For most working adults, by far the most effective way of reducing your personal carbon footprint is to kick the carbon out of your cash. If you have a mortgage, or a pension, a savings account or even an insurance policy, you have put your money in someone else’s hands and they are doing something with it. That something could be helping the planet, or harming it.
In this blog, Simon Grover, Green Party District Councillor in St Albans District, discusses the various ways we can make our money work for the climate rather than against it.
How much difference can you make if you green your money? Well, one pension provider estimates the average UK worker’s pension finances 23 tonnes of CO2 emissions a year. That’s on top of your personal footprint of 10-13 tonnes on average. Another pension provider estimates that moving your pension savings is 27 times more effective than giving up meat, flying and driving combined.
Stop and reflect on those numbers for a minute.
“Another pension provider estimates that moving your pension savings is 27 times more effective than giving up meat, flying and driving combined.”
Of course, unlike avoiding the car, moving money around doesn’t usually stop emissions immediately. That coal mine you had invested in still produces coal if you sell your shares in it. But the more of us who move our money, the more is invested for good instead of not-so-good. And the more the finance industry is encouraged to do better things with our money.
A small note: as with all financial decisions, if it involves a lot of money, it’s a good idea to get some independent financial advice before doing anything.
Green your banking and saving
Your current and savings account money doesn’t just sit in a vault. Your bank uses your money to invest, to make money for itself (and perhaps a bit for you too). So what is it investing in? It’s not easy to find out, but you can switch to a bank that is rated highly for its ethical operations. There are lots of lists, including this one at New Money, which rates the following banks most highly; Triodos, Ecology Building Society, Nationwide, Co-op and Monzo. Switching bank accounts used to be impossibly difficult, but is now much easier and quicker.
“Switching bank accounts […] is now much easier and quicker.”.
Green your pension
Your pension is probably your largest investment that you don’t even think about. What companies are your workplace or private pension savings invested in? There are likely to be some horrors in there. Not just coal mines and oil companies, but tobacco, arms and gambling too. Look at the Make My Money Matter campaign for ideas on finding out, and asking your employer to make sure their scheme is a good one. If you want, you can usually choose a more ‘ethical’ option in your employer’s scheme. If you have pension savings from a previous employer, you might move them to a greener provider. Have a look at Good With Money for ideas.
“What companies are your [..] pension savings invested in?”
Green your mortgage
Although a mortgage is a loan to you, you pay interest on that, so you are significantly supporting your mortgage provider, which is a financial institution. Is your mortgage provider genuinely part of the low carbon transition? Or are they dragging their feet? The Ecology Building Society is well known as a ‘green’ business, even giving better deals to eco-friendly homes. But there are others too. For example, see this article at This Is Money.
If you have installed energy efficiency measures in your home, or want to put the cost of doing so on your mortgage, you might be able to get a discounted ‘green’ mortgage. As well as The Ecology Building Society, there are other banks and building societies that offer these.
Green your investments
There are now a huge range of ‘green’ investment funds, that you can invest in through ISAs or other investment products. You could be investing in eco-minded companies through shares and bonds, or even in low carbon property and infrastructure. Watch out for greenwashing and ‘too good to be true’ offers. Perhaps try a well-known platform or investment manager like Nutmeg, Hargreaves Lansdown or M&G. For more on this, try Your Ethical Money.
Remember that it’s not all about taking money away from high carbon companies. Some of those companies might need encouraging to transition to the low-carbon future. Oil and gas company Orsted has already moved 100% into renewables, for example. Different investment providers will have different attitudes to this issue.
“Watch out for greenwashing and ‘too good to be true’ offers.”
Green your bills
Of course, the money you spend also has an impact on the world. Green shopping gets a lot of attention, but what about your everyday household bills? As well as switching to a ‘green’ energy supplier, you can invest environmentally to reduce your bills. This is also an example of moving money that DOES have an immediate effect on reducing emissions. For example, getting solar panels and insulation to reduce your heating or electricity bills. Getting an electric car can even be seen as an investment in reduced fuel bills over time. Recent Sustainable St Albans blogs cover many of these topics.
Not sure where to start?
It can feel hard to know where to start with greening your money. But it’s well worth a try as it can make such a huge difference. An easy way to start is with Make My Money Matter who can help you ask your pension provider to improve the green credentials of your pension, in just a few clicks.
“An easy way to start is with Make My Money Matter.”
Environmental groups of St Albans District have come together to set up the St Albans Climate Action Network who are hosting their own special St Albans Climate Action Network page. Simply visit the page, explore the 16 steps and pledge to take one step by choosing “Take a Step”. When you register, tick that you are part of the “St Albans Climate Network” to have your step counted on the St Albans page.
Join in today and use Simon’s advice to help you choose the “Green Your Money” Step as your pledge.
You can track the carbon impact of your own actions. As more people join, we will all see our cumulative efforts across St Albans, Harpenden and the villages.