Caring about climate change and using your money to help rather than harm the planet is increasingly important to many of us.
Financial services companies have cottoned on to this and many more have begun to offer mortgages, loans and savings accounts and other products branded as ‘green’.
For example, a spattering of green mortgages designed to reward borrowers financially for making their homes more energy efficient launched over the summer.
Meanwhile, Nest, the national pension scheme provider set up to house auto-enrolment retirement savings, announced plans last month to ditch carbon heavy investments and funds where they could not demonstrate progress towards a cleaner future.
Light bulb moment: Quite suddenly, greener finance has become mainstream
As part of the bigger picture, former Bank of England governor Mark Carney highlighted the financial risk that climate change poses to the world economy in December last year.
In June this year, British film director Richard Curtis started a new campaign, Make My Money Matter, encouraging British people to put their pensions into investments they feel matter.
Quite suddenly, greener finance has become more mainstream. But it’s still early days and there are many ways that firms claim to be contributing positively to the fight against climate change.
Some are clearer than others.
If you’re considering giving your personal finances a green makeover but don’t know where to start, this is the guide for you.
This is Money has done the digging and pulled together the top offers that can help you make your money a little greener and your conscience a little lighter.
Research from E.ON in September this year found that 89 per cent of prospective homeowners are now more interested in finding sustainable homes.
Four our of five said they would choose solar panels and efficient boilers over having a garden. Lucky then that more mortgage deals are emerging to support that move.
In August, government unveiled a green homes grant available to those making energy efficient improvements to their homes
Ecology Building Society is the original green lender and savings provider, established in 1981 by members who wanted to start a building society to help finance environmental building renovations and support sustainable development.
Energy efficient improvements
Solid wall, cavity wall, under-floor insulation (solid floor; suspended floor), loft, flat roof, room in roof, and park home insulation.
Low carbon heat where the home is suitably insulated
Air source heat pump, ground source heat pump, solar thermal, and biomass pellet boilers.
Windows and doors
Draught proofing, double/triple glazing where replacing single glazing, secondary glazing in addition to single glazing, and energy efficient replacement doors.
Heating controls and insulation
Hot water tank thermostats, hot water tank insulation and heating controls including smart heating controls, zone controls, intelligent delayed start thermostat and thermostatic radiator valves.
They’re very strong on self-build mortgages but also offer a range of mortgages for renovation, conversion, shared ownership, energy improvements and even for the purchase of woodland.
Saffron Building Society has a retro fit mortgage offering financial incentives to improve your home’s energy efficiency.
Barclays has pioneered green mortgage options, and offers its customers lower mortgage rates if the home you want to purchase has an energy efficiency rating of 81 or above, or is in energy efficiency bands A or B.
Nationwide offers existing borrowers a Green Additional Borrowing Mortgage, which rewards you with a lower initial rate if at least 50 per cent of the new advance is spent on energy efficient home improvements.
The lender has also created a £1billlion fund to help borrowers get a mortgage for energy-efficient homes, which will allow Nationwide to offer lower mortgage rates to customers buying a new-build property that has an A-rated energy performance certificate.
Newbury Building Society’s Go Green Further Advance rewards existing borrowers who want to take additional borrowing to fund energy efficient home improvements with a lower interest rate.
Monmouthshire Building Society meanwhile, is currently running a research project with the Royal Institution of Chartered Surveyors, Rightmove and zero carbon homebuilder and sustainable energy service provider Sero, to design the first mortgage offered in the UK that recognises home energy efficiency in its affordability calculations.
David Hollingworth, of mortgage broker L&C Mortgages, said: ‘With our homes often a big part of our energy use and emissions it seems that mortgage finance should only become more aligned with the aim of improving energy efficiency.
‘Barclays has offered green mortgages on properties from some developers where a certain minimum energy efficiency can be met. This can offer a slightly better rate for the borrower and gives a greater awareness of the higher efficiency of new build properties versus the potentially draughtier, older property.’
But he added: ‘The issue that most green initiatives have struggled with has been that better rates are available on mainstream deals. There is room for improvement in how lenders create these sorts of products.’
Get a green homes grant
In August, government unveiled a green homes grant available to those making energy efficient improvements to their homes.
Homeowners and landlords in England can apply for a voucher towards the cost of installing energy efficient and low-carbon heating improvements to homes, which could help save up to £600 a year on energy bills.
The government will provide a voucher that covers up to two thirds of the cost of qualifying improvements to your home.
The maximum value of the voucher is £5,000.
You may be able to receive a higher level of subsidy if you are a homeowner and either you or a member of your household receives one of the qualifying means-tested benefits, covering 100 per cent of the cost of the improvements.
