Awards.
I like the user interface and the easiness of their app. As a digital bank, you’d expect their app to be slick. I also like the fact you can integrate accounting software and send invoices. At £5 a month for their Pro business account, I think this is well worth the money.
Being a more ethical bank, Monzo have a list of businesses they don’t support in their eligibility section. Some of these industries include: mining and quarrying, consumer credit or lending money, defence and weapons, shell companies and gambling. Read my Monzo bank review here.
Highlights of Monzo business bank:
- Business bank account options: Lite (Free), Pro (£5 a month)
- Create tax pots and choose a percentage to be automatically set aside (pro)
- Send up standard pots (free) – I use this for pension
- Free and instant UK bank transfers
- Earn interest on savings (free)
- Connect accounting tools e.g. Xero (pro)
- Create, send and track (invoices)
- FCA regulated and FSCS protected bank
Find more information on the Monzo business bank accounts here
3. Co-op Bank
Co-operative Bank’s business account is another excellent choice for socially conscious businesses.
The bank has a strong focus on social responsibility and ethical lending, applying strict criteria to ensure that the Co-op’s investments align with its member-generated values. Their ethical lending policy covers human rights, environmental impact (including fossil fuels and climate change) and animal welfare. This is comprehensive and probably the leading ethical policy in the banking sector.
The Co-op Bank offers various business current accounts and financial services for small businesses, bigger organisations and start-ups.
Although Co-op have a number of options, their two most popular business bank accounts are the standard current account (free) for sole traders and single directors, and the Business Directplus (paid) for businesses of any size.
Highlights of Co-op’s business bank account:
- Business bank account options: Business Current Account (Free), Business Directplus (30 months free [if balance stays above £1,000], then £7 a month). They also have other specialist accounts.
- Free integration of accounting software e.g. Xero and Sage
- Payment request app
- Pay in cheques and cash in branch
- FCA regulated and FSCS protected bank
Find more information on Co-op business bank accounts here
4. Tide Bank
In the digital banking space, Tide has quickly risen as a formidable player for all small to medium sized businesses, including for freelancers. This is because Tide specialises in business bank accounts and nothing else.
Tide isn’t technically a bank, think of them more like a technology company. They offer a no-nonsense approach to business banking with a suite of tools to streamline business processes, from invoicing to expense management.
Their commitment to innovation is evident in the regular feature updates and enhancements they introduce based on user feedback.
In 2021, Tide started measuring all of their green gas emissions. With this, they formulated a net zero plan, which involves removing 100% of their emissions. They are also committed to making net zero easier to achieve for their members, which make up around 9% of UK SMEs.
Highlights of Tide’s business bank account:
- Four business bank account options: Free, Plus (£9.99 a month), Pro (£18.99 a month), Cashback (£49.99 a month)
- All business bank accounts offer accounting integrations
- Scheduled payments
- Create and send invoices (all accounts)
- FCA regulated and FSCS protected bank
5. Starling Bank
Starling has made a name for itself as a front-runner in the ethical banking space. I’ve heard good reviews from fellow self-employed folk who are using Starling’s business account. Around 500,000 businesses now use Starling for their banking.
I actually had a sole trader account with Starling and was very happy with it. I then applied for a business account, but my application was rejected. No idea why, they wouldn’t give me an explanation. For this reason, I had to close my Starling business bank account down.
With my experience on Starling’s sole trader account, the app is fairly easy to use, although I don’t think it’s as good or as clear as Monzo. You can categorise all incomings and outgoings, and you can integrate the bank account with accounting software.
Starling has a strong ethical backbone. They’ve made it clear about the types of businesses they can’t associate with. This includes certain sectors that are not environmentally friendly, such as defence and weapons, mining and the sale and distribution of oil, fuel, wood, gas, charcoal and coal. You can read up on my Starling bank review here.
Highlights of Starling business bank:
- Business bank account options: Basic (Free), Business Plus (£7 a month)
- Fully digital bank
- Schedule and categorise payments
- Create and send invoices (paid)
- Set money aside in spaces e.g. for pensions and tax
- Free UK bank transfers and cash withdrawals
- Integration with accounting tools like Xero, QuickBooks and FreeAgent
- Multi-director access
- FCA regulated and FSCS protected bank
For more details about Starling’s business bank accounts, check out their website.
6. Reliance Bank
Reliance Bank are wholly owned by The Salvation Army International Trust. They have a strong focus on ethical banking practices and give a portion of their profits to The Salvation Army to support charitable initiatives. In the past 15 years, Reliance Bank have donated over £8 million to The Salvation Army.
On the ‘Impact’ section of their website, Reliance state they are keen to support social purpose organisations who tend to get overlooked by the big traditional banks. This is very commendable. Reliance have a strict and ethical transparency code of who they won’t finance, including companies which derive more than 10% of revenues from tar sands, oil and coal.
Reliance offers a range of business banking services, including current accounts and business loans. They may not be as digitally native as the newer fintech banks, but you should be able to do all of the business essentials. For me, I want an all-singing, all-dancing digital app for my business bank account, so Reliance doesn’t quite hit the mark here.
Highlights of Reliance business bank account:
- One business bank account option (free)
- Business Visa debit card
- Chequebook and paying-in book (can be used for deposits at Natwest or RBS)
- Access to internet banking
- FCA regulated and FSCS protected bank
More details on Reliance Bank’s business account here
How your business bank could be undermining your sustainability
More and more businesses are prioritising their efforts against the climate crisis. This is great news.
But what many people don’t realise is that money sitting in a bank account can be a major source of carbon emissions. Especially so when it’s deposited in the wrong type of bank account: an unethical one. The more cash in the bank, the bigger the potential impact.
