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Is Starling Bank Ethical? [Full Starling Review]

    is starling ethical bank

    Are you wondering how ethical Starling Bank is? Good, because you’ve landed in the right place to find out.

    This Starling review will take a deep dive into their sustainability credentials, environmental policies and answer the burning question of is Starling bank ethical.

    It’s an important question because I bet you’d love to use an ethical bank that cares about people and the environment. One that invests its money (and your money) into good businesses that act sustainably and responsibly for the betterment of society. Too much to ask?

    Almost all of the traditional high street banks do not fit this bill, but could Starling Bank be an ethical choice?

    I’ve personally been using the Starling banking app since early 2021. They are a young, disrupter bank that have been taken as an alternative choice by millennials en-masse.

    Is this a good sign into their ethics or is just because they offer a good, efficient way to manage money?

    Let’s get to it.

    *This post was updated in July 2022.

    What is ethical banking?

    According to Ethical Consumer, ethical banking can be reduced down to two aspects:

    • What companies does the bank invest in?
    • Does it pay its taxes in full?

    The big, traditional, high street banks tend to fail on both of these counts and have terribly poor ethical records.

    Keeping the fossil fuel industry flooded with cash, financing weapons deals and funding businesses who exploit animals are just a few of the unethical actions the traditional high street banks – Barclays, HSBC, NatWest – tend to be involved with. Not good for society or the environment.

    On the other hand, the most ethical banks are fully transparent about investments, as well as how much tax they pay. Good eco banks should also care about the environment, have policies in place to reduce carbon emissions, have a positive environmental impact, treat its workers well and with fairness.

    What is Starling Bank?

    Starling is a British bank founded in 2014 by Anne Boden. This made it the first UK bank ever to be founded by a woman. Boden is the former Chief Operating Officer of Allied Irish Banks.

    Unlike your traditional high street banks, Starling is a purely app-based bank with no physical branches. However, it still offers the type of accounts you’d expect from a bank – personal, business, joint, children’s and teens accounts.

    Although branchless to the customer, Starling has four offices: headquarters in London, as well as spots in Southampton, Cardiff and Dublin.

    Apparently, it’s name comes from the Starling bird – social, adaptable and friendly, which gain new territory by removing the old guard.

    starling bank graphic
    Source: Starlingbank.com (as is the background for the header image)

    Who owns Starling Bank?

    Starling are a privately owned, independent bank. They are not part of a banking group and don’t have any large hedge fund stakes behind them.

    Founder and CEO Anne Boden owns 24% of Starling with the remaining 76% being owned by employees, ex-employees and private investors.

    In 2020 Starling raised £60 million through existing investors Merian Global (who also back Klarna, The Hut Group and TransferWise) and JTC (headed by founder Harry McPike).

    Starling gave all the created shares to its 800 employees. Nice move.

    How many customers does Starling have?

    Since opening its proverbial doors to the public in May 2017, Starling now has more than 2 million customer accounts.

    Many of these customers will have opened an account to access Starling’s well-regarded business account. Some, like me, will have opened a Starling account to use as a ‘secondary’ money holding account that comes in handy for use abroad.

    Starling will be hoping more people make the full switch across where they start getting their salaries paid into the current account. Thanks to the Current Account Switch Service, this is now a very easy process.

    Is Starling Bank safe?

    Starling is a fully licensed and regulated UK bank in accordance with the Prudential Regulation Authority (PRA) and Financial Conduct Authority (FCA).

    It is FSCS protected – this means it’s part of the Financial Services Compensation Scheme which offers insurance for customers should the bank be unable to make a payment. FSCS protects customer deposits and investments up to £85,000 and is overseen by the FCA.

    Yes, Starling is a safe bank, certainly as safe as any other FSCS protected bank.

    They’ve also won the British Bank Awards for three years running, as well as being a which? recommended provider.

    Are Starling Bank responsible and ethical?

    Starling themselves say that good business and ethics go hand in hand. They also agree that an ethical business should look at their social, economic and environmental impacts.

