James Daley: Beware the forest of 'green' schemes

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The Independent Online

Financial-services companies have been shamelessly clambering over themselves to jump on the green bandwagon over the past couple of years. Climate-change funds, carbon-offset mortgages, green current accounts and "carbon-neutral" banks (to name a few) have become all the rage – if not with consumers, then in the marketing departments of financial organisations across the country.

But if you've got a burning eco-conscience, and find yourself seduced by this new green gimmickry, take a step back before you sign on the dotted line. A look under the bonnet of many of these "eco-friendly" products reveals that there are many different shades of green – some of which are much closer to brown.

HSBC has been one of the biggest organisations to tap into green marketing over the past couple of years, launching a new climate-change fund just this week, as well as establishing a "Climate Change Centre of Excellence". The bank is the latest in a string of companies to launch such a fund, and it follows on from a number of other recent green initiatives – such as promising to donate £5 to an environmental charity, and promising to plant a tree, for clients that opt for paperless banking.

While the new fund is perhaps simply an act of opportunism (would it bother launching if there were not the demand?) green current account initiatives – HSBC's and others – are not exactly the great products of altruism that the banks make them out to be. Persuading customers to forgo hard copies of their statements, as well as cheque books and paying-in books, represents a significant saving for the banks – more than £5, for sure.

Meanwhile, though HSBC was indeed the first major bank to declare itself carbon neutral, back in 2005, much of this is based on carbon offsetting – a practice which remains controversial in the world of ecology. George Monbiot famously compared it the practice of buying confessions in the Middle Ages – paying to give yourself a clean conscience. Although planting trees may be a worthy business, there have been numerous stories of the carbon-offset companies, who are charged with clearing the big corporations' consciences, frittering money away on carbon credits, which make no difference to reducing emissions whatsoever.

Carbon-offsetting is, in fact, at the heart of almost every green financial product. Green car insurance from More Than, green mortgages from Giraffe, green travel insurance from Axa – the list goes on.

Even if you put any cynicism about carbon-offsetting aside, most of these products do represent good value. In most cases, the rates are so uncompetitive, that you're better off finding yourself a cheaper deal, and making a donation to charity with the saving. Once you've added gift-aid, you'll be making a far greater difference – and you'll be making the choice, rather than your financial services company, about where your cash is going.

Just as much vigilance is needed in the world of ethical and environmentally-friendly investment. According to the environmental research organisation Trucost, one in four so-called "socially responsible investment" funds have a higher carbon footprint than their more mainstream rivals. Trucost's research looked at the carbon footprint of all the companies in the FTSE 350 before looking at which funds invested in them. The companies in Jupiter Asset Management's Environmental fund, for example, were found to have a higher carbon footprint than all but six of the other 184 funds that the research looked at.

I'm confident that there will be a day when there are many more genuinely green financial services companies – but for the moment, the environment is simply just another marketing gimmick for most of the big boardrooms. So don't be fooled into thinking that most of these products are any more.

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