A great study into financial deposits by The Carbon Bankroll uncovered some eye-watering stats.
The study found that cash and investments held by big companies, such as Google, Amazon, Microsoft and Paypal, by far exceeded all other emissions at the respective companies. And not even just direct emissions, all the emissions from their supply chains too. Here are some shocking facts from 2021:
- Paypal’s financial footprint was 55X larger than all of their other emissions
- Google’s money footprint was 38X than their total operational emissions over the last 5 years
- Netflix’s financial footprint was 10X larger than all of the emissions from the worldwide streaming of Netflix
This all comes down to having money deposited at unethical banks who pump money into environmentally damaging, carbon-intensive industries.
Now, I’m not saying you have as much cash as Google and Amazon, but the same principles apply, just on a smaller scale.
What do unethical business banks fund?
Banks do more with your money than just holding it. It doesn’t just sit idly in your account.
Although the investment side and deposit side of a bank are separate, at the end of the day it’s one company operating as a whole. So, any money in one of the major traditional banks indirectly supports investment decisions.
Banks use their finances to fund other projects, developments and give out business loans. Where all this money goes depends on their policies. For unethical banks, not many industries are off-limits in terms of who they might invest in. As long as they can see a return on their investment it’s fair game.
Data from Banking on Climate Chaos tells us that since 2016, the 60 largest banks in the world have put 50 times more into fossil fuel expansion than the fossil fuel companies themselves. I think that’s incredible. The banking industry is funding the climate crisis.
Many of the traditional, corporate banks will be supporting:
- Fossil fuel sector and new exploration projects
- Tar sands
- Coal mining
- Nuclear weapons and the arms industry
You’ve then also got the social issues, such as:
- Engaging in tax evasion tactics
- Hefty salaries for the suits
- Large gender pay gaps
What can you do about it?
It’s that simple. As is switching.
According to the stats gathered by pay.uk, more people and businesses have switched banks in 2023 using the Current Account Switch Service (CASS) than ever before.
Switching your bank account is now as straightforward as swapping your electricity provider. A couple of clicks online and the CASS take care of everything else.
I’ve switched banks three times now — my personal account, joint account and business account. All smooth, all easy.
The service even transfers direct debits and saved payment details, as well as putting on a forwarding service on your old account to capture any overlooked incoming payments.
What Makes an Ethical Business Bank?
An ethical business bank differentiates itself from traditional banks by prioritising social and environmental values.
In an ideal world, an ethical bank will ensure the money it holds, lends or invests goes to supporting sustainable initiatives and promoting positive change. Examples of these projects include renewable energy, organic farming, fair trade, social housing and community development.
An ethical bank should also be committing to carbon emissions reduction targets, have policies around this and publish an environmental report.
Realistically, there’s a grey line between actively doing good and just avoiding creating a negative impact.
How we know the difference is all to do with transparency. This is a cornerstone of an ethical business bank.
An ethical business bank will openly share information about their lending and investment practices, as well as pay their fair share of taxes and not be registered in a tax haven.
Customers who bank with ethical institutions can have peace of mind that their money is not being used to support harmful industries.
Many ethical banks, like the ones highlighted in my most ethical banks, demonstrate their commitment to these values by continually reviewing and adjusting their policies and lending practices to reflect the ever-changing needs of the environment and society.
The Unethical Business Accounts Not to Bank With
As you’ve heard, not all banks and financial institutions adhere to the same strong ethical principles. Many of the high street banks and old stalwarts engage in some seriously shady activities that cause untold damage to the environment.
Here are some of the prominent banks with poor ethical and sustainability credentials:
- Barclays – Faced numerous controversies over its financing of fossil fuels, particularly coal and tar sands projects. Barclays are one of the biggest backers of the fossil fuel industry in the world. In addition to this, the bank has been involved in ethical scandals such as rigging foreign exchange rates and manipulating LIBOR.
- HSBC – Another bank with a questionable ethical track record. In the past, it has been accused of money laundering, financing sectors such as arms manufacturing and the fossil fuel industry. Like Barclays, HSBC are a major provider of fossil fuel industry financing.
- NatWest and RBS (Royal Bank of Scotland) – Part of the same financial group, they’ve attracted criticism for their support of the fossil fuel industry, particularly oil and gas extraction. Additionally, the group has been implicated in manipulation of financial benchmarks, which undermines confidence in its approach to ethical business.
- Santander – Has drawn scrutiny from many sides for financing environmentally-harmful industries, including coal mining and deforestation projects. The bank has also been associated with various corruption and money laundering scandals.
- Lloyds – Faced allegations of mis-selling financial products, involvement in the LIBOR scandal, and support for fossil fuels through commercial lending to big energy companies.
So, who did I switch to?
In the end, I switched my business bank account to Monzo.
This was because of a few reasons.
Firstly, at the time of looking Triodos bank weren’t accepting any new applications for business and charity customers. This is a shame as Triodos are a bank actively doing good in the world.
I did apply to Starling as I already had a sole trader account with them. My application got rejected without any explanation.
I have a current account with Monzo and looked at their business bank account next. I was impressed. They also have a big long list of businesses and industries that they won’t accept. I’m now happily set up with a Monzo business bank account and would certainly recommend them.
Liked that? You’ll like to read these on ethical money…
I’m the Creator and Editor of Tiny Eco Home Life. I write and publish information about living a more sustainable, environmentally friendly life. Away from the laptop, I love spending time in nature and with my young family (plus Murphy the dog!). I write and send out the Eco Life Newsletter.