The maximum value of these voucher is £10,000. Landlords cannot apply for the low-income part of the scheme.
Ecology Building Society is a leader in this space, offering a range of savings accounts including an easy access account paying 0.2 per cent interest, a cash Isa paying 0.45 per cent and a limited access monthly savings account paying 1.1 per cent.
Saffron launched its Enviro Saver earlier this summer, it pays just 0.15 per cent but is an online savings account that generates money for an environmental charity.
You still receive interest on your savings but forego a small amount of interest, which they match and donate to charity annually as a lump sum payment.
Triodos, Ecology Building Society and Saffron Building Society offer ‘green’ savings deals
Triodos also offers a range of green savings accounts, including its easy access online saver plus, paying 0.3 per cent AER. Withdrawals are limited to three a year, with a 0.1 per cent charge imposed on withdrawals over this.
Its one-year fixed rate bond pays 0.4 per cent, but its best rate is available on the Triodos Fixed Regular Saver 33-day notice account which allows two withdrawals a year, lets you save between £25 and £500 monthly and pays 1.25 per cent fixed for 12 months.
If you are prepared to accept a broader ‘ethical’ account, the Co-operative Bank offers a range of ethical savings accounts which can be found here.
Charity Bank also offers more broadly ethical accounts and it’s worth noting that Sharia-compliant savings accounts often align with a more ethical approach too.
Because they’re investing funds rather than lending them out to other consumers as most banks and building societies do, both Al Rayan and Gatehouse can offer table-topping savings rates – you can compare This is Money’s independent savings tables here.
Accounts are covered by the Financial Services Compensation Scheme up to £85,000 and savings cannot be invested into businesses profiting from alcohol, arms, gambling and tobacco.
Invest AND improve the world
Can you make a profit and get your money to do some good?
Most personal investors are just ordinary people trying to grow their wealth over the long term – and like the population at large many of them care about the environment, people being treated well and business being done properly.
On a This is Money investing special podcast, Simon Lambert and Rob Morgan, of Charles Stanley Direct, explore how to invest for profit and improve the world we live in.
Green current accounts
Triodos, the Co-operative Bank and Ecology Building Society are the stalwarts of green and ethical banking.
But high street banks are jumping on the bandwagon too. Following her appointment, Alison Rose as chief executive of RBS and NatWest, has pushed the bank’s investment activities heavily onto green sectors.
Speaking in January this year, she made the following commitment to customers.
‘As the largest supporter of British businesses – and the biggest lender to the renewable energy sector in the UK – we have an important role to play in supporting Britain’s transition to a low or zero-carbon economy.
‘We want to be a leader on this issue, facing into the climate challenge with the customers and communities we serve.’
This highlights the difficulty facing customers who want to choose a ‘green’ bank.
How each provider goes about it will be different – it’s a matter of interrogating the claims made by these companies to understand whether they stand up.
The Triodos current account has been on offer since 2017 and attracts celebrity customers
The Triodos current account launched in 2017 and comes with a mobile app to help manage your money on the go, easily and securely.
It’s one of the UK’s most eco-friendly debit cards, made from 100 per cent renewable resources and boasts celebrity customers including Lily Cole, Richard Curtis and Hugh Fernley Whittingstall.
‘A monthly £3 fee applies but we believe this is the fair and transparent way to fund a current account service,’ explains Triodos’ Gareth Griffiths.
‘Many big banks instead fund ‘free’ accounts with hidden costs and high overdraft charges that hit the most vulnerable in society – this has been exposed by the FCA.
Instead our model allows costs to be shared equally by all current account customers.’
Triodos recently launched a refer a friend scheme where new customers can receive a £60 voucher for signing up if they are referred by a friend who is an existing customer of the bank. A further £25 is also donated to charity.
The bank also offers a current account to businesses.
The Ethical Consumer website ranks current accounts on a variety of ethical issues, one of which is environmental.
Triodos scores top, followed by Cumberland Building Society and Nationwide. The Co-operative Bank, also offers an ethical current account.
Green credit cards
There used to be a number of credit cards on offer that claimed green credentials – the biggest was probably the Barclays Breathe Card that donated a proportion of its profits to an environmental charity.
That no longer exists. Neither does the credit card venture between the Co-operative Bank and Greenpeace which launched in the late 1990s.
Perhaps this is an area to watch as more providers recognise the rising demand for greener ways to spend.
Tandem chief Ricky Knox
This summer, challenger bank Tandem announced its acquisition of Allium Lending Group, a green lending business.
