Ethical Finance: Calling all card-carrying greens: the planet needs you to go deep into debt

Sam Dunn asks whether the new 'Breathe' Barclaycard and products like it are really worth the extra cost to the conscientious consumer
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The Independent Online

Green may be the new black but, when it comes to the latest ethical financial product to hit the market, you'll be a lot greener if you're well in the red.

Barclaycard's new credit card promises to donate 50 per cent of its profits to projects around the globe that reduce carbon emissions. Barclaycard Breathe cardholders will be offered discounts on ethical purchases - for example, £25 off energy bills with the green fuel provider Ecotricity, and 10 per cent off bikes purchased at Halfords.

Interest is charged at a low annual percentage rate (APR) of 5.9 when the card pays for "green" transport - bus and rail tickets instead of private car use - but otherwise the APR is 14.9.

Of course, the greater your debts and the less you pay off each month, the more your interest payments build up to help the environment. Use the card astutely by paying off all you owe each month, and your contribution to the fight against global warming will be minimal. "It's the [bigger] borrowers that will fund Barclaycard's green giving," stresses a spokes- woman for the financial analyst Moneyfacts.

A better idea, she suggests, would be to find the low-interest credit card deal that best suits your needs "and then make separate donations to your favourite green cause".

Yet the market for ethical financial products remains strong, with Barclay-card claiming that the launch of its new card has come in response to "growing consumer demand". It cites its own research, suggesting that more than two-thirds of shoppers feel guilty about the impact their behaviour has on the planet, and 82 per cent would buy more environmentally friendly clothing, food and cars if they were cheaper.

Not that the ethical market is completely price sensitive. In the same way that consumers will pay a premium for organic food, so some seem prepared to accept a higher price for green savings accounts, investment funds, car insurance, bonds, child trust funds, mortgages, electricity - and now credit cards.

But working out whether such products really make a difference to the environment, and whether they offer value for money, is not easy. To this end, a new service from Moneyfacts allows consumers and financial advisers to compare the various green financial products available.

For now, Moneyfacts won't be compiling an ethical "best buy" league of the kind it provides for mainstream deals, but it hopes to build up some sort of database to produce one later this year.

"We won't be able to go into just how green the products are - comparing different 'shades' of green - but that may come later," the spokeswoman says.

Instead, its early service will include details of providers that it considers to have a particularly green agenda, such as the Co-operative bank, the Triodos social bank and the Ecology building society.

Independent financial advisers (IFAs) are keen to get into the market too. From this month IFA Baigrie Davies will offer free socially responsible investment (SRI) "health checks" for anybody with a pensions and investment portfolio of £200,000 or more. (For smaller portfolios, there is a £100 charge, or £250 if shares are included.)

Baigrie Davies director Amanda Davidson says: "Very few people realise they can make a positive contribution to the environment through a socially responsible investment strategy. Going green doesn't mean inferior returns - far from it - and our own fund manager research shows almost universal agreement that the gap between [the returns from] conventional and SRI funds is closing, and closing fast."

Despite this, green products are often viewed with scepticism - the accusation being that companies are simply cashing in on a social trend rather than genuinely adopting an ethical approach. But where once those who bought organic food and recycled their household waste were seen as quaintly eccentric, today there is broad acceptance of the need for all of us to be environmentally aware.

"It's easy to be cynical at the thought of [companies] using green and ethical issues to market more of their products to consumers, but there are worthy causes," says Rob Kenley of the price-comparison service Moneysupermarket.com.

The ever-broader range of ethical financial products on offer shows how providers are coming up with all sorts of ways to turn your wallet green.

For example, last November, Co-op Insurance Services (CIS) launched its ecoinsurance deal for motorists. CIS offsets a fifth of your car's CO 2 emissions by donating 20 per cent of your premium - at no extra cost to you - to Climate Care, which supports environmentally friendly projects in developing countries. Among its current initiatives is the purchase of fuel-efficient stoves to replace traditional wood-burning ovens in Honduras.

Late last year, Triodos launched a two-year "renewable energy bond" (paying 4.5 per cent, at the time only 0.25 per cent less than base rate), with investors' cash used to finance renewable energy projects like community-backed wind farms.

Norwich & Peterborough building society remains one of the few mainstream lenders offering a green mortgage. It will plant 40 trees on your behalf to make your home "carbon neutral".

But all such deals carry a discernible premium.

As in the case of Barclaycard Breathe, you might do better to find a more competitive deal on the wider market, and donate the money saved to a green charity. Alternatively, you could use savings to make your home environmentally friendly - by insulating your loft, say.

For now, at least, the best-value green financial deals are those offered by investment funds and electricity suppliers (particularly if you've never switched supplier before), thanks to greater competition in their respective markets.

As an ethical investor, the exclusion of oil and tobacco stocks from your funds means you will probably miss out on some generous returns. So make sure you have a broad portfolio of assets - property, cash and bonds, as well as shares.

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