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10 Most Ethical Savings Accounts In The UK 2022

    most ethical savings accounts uk

    Saving money doesn’t have to be difficult or unethical. In fact, there are a lot of great options out there when it comes to ethical savings accounts.

    If you’re looking for a way to save that aligns with your values, you’re in the right place. We’ll be taking a look at the most ethical savings accounts available in the UK in 2022.

    You can find ethical saving accounts that support renewable energy projects, green businesses and charitable causes, so you can feel good about where your money is going and save sustainably.

    Plus, these ethical savings accounts often offer competitive interest rates too, so you can make sure your money is working hard for you too and for your future!

    Why open an ethical savings account?

    Ethical savings accounts are becoming an increasingly popular way to invest your hard-earned money.

    These days people are more informed about how their money is being used by banks and care more about which type of world they’d prefer to support i.e. a sustainable one!

    At the same time, it’s also clear that many people are still unaware of the ethical implications of their savings account and how their money is used to fund other projects – this was just like me until a few years ago. 

    By opening an ethical savings account, you can be sure that your money is being used in a way that aligns with your values and principles. The same thing applies with your bank to which is why you should try to opt for one the more ethical UK banks.

    There are many different types of savings accounts, including ISAs, Easy Access and Regular. This blog will primarily focus on regular and easy access savings accounts.

    With any regular savings account, you’re trusting the bank or account provider to save ethical on your behalf. They do this by ethical investing your money into different businesses, organisations and projects.

    The difference between saving and investing

    So, what’s the difference between a savings account and investing I hear you say?

    When it comes to financial planning, the terms ‘saving’ and ‘investing’ are often used interchangeably. While both saving and investing are important, they serve different purposes and there’s a big difference between the two. 

    Saving is when you set aside money into a safe, low-risk regular account. This is usually done with the aim of making sure you have cash available for a specific goal e.g. for a first house deposit, a travelling trip, or just a rainy day fund in the case of an emergency.

    Investing, on the other hand, is when you use your money to purchase assets such as stocks, shares or bonds in the hope of achieving long-term growth. Investing comes with much more risk and your money can easily decrease, as well as increase. However, over the long-term you hope to see good growth.

    This blog post is about regular savings accounts. The more low-risk variety with guaranteed interest rates that make saving easy and completely passive. You can also open cash ISAs which serve this purpose too and allow tax-free savings.

    Stocks & Shares ISA for more control but more risk

    If you want more control on exactly where your money is going and how it’s being used, which comes with a higher risk element, you will be better looking into an ethical Stocks and Shares ISA

    With a Stocks and Shares ISA, there are no set interest rates and performance your money depends on the stock performance of the individual company or fund (which are made up of numerous businesses selected by the provider). Funds take the average performance of all the businesses in that particular portfolio, which means they are a good way to de-risk your savings.

    I have a couple of stocks and shares ISAs, including an impact investment one with CIRCA5000, which work really well – my money goes into good causes, plus the returns have been very good too. 

    How does a savings account work?

    In simple terms, a savings account works like this:

    You open a savings account and deposit money into it. You will earn interest on this money, and any future money, over time. Usually the interest rates are small but guaranteed because of the low-risk nature of standard savings accounts. 

    Banks, or building societies, then loan out your money to other people, businesses and projects. They do this at a slightly higher interest rate, so they make money on your money.

    More often than not there is no charge for opening a savings account. Sometimes a provider may offer a range of similar accounts with different interest rates. For the higher interest rate accounts, they may charge a monthly fee. Whether or not this is worth it depends on how much money you have in there.

    When you want to withdraw your money from the savings account you simply make the request. This may be instantly or you might have to give the bank a bit of notice.

    For example, with my Monzo savings pot, it usually takes a couple of working days to be deposited back to me. 

    monzo savings account
    My Monzo Savings Account Pot

    As you can see with my Monzo savings account above, they use a third party bank for this service. In this case, Charter Savings Bank are the provider. Charter could be much better in terms of ethics, but are not as bad as the big high street providers who we’ll discuss further below.