Allium has been helping customers transform their homes to become more energy efficient and environmentally friendly by financing everything from home insulation, energy efficient boilers and double glazing, to solar panels, heat pumps and home charging stations over the past six years.
Tandem’s chief executive Ricky Knox said: ‘I founded Tandem with the number-one intent of building The Good Bank – one that puts customers’ needs first and takes the stress out of money management to leave people with more money to spend on the things they love.
‘With the acquisition of Allium, we can truly evolve our mission from building The Good Bank to becoming the UK’s first green digital retail bank.’
Knox also hinted that Tandem is currently developing new green savings and green mortgage products for launch in the near future.
‘The current social and economic backdrop is increasingly green-centric,’ he added.
‘People care, probably more than ever, about the future of our planet and are taking direct action to tackle the current climate crisis in ever increasing numbers.
‘This includes self-evaluating lifestyles and making money choices that actively work towards the realisation of a green agenda.’
Tandem acquired Allium, a personal loan provider for environmental home improvements
Green energy deals
Going green by choosing an energy provider or tariff that uses renewable energy sources to fuel your home is probably the most obvious step consumers can take to make their money greener – and it’s getting easier.
Renewable energy is increasingly taking up more of the national fuel mix and in 2019 some 38 per cent of the total electricity generated in the UK came from renewable sources.
Peter Earl, head of energy at Compare the Market, said: ‘Some energy tariffs source 100 per cent of their energy from renewables, typically wind or solar, but it is more common for suppliers to offer in their renewable tariffs a mix of energy sourced from renewables and non-renewable sources, including fossil fuels and nuclear.
‘If you want to switch to using energy from renewable sources it is worth checking the terms and conditions of the tariff to get a detailed breakdown from where the supplier sources its gas and electricity. Renewable energy can cost more than non-renewable, but this isn’t always the case.’
For green-minded customers looking for good value, the average cost of the 20 cheapest tariffs on the market that include renewable energy is £842 – and the list below includes several big six providers.
Earl added: ‘There are other steps households can take to bolster their green credentials, including opting for paperless billing, considering a supplier that invests money in environmental projects, and installing a smart meter to monitor home energy usage.’
Could you cut your energy bills… and go green?
Millions of people could be needlessly overpaying for their energy as they fail to switch to providers who offer cheaper deal.
They may also be missing out on the opportunity to help the planet and fight climate change, by switching to green deals that offer electricity from renewable sources and more environmentally-friendly gas.
With our partner, Compare the Market, you can compare energy tariffs and exclusive deals.
You can check out the top green energy deals in This is Money’s review here.
As Earl points out, there are different sorts of green tariffs, some of which offer some really clever benefits.
Octopus Energy is one of the absolute best if you’re looking for clean and efficient energy use that helps you save money as well as carbon.
With Agile Octopus, you get access to half-hourly energy prices, tied to wholesale prices and updated daily.
So when wholesale prices drop, so do your bills – and if you can shift your daily electricity use outside of peak times, you can save even more.
Over the last 12 months, a typical UK family would have saved £210 on Agile Octopus compared to the average Big 6 variable tariff – and could save another £120 by shifting their electricity use outside of peak hours.
|Rank||Supplier||Tariff||Rate Type||Annual Bill Value|
|1||Outfox the Market||One Green Flex 2.0||Variable||£788|
|2||E.ON||Home Exclusive v2 EXCLUSIVE||Fixed||£790|
|4||Outfox the Market||One Green Flex 2.0 Plus||Variable||£804|
|6||London Power||my london fixed yearly plan 12m fixed aug 2020 v4||Fixed||£840|
|7||Powershop||Top Shopper 2020 Issue 3||Variable||£854|
|8||Outfox the Market||Fix’D 20 14.0||Fixed||£854|
|9||Together Energy||Green Together Fixed July21 v4||Fixed||£855|
|10||Gulf Gas & Power UK||Gulf Home Renewable 12 September 21 v1||Fixed||£858|
|11||Tonik||Go Green Fix (12m) v2 + Free Boiler Service||Fixed||£859|
|12||Shell Energy||Energy November 2021 EXCLUSIVE||Fixed||£859|
|13||Pure Planet||100% Green 12m Fixed Aug20 v1||Fixed||£862|
|14||GOTO Energy||In Control Green Aug 2021 V1||Fixed||£864|
|15||Green Network Energy||GNE MSM Exclusive 2 Winter Fix V3 EXCLUSIVE||Fixed||£869|
|17||So Energy||So Banana Essential – Green – Seasonal Payments EXCLUSIVE||Fixed||£870|
|18||London Power||my london carbon neutral plan 12m fixed aug2020v4||Fixed||£877|
|19||British Gas||Energy and Home Protection Aug 2021v2 EXCLUSIVE||Fixed||£877|
|20||Octopus Energy||Exclusive Octopus 12M Fixed August 2020 v1 EXCLUSIVE||Fixed||£878|
|Source: Compare the Market (accurate on 2 September 2020|
Green broadband deals
The provision of internet services is complex and while customers interact with their service provider – say Sky or Virgin Media – the majority of the physical infrastructure that underpins broadband is owned and administered by BT through hundreds of telephone exchanges across the country.
