How to use your savings to campaign for a better world

Choose ethical financial services providers to make a difference, says Jenne Mannion

People who live their lives with socially responsible principles in mind would be appalled if their money was spent in ways that contradicted such values. But unless you take action to prevent this occurring, that's what can happen with money invested in banks, building societies and pension funds.

BANK ACCOUNTS

Most people have a savings account. The providers of these accounts use your money for their own ends. Your deposits are loaned to other individuals and businesses - possibly to fund activities that you would not choose to support.

Ethical banks, by contrast, state all the activities to which they are happy to lend money, and they operate within strict criteria.

Philip Chapman, a financial planning director at John Scott & Partners, says that although an ethical bank's account may not pay the very highest rate of interest in the market, you will still have a full range of products, including current accounts, savings accounts and even cash Isas.

"Some banks have a positive investment policy, focusing on enterprises and activities that create social or ecological benefit," Chapman says. "Others use a negative investment policy, avoiding sectors or areas of activity with a negative impact, such as tobacco, arms or animal testing."

There are four main ethical banks. The largest is Co-operative Bank and its internet subsidiary Smile. It is the only bank to apply ethical criteria across all of its activities.

Even better, says John Ditchfield, an adviser at Barchester Green, Smile offers the most competitive range of products of all the major ethical banks. Smile's current account pays an interest rate of 3.3 per cent a year, while the bank's cash Isa offers 4.65 per cent if you also hold a Smile current account, or 3.95 per cent if you don't.

The other three ethical operators are Triodos Bank, which finances only those enterprises that can clearly demonstrate a positive impact on the environment and the community; Shared Interest, a co-operative lending society; and the Ecology Building Society, which uses the money deposited by savers to grant mortgages on properties and projects that help the environment.

AFFINITY/CREDIT CARDS

A good way to support your favourite campaigns is through affinity cards. This is where a card issuer donates a portion of the annual fees or interest charges to the sponsoring organisation.

One example is the Co-operative Bank Oxfam Visa credit card. For every new card taken out, Co-operative will donate £15 to Oxfam. A further donation of £2.50 is made if the card is used within the first six months, plus a further 25p for every £100 spent on the card or transferred to the card. Co-operative runs similar cards for Greenpeace, Amnesty International and the Royal Society for the Protection of Birds (RSPB), which is particularly popular.

MORTGAGES/LOANS

No one likes paying interest charges, but profits on mortgages or loans from ethical banks may at least be put to good use.

Co-operative Bank offers a mortgage that tracks the Bank of England base rate for the entire lifetime of the loan, and has no early repayment charges. The rate is quite competitive, at base rate (currently 4.5 per cent) plus 0.45 per cent, total 5.1 per cent AER.

The mortgage also has a number of positive environmental features. First-time buyers receive a free home energy rating report with their valuation.

PENSIONS

If you have any form of pension, saving either directly or through your employer, you may be able to ensure that the money is invested ethically. A number of company pensions offer ethical fund options, and you will certainly have an ethical option in a personal arrangement, such as a stakeholder plan or Sipp.

There are many variations of such funds, according to the screening techniques employed. While most will generally avoid unsavoury areas such as weapons and tobacco, for example, others will look for more positive factors, such as those aiming to make a positive impact on the environment.

Jonathan Clark, a financial consultant at Barchester Green, says the main pension providers his company uses for ethical investing are Friends Provident, Norwich Union, Scottish Equitable and Standard Life.

Clark adds: "There is a common perception that investing your pension in ethical funds is higher risk because your money is being concentrated into certain areas of the stock market.

"Our argument is that these funds screen out the stocks that are higher risk because of their activities. If, say, there was a class action against tobacco companies in the UK, pension funds containing tobacco stocks would suffer."

INVESTMENTS

The ethical fund management business is massive, with more than £3bn invested in unit trusts that invest according to environmental or socially responsible principles.

Each fund's stance varies - in the same way as pension funds - so in addition to looking for good investment performance, savers need a fund where the principles reflect their own.

The Ethical Investment Research Service (020-7840 5700; www.eiris.co.uk) is the best source of information on the whole ethical fund market.

A tax break for ethical savers

* Community Investment Tax Relief (CITR) enables you to put your cash into a savings account for five years. The money is put to use helping good causes in regions and sectors throughout the UK.

* Rather than interest, you get an income tax credit of 5 per cent a year over the five-year duration. On an investment of £5,000, for example, you would earn a £250 income tax bill reduction each year.

* For a higher-rate taxpayer, this is the same as earning 8.33 per cent interest before tax from a savings account, or 6.41 per cent for a basic-rate taxpayer.

* The two main banks that offer CITRs are Triodos and the Charity Bank. The Community Development Finance Association lists other CITR accounts linked to individual projects on its website ( www.cdfa.org.uk).

'I want my savings invested responsibly'

Jill Nichols, of Dukinfield, Greater Manchester, feels comfortable knowing that the money in her bank account is not being put to use in an unsavoury manner. Jill, 57, opened her account with Co-operative Bank 30 years ago, initially out of frustration with her previous bank.

"At the time, I was married and my bank would not let me have my own cash card or credit card," she says. "I was so incensed by this that I decided to go elsewhere, and I thought that a co-operatively run business would be better."

Since switching to Co-operative, Jill has become more aware of its socially responsible policies, and says she would now settle for nothing less.

A part-time librarian, with one son aged 32 and a young granddaughter, Jill says she now wants other people to be more aware of how their savings are used by the larger banks. As well as her current account, she also holds savings accounts with her bank.

