Whether you’ve got a savings account, an ISA, a pension fund or some stock market bonds; your money is not just being stored in some big vault somewhere underground, Gringotts-style.
Quite the contrary in fact: the bank you choose to deposit your money with is using your assets (cumulatively with lots of other people’s) to invest in companies, projects and infrastructure around the world which they believe will be successful, and will thus deliver them a return on their investment and make them some profit (some of which is then returned to you in the form of interest).
OK so now you’re asking why I’m describing basic economics to you, and what the heck it has to do with sustainability. Well, to tell you the truth, it has a lot to do with sustainability. In fact, banking is probably the sector which has the most opportunity to transform the world into a more sustainable place to live.
When fund managers invest your savings or your pension on your behalf, they are choosing to support a company or project which they believe will be financially successful in the future. However, what they (and you, via proxy) are also doing is choosing to support that company’s primary activities, which could be anything from making bread to extracting oil from underneath the Arctic.
A way to ensure that you aren’t inadvertently invested in nuclear weapons or child slavery or big oil, is to ask your bank what they’re doing with your money. Now if you’re a big fish with lots of dolla dolla, you may well know your fund manager by name, or have your own financial advisor. If that is the case, you are very well placed to ask them exactly where your money is, and to engage them in a conversation about ESG indices and ‘investing for good’.
If however, like myself, you are just a small fish with very little in the way of savings, then you will probably not know the name of the person from NatWest or HSBC (other high street banks also apply) who is in charge of your specific ISA. Whilst you could go about trying to find out, you might also consider moving your savings account to a new bank – which is probably an easier route. Triodos Bank is consistently ranked as the most sustainable bank in the UK, and is a member of the Global Alliance for Banking on Values. For some other options, check out this list.
And finally, if you have a pension fund (which you almost certainly will), check out The Guardian’s top tips on getting them to divest from fossil fuels.
Now some of you might say “but I won’t earn as much interest on an ethical ISA or a responsible investment portfolio”, however there is actually plenty of evidence to say the opposite, and some sustainable funds actually outperform conventional investments – so you could even make more money.
SO. This week’s ask in the Sustainable Revolution, is to think about the kind of world you want to live in, and to start using your money to support that idea: rather than financing the exact opposite. Let’s all get a bit more informed about the murky world of finance, and together, let’s put our money where our mouth is.
For more info:
UNPRI – What is responsible investment?
Forbes – Socially Responsible Investment: what you need to know.
This is Money – Guide to Ethical Investment
UK Sustainable Investment and Finance Association