Who Are The Most Ethical Banks UK 2023? [Plus Ones To Avoid!]

Top Takeaways

>> Triodos, Nationwide and Co-Op are the most ethical UK banks

>> The worst banks for ethics are Barclays, HSBC, NatWest, Lloyds and Santander

>> Choosing an ethical bank is a vote for the environment, biodiversity and a more sustainable future

>> Supporting the status quo traditional banks results in fossil fuel funding, Arctic oil exploration, Amazon deforestation, coal mining, weapons trading

Who you bank with is a powerful way to support a more sustainable world.

In fact, debating ‘is my bank ethical’ is one of the most important questions you can ask yourself if you care about sustainable living.

Ethical banks have greener investment policies, pay their fair share of tax and offer a brighter future for the environment.

The vast majority are also protected by the Financial Services Compensation Scheme (FSCS), meaning your money is just as safe in an ethical bank as it is in any other FSCS protected bank. 

The banking sector hasn’t been short of controversy in the last few years. They aren’t known for their world caring policies either.

But ethical banking alternatives in the UK do exist. They’re out there to switch to now.

I know because I’ve switched myself after realising how bad Natwest are. Only a handful of institutions can claim to be green ethical banks UK.

Let’s take a look at the best ethical banks that offer you a sustainable current account.

Most Ethical Bank
Best Digital Eco Bank
Best Traditional Choice
  • Most eco friendly bank
  • Fully transparent dealings
  • Plant-based plastic bank card
  • Certified B Corp
  • Authorised FSCS bank with more than 5 million customers
  • Publish environmental report
  • Pledged not to invest in fossil fuels
  • Great, easy to use app
  • Member owned, no external shareholders
  • The best 'traditional' choice
  • Physical branches
  • A range of accounts
Most Ethical Bank
  • Most eco friendly bank
  • Fully transparent dealings
  • Plant-based plastic bank card
  • Certified B Corp
Best Digital Eco Bank
  • Authorised FSCS bank with more than 5 million customers
  • Publish environmental report
  • Pledged not to invest in fossil fuels
  • Great, easy to use app
Best Traditional Choice
  • Member owned, no external shareholders
  • The best 'traditional' choice
  • Physical branches
  • A range of accounts

Is your bank ethical?

All banks use your money. They use the money you have deposited in your current account, as well as everyone else’s money, as a leverage to invest in other companies and projects.

You don’t really get told about this part do you? This is why it’s important to take a bigger view on how the company operates. This is also true for ISAs and savings accounts.

For further reading, you might like to have a look at my blogs on ethical Stocks and Shares ISAs and ethical savings accounts.

What are unethical banks funding with your money?

Ok, so banks use your money. But what do they use it for?

Having a current account with one of the ‘big four’ traditional banks really is a vote for the status quo.

Is this a bad thing?

If you care about the environment, yes it is a bad thing. The status quo in the traditional banking world quite often means:

  • Funding the fossil fuel industry
  • New oil and gas exploration, including in the arctic
  • Tar sands oil
  • Amazon deforestation
  • Coal mining
  • Fracking
  • Investing in nuclear weapons
  • Tax avoidance
  • Profiteering from the arms trade
  • Excessive pay for the top dogs
  • Big pay gaps between men and women

Not a good ethical list is it?

How much funding are unethical banks providing?

The latest Banking on Climate Chaos report 2023 finds that big banks across the world have provided – brace yourself – $5.5 trillion (yes, trillion) to fossil fuel companies since the 2015 Paris Climate Change Agreement. That’s $5,500,000,000,000.

Globally, fossil fuel financing has increased since the 2016 agreement to limit global warming. In 2022, $673 billion was given to fossil fuel financing.

Two of the worst UK culprits are Barclays and HSBC.

Barclays have provided over $190 billion worth of fossil fuel funding since 2016. The only slight saving grace from Barclays is that their fossil fuel funding reduced in 2022 to $16.5 billion (from $21bn in 2021). Still an awful lot.

HSBC have financed $145 billion since 2016. Their 2022 figures also dropped from just under $20bn in 2021 to $11bn last year. Other UK banks, such as Lloyds, increased their fossil fuel funding in 2022.