Independent Partners; request a free guide on NISAs from Hargreaves Lansdown

Voices
A Russian hunter at the Medved bear-hunting lodge in Siberia
Save the tigerWildlife charities turn to those who kill animals to help save them
News
Davis says: 'My career has been about filling a niche - there were fewer short actors and fewer roles – but now I'm being offered all kinds of things'
PeopleWarwick Davis on Ricky Gervais, Harry Potter and his perfect role
News
i100
Sport
Frank Lampard will pass Billy Wright and equal Bobby Charton’s caps tally of 106 caps against
sportFormer Chelsea midfielder in Etihad stopgap before New York contract
PROMOTED VIDEO
Arts and Entertainment
The first film introduced Daniel Radcliffe to our screens, pictured here as he prepares to board the train to Hogwarts for the first time.
booksHow reading Harry Potter helps children grow up to be gay-friendly
Arts and Entertainment
A scene from Aladdin is performed at the Tony Awards in New York in June
theatreBrit producer Lythgoe makes kids' musical comedy a Los Angeles hit
Sport
Usain Bolt of Jamaica smiles and shakes hands with a competitor after Jamaica won their first heat in the men's 4x100m relay
sport
News
Chancellor George Osborne, along with the Prime Minister, have been 'complacently claiming the economy is now fixed', according to shadow Chancellor Ed Balls
i100... which is awkward, because he is their boss, after all
Life and Style
A small bag of the drug Ecstasy
Health
Life and Style
Floral-print swim shorts, £26, by Topman, topman.com; sunglasses, £215, by Paul Smith, mpaulsmith.co.uk
FashionBag yourself the perfect pair
News
news
News
Netherlands' goalkeeper Tim Krul fails to make a save from Costa Rica's midfielder Celso Borges during a penalty shoot-out in the quarter-final between Netherlands and Costa Rica during the 2014 FIFA World Cup
newsGoalkeepers suffer from 'gambler’s fallacy' during shoot-outs
News
people
Arts and Entertainment
Standing the test of time: Michael J Fox and Christopher Lloyd in 'Back to the Future'
filmReview: A week late, Secret Cinema arrives as interactive screening goes Back to the Future
Extras
indybest
News
i100
Finacial products from our partners
Property search
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

ES Rentals

    iJobs Job Widget
    iJobs Money & Business

    Financial Analyst - Forecasting - Yorkshire

    £300 - £350 per day: Orgtel: Financial Analyst, Forecasting, Halifax, Banking,...

    Business Architect - Bristol - £500 per day

    £500 per day: Orgtel: Business Architect - Banking - Bristol - £500 per day A...

    Regulatory Reporting-MI-Bank-Cardiff-£300/day

    £200 - £500 per day + competitive: Orgtel: I am currently working on a large p...

    Trainee Recruitment Consultant - Birmingham - Real Staffing

    £18000 - £23000 per annum + Commission: SThree: Real Staffing are currently lo...

    Day In a Page

    Save the Tiger: Meet the hunters tasked with protecting Russia's rare Amur tiger

    Hunters protect Russia's rare Amur tiger

    In an unusual move, wildlife charities have enlisted those who kill animals to help save them. Oliver Poole travels to Siberia to investigate
    Transfers: How has your club fared in summer sales?

    How has your club fared in summer sales?

    Who have bagged the bargain buys and who have landed the giant turkeys
    Warwick Davis: The British actor on Ricky Gervais, how the Harry Potter set became his office, and why he'd like to play a spy

    'I'm a realist; I know how hard this business is'

    Warwick Davis on Ricky Gervais, Harry Potter and his perfect role
    The best swim shorts for men: Bag yourself the perfect pair and make a splash this summer

    The best swim shorts for men

    Bag yourself the perfect pair and make a splash this summer
    Has Ukip’s Glastonbury branch really been possessed by the devil?

    Has Ukip’s Glastonbury branch really been possessed by the devil?

    Meet the couple blamed for bringing Lucifer into local politics
    Dress the Gaza situation up all you like, but the truth hurts

    Robert Fisk on Gaza conflict

    Dress the situation up all you like, but the truth hurts
    Save the tiger: Tiger, tiger burning less brightly as numbers plummet

    Tiger, tiger burning less brightly

    When William Blake wrote his famous poem there were probably more than 100,000 tigers in the wild. These days they probably number around 3,200
    5 News's Andy Bell retraces his grandfather's steps on the First World War battlefields

    In grandfather's footsteps

    5 News's political editor Andy Bell only knows his grandfather from the compelling diary he kept during WWI. But when he returned to the killing fields where Edwin Vaughan suffered so much, his ancestor came to life
    Lifestyle guru Martha Stewart reveals she has flying robot ... to take photos of her farm

    Martha Stewart has flying robot

    The lifestyle guru used the drone to get a bird's eye view her 153-acre farm in Bedford, New York
    Former Labour minister Meg Hillier has demanded 'pootling lanes' for women cyclists

    Do women cyclists need 'pootling lanes'?

    Simon Usborne (who's more of a hurtler) explains why winning the space race is key to happy riding
    A tale of two presidents: George W Bush downs his paintbrush to pen father’s life story

    A tale of two presidents

    George W Bush downs his paintbrush to pen father’s life story
    Restaurateur Mitch Tonks has given the Great Western Pullman dining car a makeover

    The dining car makes a comeback

    Restaurateur Mitch Tonks has given the Great Western Pullman dining car a makeover
    Gallery rage: How are institutions tackling the discomfort of overcrowding this summer?

    Gallery rage

    How are institutions tackling the discomfort of overcrowding this summer?
    Louis van Gaal has £500,000 video surveillance system installed to monitor Manchester United players

    Eye on the prize

    Louis van Gaal has £500,000 video surveillance system installed to monitor Manchester United players
    Women's rugby: Tamara Taylor adds fuel to the ire in quest to land World Cup

    Women's rugby

    Tamara Taylor adds fuel to the ire in quest to land World Cup