Your financial choices make a real difference

As part of our focus on sustainable finance, we asked our friends at MotherTree to do a deep dive into ethical banking. This article is a great complement to our blog on ethical investment. Both pieces currently have a UK focus, but we’ll be highlighting other regions in future blogs, so remember to keep checking in. And now, over to MotherTree…

Your choice of bank and pension provider could be producing more carbon emissions than all your other actions combined.

In fact, the average UK consumer produces about 10 tonnes of carbon emissions through their lifestyle. Shockingly, this is about the same as the emissions funded via their financial institutions. [1] [2]

In an effort to raise awareness among consumers of the environmental impact of their savings, the green savings experts at MotherTree have compiled new figures which reveal the UK’s biggest offenders in banking when it comes to carbon emissions.

The problem: how your money funds fossil fuels 

Where your money goes matters.

The UK’s traditional big five banks – Barclays, HSBC, Santander, NatWest and Lloyds – put £27 billion into oil & gas companies last year. [3]

The world’s 60 biggest banks, including the UK’s big five, invest 50 times more into fossil fuel expansion than fossil fuel companies themselves. [4] To put that another way, for every £1 that BP invests into fossil fuel expansion, the world’s biggest banks are putting in £50.

In short, without the banks’ money, oil & gas would be a thing of the past.

How does my choice of bank impact my carbon footprint? 

Where a bank invests has huge implications for carbon emissions.

MotherTree’s research has uncovered that most major banks are investing billions into fossil fuels, while a tiny proportion goes into renewable energy. These kinds of investments can be reflected as a carbon footprint.

Looking at the bank’s own operations, plus where the bank invests, MotherTree builds up a view of the bank’s overall carbon footprint. They’ve compiled a handy league table so that you can see how your bank’s carbon footprint compares to the rest of the market.

What does this mean for consumers and businesses? 

Your choice of bank has a huge impact on your personal and business carbon footprint.

For the majority of businesses, the biggest source of carbon emissions is from their bank.

Take Google and its parent company Alphabet. Google has over $130 billion in cash for paying employees, acquiring other companies, and tax purposes. This cash is invested with just a few banks and based on how those banks are investing, the cash has a carbon footprint. That footprint is bigger than Google’s carbon footprint for its entire supply chain. The average UK company follows a similar trend. [5] 

When cash is taken into account, a company’s carbon footprint often doubles.

The good news: sustainable banking can benefit your business and your carbon footprint 

Switching banks can actually lead to higher interest rates. 

MotherTree’s analysis shows that green banks often outperform traditional banks on interest rates. In fact, Triodos, one of the leading green banks in the UK, has outperformed Barclays on interest rate every year that it’s been in the UK market.

And it doesn’t stop there. The banks analysed by MotherTree are all covered by FSCS (the Financial Services Compensation Scheme) which means that, whether you’re with Barclays or Triodos, your money is guaranteed up to £85,000.

Isn’t that crazy? If you stick with your current bank, you might be putting out more carbon and getting a lower interest rate than if you were to switch to a green provider.

How to switch to a green banking provider

Extensive research by MotherTree shows that despite knowing the carbon impact of banks, businesses and consumers are unlikely to make the switch. It’s simply not a task that sits high on the priority list.

That’s where MotherTree’s Green Living Service comes in.

They do all the paperwork on your behalf, taking time to understand your requirements, values and budget, then moving you to providers that: 

• match your values
• reduce your carbon footprint
• save you money

It’s led to happier employees, happier customers and, in some cases, more investment.

Who is MotherTree?

MotherTree is built by the team behind Look After My Bills (best ever deal on Dragons’ Den, saved the British public £127m in 3 years).

Their mission is to make it easy for values-led businesses to go green and save money on their banks, pensions and bills.

MotherTree works with the likes of GoCardless and has shifted over £2m into the green economy since starting out in March 2022.

[1] Based on having £6,757 in a current account with Barclays and a pension of £42,651 held invested in the UK Equity Fund over 25 years. Note, in 2020, the average person in the United Kingdom (UK) had £6,757 saved (source: https://www.finder.com/uk/saving-statistics. Analysis conducted by finder.com/uk). Note, The UK’s average pension pot stands at just £42,651 (source: https://www.finder.com/uk/pension-statistics. Analysis conducted by finder.com).

[2] Based on analysis by Accenture: The average UK household’s spending generated 204 kg of CO2 emissions each week. This equates to 10,617 kg per household per year, which collectively amounts to an estimated 295 million tonnes of CO2 in 2020. Note, this does not include any investment, bank account or pension.

[3] Banking on Climate Chaos, 2023

[4] Bill McKibben, Wall Street Journal, 17th September 2019

[5] Based on ONS data, the average UK company has 10 employees and £300k in the bank

Disclaimer

Neither MotherTree Limited (13969046) nor EnviroRental provide financial advice. Neither MotherTree nor EnviroRental will be held responsible for any financial losses or customer service problems related to the choice of product or provider mentioned on this website.