A beginner’s guide to being ethical with your finances

From who you bank with to your weekly shop, financial habits can have a big impact on the wider world. Personal finance correspondent Vicky Shaw reports

WHAT does being “good” with money mean to you? Maximising your returns, borrowing cheaply, or the impact your financial habits could be having on the wider world?

Though they might not always be obvious, there are ethical options out there which enable people to help make a positive impact on the environment and society.

Research from Triodos Bank has found a big appetite among UK investors for creating positive change – with two thirds (67%) saying that for the economy to succeed in the long term, investors need to support progressive and pioneering businesses.

Bevis Watts, managing director of Triodos Bank UK, says investors increasingly recognise the power of money to be a “powerful tool for change”. He says: “They know they can exert a positive influence on our wider society by simply channeling their investments into things that benefit not only themselves but also the world around them.”

■ What does being good with money involve? Who our money is banked or saved with can have a big impact. Different people have different beliefs about ethics, so it’s very much down to personal choice when it comes to how to be “good” with your money.

There may be particular organisations, for example, whose aims mirror your own beliefs and principles. Simon Howard, chief executive of the UK Sustainable Investment and Finance Association (UKSIF) says: “We’re flagging that it’s up to the public to make sure they are taking advantage of the products available in banking and investment to make ‘good’ money choices.”

■ How does where I put my money make a difference? The firms where you put your money may also do business with companies whose activities you support, or they may carry out activities you’re not too keen on.

John David, head of Rathbone Greenbank Investments, says rather than just boycotting companies whose actions you don’t agree with, people could also consider actively investing in those whose values they support.

He says investing ethically can also bring about change within companies. David says: “Shareholder activism, for example voting on executive pay or environmental reporting, can be effective in provoking change in an organisation.”

■ What sort of financial products could I consider when being ‘ethical’ with money? This could be anything from current accounts and savings accounts to loans and pensions. You could ask your own bank or building society about their ethics and policies.

For example, the Co-operative Bank’s ethical policy has been shaped by feedback from its members, and Triodos Bank publishes details of the organisations it lends to on its website. If you’re using a financial adviser, you could also ask them what ethical or sustainable options they could suggest.

■ Is there anything else I could consider? Triodos Bank, which asked website good-with-money. com for some top tips, also suggests thinking about your weekly food shop. For example, some people may want to buy more locallysourced food or products. Utility bills and weighing up different energy providers’ credentials may also be another option to consider.

■ Where can I go for more information? Information about ethical and sustainable options potentially available can be found at goodmoneyweek.com. The Financial Conduct Authority (FCA) also has a warning list enabling people to check, in general, any pension or investment opportunity they have been offered and protect against scams at fca.org.uk/scamsmart.