    What to look for with an ethical savings account?

    Ethical is a wide-ranging term that means different things to different people. 

    For some, a focus on the environment might be the most important aspect determining your ethics. For others, social responsibility or non-animal cruelty might be more important ethical considerations.

    However, there are a number of common items you can look out for when choosing an ethical savings account. You may not find all of the points in one provider and you might have to do some digging, but a good understanding will help you to make the best choice for your savings.

    • Does the provider have an ethical investment policy? If not, maybe some kind of mission statement?
    • Does the provider finance the fossil fuel industry?
    • Is the provider transparent with where your savings will be invested?
    • Is the savings provider a building society, mutual organisation or credit union?
    • Are they UK registered and do they pay their fair share of tax?

    Why are building societies and credit unions more ethical than banks?

    In the most ethical savings account UK list just below, you’ll notice many building societies. This is because building societies and credit unions tend to be more ethical than traditional banks. 

    This reason for this is because these types of mutual organisations are owned and managed by its members rather than external shareholders who want to maximise profit at all other costs. For this reason, societies and unions have a long tradition of serving the financial needs of their members over outside forces. 

    Both credit unions and building societies typically have competitive fees and charges, as well as historically good customer service.

    Building societies don’t generally invest in stocks and shares of other companies, they focus solely on homes and buildings. As a result, many people consider building societies to be more ethical than banks.

    10 Best Ethical Savings Accounts UK

    Here are 10 of the most sustainable savings accounts from an ethics standpoint that you can open up today in the UK.

    Please note, I am not a financial expert and this is not financial advice. Any money you save or invest is at your own risk.

    1. Ecology Building Society

    Ecology aim to put people and the planet before profit – not your usual stance from a financial institution!

    With your savings, Ecology invest into businesses and projects that are striving to have a positive environmental impact, whilst giving you a fair financial return. They’re rated as a best buy from Ethical Consumer magazine.

    Key details:

    • Interest rates from 0.85% to 1.4%
    • Minimum of £25 initial deposit
    • No withdrawal notice

    2. Charity Bank

    Charity Bank’s strapline is ‘a bank for good’. They aim to let you put your money where your values are i.e. into ethical and environmental causes.

    As the name hints at, Charity invest money into charities as well as social enterprises. Your savings money goes into things such as helping to fund affordable homes and investing into renewable energy projects.

    Key details

    • Interest rates from 0.56% to 2.1%
    • Minimum of £250 initial deposit
    • 33 day withdrawal notice

    3. Triodos

    Triodos always find themselves on ethical bank lists and for good reason – they’re one of the most ethical financial businesses out there. Their sustainability are demonstrated by being a certified B corporation.

    Triodos have a small range of saving accounts available, including an everyday saver and fixed rate bond.

    Key details

    • Interest rates from 0.85% to 1.2%
    • Save from £1 initial deposit
    • Instant access

    4. Yorkshire Building Society

    Based in Bradford, Yorkshire Building Society are a good choice for ethical financial services, including savings, mortgages and cash ISAs.

    YBS have high environmental standards and track their carbon footprint, emissions, water use and waste generation – just 1% of their waste was sent to landfill in 2020, the rest was either recycled or recovered.

    Key details

    • Interest rates from 1% to 1.6% (depends on account)
    • Save from £1 initial deposit
    • No withdrawal notice

    5. Monzo

    Monzo Bank have always been one of the more ethical UK banks, but they have upped their game even more recently. As I explain in my Monzo review, they now publish an environmental report to keep them accountable and do not invest in fossil fuel related projects.

    An app-based bank, Monzo use their fantastic ‘pots’ feature to easily divide your money up, including into a savings account. They do use third party banks for their savings accounts, such as Charter Bank, so you might want to check these are on the ethical side too.

    Key details

    • Interest rates from 1% to 2.76%
    • Minimum of £10 initial deposit
    • Next working day withdrawals

    6. Nationwide

    As far as the big high street banks go, Nationwide are by far one of the most ethical. From current accounts and ISAs, to loans and mortgages, Nationwide offer all everyday financial services. Nationwide are technically a building society, which may explain their better ethical stance!