In my view, and in the view of many others, this isn’t compatible with the sustainable world we want to see in the future.

It’s also why many people are making the current account switch and moving to ethical banking. Without regular money from the masses, the financial power of a bank starts to diminish.

World countries for banks financing fossil fuel expansion

Since 2016, the top three banks providing fossil fuel financing are JP Morgan Chase, Citi and Wells Fargo.

However, last year the bank who provided the most money for fossil fuel expansion was the Royal Bank of Canada at $42.1 billion.

If you were to rank the worst banks by country, the top six worst offenders are:

  1. United States
  2. Canada
  3. China
  4. Japan
  5. France
  6. Great Britian

What can you do about greener banking?

Monzo green card

The great news is that switching to a green current account in 2023 couldn’t be any easier. This is thanks to the Current Account Switch Service (CASS).

Just like changing your electricity provider, switching bank account can be done at the click of a button, stress-free in about 5 minutes. I know, I’ve done it twice (personal and joint accounts).

Your new bank will then take care of everything else, switch all your direct debit payments across and have you up and running in a week.

In 2021, I switched my current account using the CASS from Natwest. I’d been with Natwest since a teenager. I’d put off switching as I thought it would be too complex, but the process has been genuinely simple.

Once I’d clicked the button to switch with CASS they literally did everything. All my direct debits and even saved payment contacts were switched across.

They even put a forwarding action on the old account for any incoming payments that you forgot about.

I wish I’d switched to an ethical bank account sooner. More on easy switching at the end.

What is ethical banking and why is it different?

Running an ethical bank account allows you to fully manage your own finances, whilst not supporting environmental damaging activities and world damaging industries.

Run a business? The same applies, which is why it’s really important from a sustainability point of view to choose an ethical business bank. I’ve recently just switched by business bank account to try lower my environmental impact.

According to Ethical Consumer, there are two major areas to look at when looking at ethical banking:

  • Investments – How does the bank invest its money?
  • Tax – Does it pay its fair share of tax?

It’s difficult to put a finger on exactly what an ethical bank does, it’s more what they don’t do which makes them a greener banking alternative.

For example, a truly ethical bank won’t invest in the fossil fuel industry or in projects that are bad for the environment.

Some of the worst environmental banks are still investing billions and billions of pounds into the fossil fuel industry. They are piling money into some of the worst environmental practices such as deep-sea drilling, Arctic oil exploration, tar sands and contributing to the deforestation of the Amazon biome, like Santander Bank.

An ethical bank won’t finance weapon deals. Some of the most unethical banks (all listed below) are funding arms trades for countries that are linked to human rights abuses.

A bank with a conscious won’t be set up in a tax haven country.

Many of the traditional banks have complicated structures and subsidiaries set up in tax havens such as the Cayman Islands, Jersey, Mauritius, Bahamas, Bermuda and a few others.

Someone contacted me to suggest that Bermuda isn’t actually a tax haven. The country doesn’t have income tax (and never have) and they do give corporate tax breaks. I’m no expert on tax but to me that sounds suspiciously like a tax haven. They say the only big bank there is HSBC who are apparently trying to leave Bermuda.

What are the most ethical banks in 2023?

If you’re interested in opening a more ethical bank account, here’s the list you need to look at. All of the banks below are protected by the FSCS.

The banks listed below can certainly claim to ethical and much more environmentally conscious. Just to state, I am not a banking expert or financial expert.

5 Greenest banks in the uK

  1. Triodos Bank
  2. Nationwide
  3. Co-Operative Bank
  4. Monzo Bank
  5. Starling Bank

These are the most ethical banks in the UK. Yes only five can be classed as ethical.

For this reason, I’m not diluting the listing with other banks to make this post more comprehensive. You can find further details below on these standings.

I have conducted my own research as well as looking at the research on the Ethical Consumer and Bank Track websites.

Websites such as Ethical Consumer are very useful. They conduct detailed research on companies and weigh up how they perform in a variety of categories, including environmental, political involvement, record on workers and human rights and product sustainability.