    Ok, good start.

    According to the Starling ethics statement on their website:

    “We don’t provide banking services to organisations that use excessive power to systemically promote public behaviour that is harmful to individuals, groups or to the whole of society in order to maximise their own profits. This may include, for example, arms manufacturers and tobacco companies. We do not invest in such organisations or take investment from them.”

    This is a good ethical and transparent stance.

    Starling Bank also say that they lend to UK individuals and small businesses, and have said through statements that they don’t lend to companies involved in the extraction of fossil fuels.

    This is a good start and one you’d expect from a new bank trying to attract a younger audience, but there’s still plenty of room for improvement. Taking a more ethical approach is also becoming more common in other areas of the financial service industry, such as with ethical Stocks and Shares ISAs.

    In terms of politics, Starling state that they will ‘never donate to a political party, politician or party political campaign group’. Again, a good stance to take.

    Let’s see how they stack up from an environmental and social point of view.

    Is Starling Bank eco friendly?

    Starling have stated that they want to take a leading position in the finance sector as a net-zero business. So, how are they getting on with this statement?

    Starting off to achieve this, Starling are a branchless and largely paperless company. Their business is built in the cloud, which still does take energy to run via server houses, but not as much as physical locations. You see this with the likes of cryptocurrencies and website hosting.

    Just like Monzo Bank, Starling use the AWS cloud server facilities in Dublin, meaning their servers are carbon neutral thanks to Amazon’s carbon offsetting and renewable energy policy.

    Starling have also said they are committed in pursuing ‘ecological sustainability and combating climate change’.

    Environmental Impact – Reducing carbon emissions

    carbon emissions of starling bank
    Carbon emissions from Starling Bank

    Starling Bank are a founding member of UK’s TechZero taskforce, which is a small group of UK tech companies working towards net zero emission. They’ve also joined the Partnership for Carbon Accounting Financials.

    Starling are targeting a one third reduction in carbon emissions from their own operations and supply chain by 2030.

    They’re now working with a sustainability consultancy to track and audit their greenhouse gas emissions. They are then using this information to align with the Science-Based Targets initiative. Tracking emissions and putting actions into place is the only way for businesses to truly reduce carbon emissions.

    From the image above, you can see Starling’s Scope 1, 2 and 3 emissions. This is comprehensive. In 2022, their total emissions were 7,731 tonnes of CO2.

    Starling also use renewable energy to power their three UK offices where they also practice sustainable waste management and recycling.

    Recyclable bank card

    In March 2021, Starling announced they were to roll out a new debit card made from recycled PVC plastic (rPVC).

    According to testing behind it, this saves 2kg of carbon dioxide emissions for every kilogram of virgin plastic use that it replaces. The rPVC materials will come from EU plastic waste.

    The recycled debit card is definitely a good move and makes secondary use from a plastic resource. However, because plastic loses quality when it is recycled, this card cannot be recycled itself at the end of its use, meaning it ends up in general waste. Check out this blog on the different plastic recycling codes for more info.

    Starling also use recyclable packaging to send their cards out, including a more eco water-based glue.

    starling rpvc card
    Launching a new recycled PVC debit card. Source: Starlingbank.com

    Helping the environment

    As part of reducing their carbon emissions, Starling are offsetting through buying carbon avoidance and sequestration credits. These credits aid projects such as those working to create woodland, protect oceans and preserve peatlands.

    They have also launched a refer a friend scheme with Trillion Trees – a joint venture between BirdLife International, World Wildlife Fund and Wildlife Conservation Society. The aim is to plant one trillion trees by 2050.

    Every time someone refers a friend to Starling, one tree gets planted as a thank you through Trillion Trees, who worked with multiple projects across the world. This is a good, if not a very small, gesture from Starling.

    If this is anything like Eden Reforestation Projects who plant trees across the world, it only costs around $0.15 a plant a tree. Maybe 10 trees would be good?

    All in all, these actions are fantastic things to hear from a finance company and Starling bank is making very good strides to become eco friendly.