    I’ve personally used Nationwide for a number of different services and switched by current account to them (from NatWest) a few years ago. They’ve been great so far!

    Key details

    • Interest rates from 0.5% to 2.5%
    • No minimum deposit (must pay in an amount within 28 days of opening)
    • No withdrawal notice

    7. Leeds Building Society

    Leeds Building Society is a mutual organisation owned and run by its members.

    Leeds BS addresses environmental performance and climate action during its annual report. In 2021, the organisation announced that it had reduced it’s carbon footprint by 97% in just 4 years. Leeds Building Society mainly finances new homes and does not invest in any fossil fuel related activity.

    Key details

    • Interest rates from 0.65% to 1.5%
    • Save from £1
    • No withdrawal notice

    8. Cumberland Building Society

    The Cumberland have a large range of ethical savings accounts to help you save and do a little good in the world.

    In their annual report, Cumberland do address climate related activity from their offices and have published a Scope 1 & 2 emissions report in 2020. They haven’t so far included any Scope 3 activity, which is emissions from other companies in their supply chain.

    Overall, a good, sustainable organisation who are aiming to do better.

    Key details

    • Interest rates from 0.75% to 1.65%
    • Save from £1 (some accounts require a minimum balance greater than this)
    • From instant access to 40 days notice

    9. Principality

    Principality are the 6th largest building society in the UK, owned and run by 500,000 members.

    Principality aim to have a positive social impact through outside efforts, including charity work and financial education in schools. They aim to reduce their environmental footprint and have partnered with the Woodland Trust to offset some of their emissions.

    From an ethics standpoint, it’d be good to see more information on environmental reporting as well as transparency on where investments are going.

    Key details

    • Interest rates from 0.75% to 1.5%
    • Save from £1
    • No withdrawal notice

    10. NS&I

    NS&I stands for National Savings and Investments – they are technically a government department working for the public and public purse. So, when you deposit savings into NS&I, you are actually lending to the government.

    With the Carbon Trust, NS&I aim to reduce their emissions by 50% from a 2010 baseline. They also have targets for reduced water consumption and waste produced, as well as using renewable energy at a couple of sites. I couldn’t find much info on where investments go or how your money may be used.

    Key details

    • Interest rates from 0.9% to 1.4%
    • Save from £1
    • No withdrawal notice

    Unethical savings accounts to avoid

    If ethics is one of your main priorities when deciding where to save your money, then there are plenty of banks you should avoid. 

    Unfortunately, we’re still in the position where the vast majority of UK banks are highly unethical – pouring money into fossil fuel businesses and projects, funding weapons trade and being based off-shore. 

    natwest savings accounts
    My old accounts with NatWest, which I have now moved to more ethical savings accounts

    So, avoid the below saving account providers who are not ethical:

    • Barclays
    • HSBC
    • NatWest
    • Lloyds
    • First Direct (50% owned by HSBC)
    • Citigroup
    • Santander
    • M&S Money (50% owned by Barclays)
    • Halifax
    • RBS
    • Tesco & Sainsburys

    As you’ll notice, most of the high street banks are on this unethical list. And for good reason. 

    By putting your money into a savings account, with Barclays for example, you’ll be inadvertently supporting the billions they pump into fossil fuels. 

    Wrap up on ethical savings UK

    Ethical savings accounts are a superb way to save money and put yourself in a better financial position. As you can see, interest rates and charges (if any) are in line with other financial saving accounts, but the difference here is that you’ll be supporting good, sustainable causes at the same time. 

    Savings accounts in the UK can be opened with a number of different providers, including building societies, mutual organisations and banks. If you’re looking for a purely ethical savings account (hopefully you are by now), then most typical, high street banks are best avoided.

    For an easy way to save money in a low-risk manner, a savings account is for you. I hope this list of the best ethical savings accounts can help you out!

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