Green ISP and GreenNet are both powered by renewable energy sources
Providers therefore have little to no control over decisions made about that broadband infrastructure and related electrical supply contracts.
Perhaps as a result, the number of green broadband providers in the UK is seriously limited.
Earlier this year Sky announced plans to become carbon zero by 2030. BT meanwhile has pledged to go carbon zero by 2045 and Virgin Media by 2050.
This means that as it stands, there are just two small outfits that focus on environmental credentials.
Green ISP offers what it calls ‘environmentally guided internet services’ and is currently advertising a limited time offer to save 25 per cent for those signing up.
The company was founded in 2003 as a not-for-profit focused on doing things differently.
‘Green ISP’s office is solar powered, all other electricity is supplied from renewables provided by Good Energy, the UK’s first 100 per cent renewable tariff,’ says the blurb on the website.
‘We aim to run our operations in a completely radical way, our energy consumption will be from renewable sources, and all consumables will be as environmentally friendly as it is possible. We aim to assure our vision of a business model fit for the future, so being as sustainable as we can be while impacting on our planet as little as possible will help.’
Broadband up to 20MB costs from £14.99 a month. Ultrafast speeds up to 330Mb/s costs from £42.50 a month. Line installation is extra and call packages are not available.
Large data centres emit vast quantities of heat and use enormous amounts of electricity to power servers
The other is GreenNet, also a not for profit. ADSL2+ broadband up to 20MB costs £25 a month, while fibre to the premises boradband up to 80MB is £46 per month.
Founded by environmental activists, GreenNet has been providing email and internet services to charities, NGOs, campaigners, activists and individuals since before the web existed. They make an effort to operate in a way that minimises their environmental impact across their business.
Staff ride bikes or use public transport, electricity is from renewable sources provided by Good Energy, and the firm’s servers are located in a London data centre which buys its electricity from Scottish Power Renewables, generated from British on-shore and off-shore wind as well as some tidal and wave power sources.
They have some additional server space in Canada and Germany. Both of these facilities are powered by renewable electricity as well.
How broadband companies – and all companies and individuals for that matter – store data is increasingly fundamental to the carbon footprint created by using technology and communicating and transacting online.
Large data centres emit vast quantities of heat and use enormous amounts of electricity to power servers. Estimates suggest that these data centres, sometimes called data farms, are responsible for 2 per cent of global carbon emissions – the same carbon footprint as aviation.
Research by Leeds University forecasts that data centre emissions are expected to rise by as much as 300 per cent by 2026, prompting businesses such as Google to promise to power all its servers from renewables in the near future.
While not green per se, Zen is another provider that, according to Holly Mabert of Broadband Choices, ‘prides itself on a premium experience, from customer service to their Carbon Neutral Plus status as of 2020’.
She added: ‘They are more expensive versus some of the big broadband players but they do seem to come out on top for their user centric ethos.’
Consumers are increasingly demanding more environmentally aware financial services
The UK’s net zero plans
Under Theresa May’s premiership, the UK became the first nation in the world to pass into law a specific commitment to reach net zero carbon emissions by 2050.
Boris Johnson’s government has seen the economic opportunity this target presents, requiring massive investment into greener infrastructure, transport, agriculture, the built environment and energy production.
In July, the Prime Minister announced that £350million is being made available to cut emissions in heavy industry and drive economic recovery from coronavirus.
Reports followed that government is mulling the launch of a new green investment bank, following the sale of a previous incarnation to Macquarie three years ago.
In July last year government published its Green Finance Strategy, which built on work done by its Green Finance Taskforce, to set out how it planned to ‘green’ the global financial system and catalyse investment into innovation in financial products and building skills across the financial sector.
The Green Finance Institute was established and just over a year later, progress is beginning to emerge.
In September 2020 GFI announced it is partnering with the international Natural Resources Defense Council and the global clean energy non-profit, the Rocky Mountain Institute, to develop a platform to ‘support governments and institutions to establish a green bank or similar green financing vehicle’.
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