Details on the most ethical banks

1. Triodos Bank

triodos bank logo

Triodos was granted a UK banking license in 2019 and is by far the most ethical and eco friendly bank available in the UK.

Unlike most of the banking world, they believe they can help create a more positive society and benefit the environment, rather than just avoiding the bad stuff.

They back up their words with actions too.

Triodos are a Certified B Corp and only finance companies that focus on people, the environment or culture. They are fully transparent and publish details of each investment on their website. So far they have loaned billions of pounds across 734 positive impact projects across Europe to benefit people and the planet. They list the details of every business they lend money too. How’s that for transparency?

Triodos Bank was founded in the Netherlands in 1980, aiming to buck the trend of the banking industry. And it seems like they are doing just that.

Their current account has a fee of £3 a month, which I think this is very fair. The contactless Mastercard is made from renewable plant-based materials, such as corn and leaves, making it fully recyclable when it’s expired.

Read my full Triodos Bank review here.

Take a look at the Triodos Bank website here

2. Nationwide

nationwide logo

Nationwide are a well-known high street bank, who also happen to be one of the most ethical.

They were initially founded in 1848 and the current version of Nationwide is a result of over hundred mergers across the UK.

Nationwide Building Society, to give its full name, is a financial institution that isn’t listed on the stock market and operates as a mutual. The are owned by its members. This means it’s accountable to its members and run for their benefit, rather than shareholders.

For example, in May 2023, I received an email from Nationwide as a member to say they’d be depositing £100 in my account as part of their ‘Fairer Share Payment’ of profits.

They offer a range of current accounts, from free to FlexPlus with a £13 monthly fee, but with a few perks. They also have a good app to manage them.

Have a look at Nationwide here

3. Co-Operative Bank

The Co-Operative is an excellent eco friendly bank choice amongst the high street providers.

It has a fine and comprehensive ethical policy, which is refreshing to see.

They stay completely away from fossil fuels financing. In fact, the Co-Op state they denied banking services from companies involved in the extraction and production of fossil fuels. And they will terminate loans to companies who violate their ethical policy.

The Co-Op publish an annual sustainability report, which looks at their environmental targets, as well as social and governance commitments. From a 2019 baseline, the Co-Op bank has managed to decrease it’s operational greenhouse gas emissions by 55%.

Although the Co-Op Bank does have investments from US hedge funds, no one owns more than 25% of the shares. Some of the hedge funds include Invesco and Anchorage Capital Group, who are involved in areas such as nuclear weapons investment, palm oil plantations, political lobbying, factory farming and companies with bad animal rights records.

Visit the Co-Op bank here

4. Monzo Bank

monzo bank logo

Monzo is one of the disrupter, digital banks that came onto the scene in 2016.

They’ve grown rapidly since and become a fully-fledged, authorised FSCS bank with more than 5 million customers.

Monzo has made good improvements to its standing when it comes to environmental action and the transparency behind it. They pledge not to invest in any fossil fuel companies and are now publishing a comprehensive environmental report with full carbon emissions covering their bank and all third party suppliers.

With no physical branches, their environmental footprint is low compared to other banks and they use the carbon neutral AWS servers, which helps to make them a green bank.

You can take a closer look on whether Monzo is an ethical bank here.

In a previous edition of this article, I said: “Monzo have moved closer to Triodos as a bank who want to have a positive impact on society and the environment. I certainly commend them for their positive changes.”

I actually thinking they’ve taken a few steps back recently in terms of their ethics. Firstly, they’ve partnered up with BlackRock (huge American investment company) to offer an investment account alongside their current and saving options. A good move for their bank balance but not for the environment.

Secondly, they didn’t even bother responding to a recent Which? Money investigation into the greenest banks. Not a great look. Maybe they’re showing what their priorities are? Watch this space.

Take a look at the Monzo Bank site here

5. Starling Bank

Starling are another one of the popular app-based banks founded in 2014. They are an independent, privately owned company who started life catering for business accounts but now offer personal current accounts too. They have over 2 million customers.

