Applying your personal moral code to your day-to-day banking and savings is no simple matter. It is straightforward enough to put long-term savings into an ethical or green investment fund, as there are various funds on offer which are run along these lines. These funds have their own set ethical or environmental criteria, and any shares they hold must meet these guidelines.
But moral judgements are hard to make when it comes to banks which, by their nature as lenders, have their fingers in many pies. Managers of ethical funds often avoid the financial sector because corporate lending is largely undisclosed and therefore a murky area.
Michael New, senior consultant at independent financial advisers Barchester Green, which specialises in green/ethical investments, says the opportunities are limited for clients who ask where they can save their money ethically. "It is a problem. Almost always the answer is you can't," he says.
"There is a great need for an ethical building society on the high street," he says. But there's little chance of one springing up anytime soon.
The Co-op Bank provides a range of banking services and adheres to a strict ethical policy. Among other things, it pledges not to invest in or supply financial services to any oppressive regime and says it will not lend to tobacco product manufacturers.
Its rates of interest are comparatively good. Co-op's Save Direct instant savings account pays 5 per cent a year on a balance of pounds 1,000, with higher rates tiered from pounds 5,000, according to financial data provider MoneyFacts.
Triodos Bank, which used to be called Mercury Provident before it was taken over by a Dutch bank, offers various savings accounts. It says all loans it makes with savers' money go to projects which benefit the community and environment. One of its partner organisations in South Africa lent money to help a Soweto pre-school buy land and build classrooms. Affordable pre-schools increase family income by letting mothers work, Triodos says.
Triodos' Social Investor account pays 3.25 per cent annual interest with a minimum balance of pounds 500 and you have to give 33 days' notice to withdraw your money. The bank offers two Tessas. Its Top Tessa pays 7 per cent interest, whereas the Target Tessa pays only 3.5 per cent, but lets you choose which projects or sectors your money will be lent to.
Another option is West Yorkshire-based Ecology Building Society. It will only lend to people buying properties which have an ecological payback - for example organic smallholdings or the renovation of derelict houses which would otherwise be abandoned.
You have to be a member of a green organisation such as Greenpeace before you can open one of its savings accounts. All accounts are postal accounts, and you can choose from the Eco-Instant account, which pays 3.5 per cent gross, and a Tessa, which pays 6 per cent and stipulates a pounds 100 minimum balance.
For philanthropic savers willing to accept a rate of interest even lower than inflation, there is Newcastle-based Shared Interest, which supports the fair trade market. It lends money to help Third World producers with their costs until enough consumer sales come in. "We have some clients who put pounds 1,000 into this, but this is money they really are making as a charitable donation," says Philip Chapman, partner at IFA firm Holden Meehan, which specialises in ethical and green investment.
If you are looking for a mainstream institution, from an ethical and green point of view, building societies are better than banks. Mr Chapman says he might recommend Bradford & Bingley to a client with ethical concerns looking for a building society. The law states that the vast majority of building society lending has to be housing-related, and the rest has to have the backing of members. However, the wave of societies converting to banks has complicated the picture.
Karen Eldridge of the Ethical Investment Research Service (EIRS) says those building societies which have only recently converted to banks are acceptable for savers not opposed to conversion, as they are still predominantly involved in housing. But keep your eyes open for any changes. "Of the big four banks, it's generally accepted among ethical funds that NatWest is better," she says.
According to a report last year in specialist publication Ethical Consumer, NatWest scored as highly as the Co-op Bank when judged on environmental criteria.
Co-operative Bank, 0345 252000; Ecology Building Society, 0345 697758; Triodos Bank, 0500 008720; Shared Interest, 0345 023008; Barchester Green Investment, 01722 331241. Holden Meehan, 0117 9252874, publishes a free independent guide to ethical and green investment funds.