    In truth, it shouldn’t be too difficult to take a leading position in the finance sector on this – they’re quite literally only a handful of finance companies and banks that currently rate the environment as an important topic.

    Starling and its impact on people and society

    With a female founder, Starling naturally care about gender equality and inclusivity.

    They are a part of the Women in Finance Charter, which aims for at least 40% of senior management to be female by 2021 – Starling have already achieved this. Further to this, half of the Executive Committee and a third of the board are women.

    Starling are a living wage employer, committed to paying wages to meet the cost of living rather than just the minimum wage as outlined by the government.

    On a social front, Starling give all employees 16 hours of paid leave a year to volunteer in the community for a cause of their choice.

    Importantly, Starling pay their fair share of taxes in the UK and have announced they won’t do anything in their tax affairs that doesn’t align with the letter or spirit of tax regulations in the UK or in any other country.

    Does Starling Bank invest in fossil fuels?

    In terms of cold, hard policy, Starling’s stance on fossil fuel investment is vague.

    A Google command search shows me that ‘fossil fuel’ only appears twice on their website – both in blog posts on how to live an eco-friendly life.

    Blog posts aren’t exactly agreed company policy, but the CEO Anne Boden did release a public letter in 2020 that said:

     “We do not invest in or take investment from any fossil-fuel based energy companies.”

    An ethical investment policy would be better, but this is a clear statement and we have to take Boden’s word on it.

    You can read more here about investing ethically here, where I demystify and explain the topic in detail.

    Starling Bank vs Monzo: Which one is better?

    Both Starling Bank and Monzo seem to be on a par when it comes to ethics and the environment.

    Both banks have made positive comments and outlines in their ethics statement and have put good actions into place over the last year since first writing this post. to implement a few actions, but it is early days.

    In 2021, I wrote that “I personally would like them to go further and really create a steppe change when it comes to climate and environmental action.”

    I also said, “To go further with their light in content statements, Starling and Monzo would have to publish an environmental report that discusses their ecological and climate impacts in full detail. There’s no talk on either website of greenhouse gas emissions by the company or their supply chains and investments. With a proper environmental report, the companies can then formulate a plan and targets, as well as a climate policy, to help them achieve real and positive environmental change.”

    Writing now in July 2022, both have introduced thorough environmental reporting. Very well done. It seems that Starling and Monzo are on the way to reducing their greenhouse gas emissions and playing their environmental part. There’s still flesh to put on the bones but highly positive moves nonetheless.

    Starling bank vs Monzo is a difficult one. Both received the same ethical mark from the Ethical Consumer magazine. Moneyexpert.com ranks Starling above Monzo in terms of ethics, but in truth there’s not much in it. You can read more whether Monzo is an ethical bank here.

    Is Starling Bank ethical?

    With all that information, I’ll let you make your own mind up on whether Starling is an ethical bank.

    My personal opinion is that Starling is an ethical bank, especially so when compared to the competition. They are top 3 of the most ethical UK banks.

    The benefit they have is that the banking world doesn’t have many ethical and environmentally conscious role models. The only bank that can say it is ethical with certainty is Triodos.

    The poor environmental and ethical record within the banking industry, or good record but slightly behind with the technology (Triodos), leaves a gaping hole for the likes Starling or Monzo to fill. These technology-based disrupter banks have a pristine opportunity to buck the trend and really set their stalls out as an ethical bank primed for the future.

    In 2020 Starling were slightly let down by their lack of clear climate policy and environmental reporting, but they have now corrected this in 2022. If they keep up with their environmental reporting, putting actions into place and reducing carbon emissions they have potential to be a truly ethical bank.

    Switching banks is now a much easier process thanks to the Current Account Switch Service. If Starling can get the younger generation on board through its clear ethical and environmental stance, as well as being a fantastic bank to keep money in (which is its primary objective), the future could be much brighter for Starling, society and the environment.

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    If you liked that, read more on ethical money below…