Being a branchless bank but with offices in London, Southampton, Cardiff and Dublin, their carbon footprint is fairly low, particularly as they are paperless and run on renewable energy. Like Monzo, they also use the AWS servers in Dublin, which are said to be carbon neutral.

In their ethics statement, they say that they do not provide services to organisations who promote harmful behaviours, such as arms manufacturers and tobacco companies. Starling lend to UK-based individuals and small businesses, and specifically state they don’t lend to companies involved in the extraction of fossil fuels. You can read my more detailed blog on how ethical Starling Bank are.

They have recently stated that new and replacement debit cards will be made from 75% recycled PVC plastic and have pledged to become a NetZero company, which would make them a good environmental bank.

Visit the Starling Bank website here

Best of the rest for ethical UK banks

There are a number of banks occupying the middle ground. They kind of care about their ethics but not enough to make it a primary part of their identity.

They haven’t sunk as low as the major unethical banks that we shall go over below.

Of the middle-grounders, Metro Bank, Revolut, Clydesdale, Yorkshire Bank and Virgin Money are not a bad options. They all have middle of the road ethical ratings.

Which are the worst ethical banks UK?

Unfortunately, the list of unethical banks is a lot longer than the ethical list.

Not only are some of these banks still heavily funding the fossil fuel industry (e.g. Barclays are the biggest fossil fuel funder in Europe and 7th globally), but they’ve also been involved in laundering money for drug cartels (HSBC), the financial crisis (RBS), trying to expose whistleblowers (Barclays) and the rigging of bank rates and fraud (Barclays).

All of the banks listed below score very poorly in terms of ethics and environmental action.

In fact, most are downright funding climate breakdown. Every pound of money taken out of these unethical banks is a step in the right direction to sustainability.

  • Barclays
  • HSBC – including First Direct (HSBC brand) and M&S Money (50% HSBC)
  • NatWest Group – including NatWest, RBS, Coutts
  • Lloyds Banking Group – including Lloyds, Halifax, Bank of Scotland
  • Santander – including Carter Allen
  • Tesco Bank
  • Citigroup

Is switching to a green bank difficult?

No, switching to a greener bank isn’t difficult.

For many, the thought of switching bank account sounds worse than it actually is.

Transferring direct debits, updating standing orders, changing the mortgage, letting your work know your new bank details etc. No thank you, I’ll stick it out with my old bank (even if they are funding climate change and financing weapons deals!)

Fantastic news – this is an outdated view as I found early this year when switching away from Natwest.

Switching your current account to a new bank is now a stress-free, simple process. This is mainly thanks to the Current Account Switch Service (CASS). 

In the first quarter of 2023, more people switched current accounts with CASS than ever before. Over 341,000 made the move!

Even better, it’s greener banks that people are switching too. Nationwide, Triodos and Starling all had positive number of switches. Whereas Barclays, RBS and Santander saw people leave in the droves.

The trend to green banks looks clear to me!

How to switch to an eco bank?

With nearly 50 banks signed up to the service, CASS covers 99% of UK current accounts. You can check if your new bank is signed up here.

Once you’ve opened a new current account, you’ll probably be asked or there will be an option to switch your current account. Once you confirm you want to switch, that’s more or less your work done as your bank will take care of everything else. 

Switching current account won’t affect your credit rating, any payments to your old account will be redirected and you can choose a switch date to suit you. The current account switch will be complete within 7 working days. Visit the CASS website here for more details.

So, don’t let the thought of switching put you off because it’s much easier than you probably thought to make the switch to an ethical bank.

Is an ethical bank the same as an eco friendly bank?

In my eyes, ethical banking encompasses all aspects of being an eco friendly green bank

A good eco bank will have ethical policies on how they invest their money and they’ll pay tax, but they should also have environmental banking at their heart.

Ethical UK banks such as Triodos have clear environmental policies. They’ve categorically stated that they do not invest in fossil fuels and now publish a transparent environment report.

For me, any bank who wants to do good for the environment need to be doing this.

Without many to choose from, Triodos, Nationwide and Co-Op are the best green banks in the UK.

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