Whether you have a few pounds to spare or a larger inheritance, there are alternative places to invest savings. Most green companies use ‘ethical screening’ to remove funds held in ‘bad stuff’ (fossil fuels, factory farming, pornography, tobacco, gambling, weapons) to invest in ‘good stuff’ (clean energy, animal welfare, fair trade, zero waste). And as we become more eco-savvy, you are now likely to get bigger long-term returns on good stuff!
Most UK bank accounts are members of Financial Services Compensation Scheme, so savings up to a certain amount are covered by government (check before investing).
Green Bonds
Green bonds are like regular bonds but with a twist. The money raised goes straight into environmental projects. Think of solar farms or wastewater treatment upgrades. They offer a win-win: steady income for you and support for green projects. As more corporations and governments issue green bonds, they become a solid choice for eco-conscious investors.
Socially Responsible Funds
Socially responsible funds (SRFs) pick companies based on specific ethical criteria. Unlike traditional funds that focus solely on financial metrics, SRFs screen businesses for their social track record.
This means no investing in things like tobacco or fossil fuels. Instead, they spotlight companies that uphold strong labour rights or promote diversity. They offer peace of mind, knowing your money contributes to ethical practices.
Impact Investing
Impact investing is all about getting tangible results. It’s not just about making money—it’s about making a difference. Whether it’s improving education access or investing in affordable housing, the focus is on measurable social impact.
For instance, you might invest in a fund that builds clean drinking water facilities in underserved areas. It’s investment with intention, blending philanthropy with finance.
Renewable Energy Stocks
With the global shift towards cleaner energy, renewable energy stocks are hot. Companies in this sector harness wind, solar, and other renewable sources to generate power. Investing here means you support the transition to a sustainable future. Consider firms involved in battery technology or solar panel production—industries likely to grow as the world reduces reliance on fossil fuels.
Community Investments
Want to see a direct impact on your doorstep? Community investments let you back projects that boost local development. These could be anything from local businesses to affordable housing projects. By investing locally, you support economic growth right where you live, enhancing local landscapes and creating jobs.
An Account That Invests in Communities
Charity Bank is a savings bank to let you put your money where your values are. The simple accounts are easy to join, and then your money is used to do good in the local community. Your savings become part of a mission to support social enterprises and small charities across the UK.
There is a small selection of fixed and variable and ISA accounts for personal savers, along with (savings) accounts for businesses, charities and credit unions. You can look up your local area on the website to see projects that have been funded. Here are some examples to inspire:
- Helping a compassionate care centre for complex needs
- Installing solar panels on the roof of a Somerset village hall
- Funding a Kent sports centre, for people struggling financially
- Providing accommodation for six homeless adults in Cornwall
- Funding a YMCA support centre in the West Midlands
Low-Risk Investments to Help Councils
Abundance Investment is a 10-year old company with over 8000 investors who trust its open honest approach to green investment, and together have invested over £150 million to support climate projects. Community Municipal Investments (climate bonds’ to allow councils to get closer to Net Zero targets) are less risky, as councils are legally obligated to pay bills.
To date, no UK council has ever failed to pay back a loan. Investors can also choose to donate interest to fund solar power and wildflower verge restoration.
The founders left successful careers in finance and business, to serve ordinary investors who wished to use their money to create a sustainable economy. Your money will be used for anything from energy efficiency to solar panels to EV charging stations.
The company has a growing pipeline of councils who wish to join, and other councils wish to launch more investments to fund environmental programs. These loans are eligible to be held in an Innovative Finance ISA, for tax-free returns of up to £20K a year (bar two). The company’s 800 investors have raised £2 million with 2 councils (17% invested less than £100).
How to Start Investing Sustainably
Ecology Building Society offers a range of savings accounts, including ISAs. Profits are used to give to those building eco-friendly homes or doing up dilapidated old buildings.
Shared-Interest offers simple savings accounts, with profits used to give fair trade loans. Examples include fair trade coffee farming, and a no-till method to grow food.
Gatehouse Bank offers a woodland savings account (which plants a native tree on your behalf with each opened or renewed fixed term deposit or fixed term cash ISA account). The plantings include areas to help endangered red squirrels thrive (endangerment is due to lack of habitat, not grey squirrels). Rather than interest, profits are shared (so compliant with no-interest beliefs for Muslims). Manager your account via the Savings App.
Become a Locavestor (local investor)
Locavesting is when investors put money in communities, rather than the stock market. All investment has risk, but if you put your ‘shares’ in a locally-owned food co-op (over a national supermarket), you still ‘win’ if you don’t make money, as you’ve improved where you can buy your food!
Amy Cortese coined the term, her book is a good place to start. Meet pioneers and ideas behind the local investment movement, and explores community capital and crowdfunding to local stock exchanges. Also read Financing Our Foodshed, profiling local investors who helped an artist start a gluten-free bakery, reduced loan payments by a third for a much-loved grocery co-op and helped refinance credit card debt for a local restaurant.
Investing (ethically) on the Stock Exchange
Always a risk, so never invest more than you can afford to lose.
Ethical Investors can makeover your portfolio and has given over £600,000 to good causes, via its own ethical screening criteria. It can also advise on pensions and hand you over to discretionary managers to tailor bespoke investment portfolios.
US Vegan Climate ETF tracks Beyond Investing US vegan climate index, which does not invest in anything that harms animals, humans or the planet or humans. It’s listed on Cboe BZX Exchange (under ticker VEGN). Plant-based companies can visit Veg Capital.
Create Social Justice through Financial Decisions
The Social Justice Investor is the best book to read, if you regularly invest your savings either in banks or on the stock market. Obviously there is always a risk, but millions of pounds are invested for financial return. And if you go down this route, you can use these decisions to wisely invest for a better future for all.
Whether you invest a little or a lot on the stock market, or even donate regularly to charity, money can help fight social injustice. It’s not a silver bullet, but it’s one a suite of decisions you can make. Invest in what you care about and know you’ve made a difference, as well as hopefully a little profit.
This book is ready to help you put your money where your values are. It removes all the technical jargon and introduces you to the basic building blocks of ethical investment. Once you have your toolkit, you can then either go it alone or explain your ideals to a financial advisor.
Learn to select investments that match your ethics, allocate resources widely and wisely, and then measure your success. Changing the world, often starts with where you decide to put your money.
Nicole was stunned by the murder of George Floyd in 2020. She protested police brutality and racial injustice through Congressional letter campaigns. But it wasn’t enough. She wanted more change. So Nicole purchased a $500 investment product that finances black-owned businesses.
After 3 years, she reviewed the investment’s returns statement. To find that her investment was now valued at £575 (a 15% return) and had contributed to the investment’s collective creation of over 30,000 black-owned businesses.
Andrea Longton is a writer and social justice investor who specialises in community development finance. She has raised over $1 billion for social justice investments in the US and advised on another $1.5 billion worldwide. She also manages her family’s social justice investment portfolio.
A treasure chest of valuable insights, for readers who want to finance a more just society. Joanne Gan