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5 ways to make your finances more sustainable

There’s no denying that the world is currently in the middle of a climate crisis. In fact, one leading energy expert recently said we only have six months to change the course of the climate crisis and prevent a post-lockdown rebound in greenhouse gas emissions that would overwhelm efforts to stave off climate catastrophe.

Fatih Birol, executive director of the International Energy Agency, said: “This year is the last time we have, if we are not to see a carbon rebound.”

In my last post I detailed some of the most important reasons why we shouldn’t rush back to normal after lockdown is eased and the threat of the pandemic is diminished. One of those reasons was climate change. This seemed to resonate with a lot of readers, so rather than just giving a list of problems, I’ve compiled five simple things we can all do to make our finances more sustainable.

It’s important to note that this does not constitute personal advice and if you’re not sure whether an investment or savings account is right for you please seek professional financial advice.

1. Move to an ethical bank

For many of us, especially younger people, the majority of our money is held in our main bank account, whether that’s in a current account, a savings account or an ISA – or often a combination of all three.

This means inadvertently you are supporting your bank’s values and investments. While this is not necessarily a bad thing, there are banks that focus on ethical and environmental issues that may better reflect your values and allow you to make a positive impact simply by having an account with them.

In the UK, there are a few ethical banks you could consider. Bristol-based Triodos is one option. Built on the premise of “your money has the power to change the world,” it has to date has issued £7 billion in loans across Europe to projects benefitting people and the planet.

Other options include Monzo, which was founded as an “alternative to the banking of the past.” and the Co-operative Bank, which is one of very few high street banks to have a clearly stated ethical policy covering a range of issues.

The middle of a global pandemic may not be the most sensible time to switch banks, particularly if you’re finances are squeezed more than usual at the moment, but it is something to keep in mind for when the situation improves.

2. Check your investments

Are you aware which companies the funds you invest in hold in their portfolios? Worryingly, most people are not.

In general, selecting funds focuses a lot on risk appetite – which is really important – but not a lot on ethical or moral considerations.

There are now a lot of ESG (environmental, social, governance) focused funds, where you could choose to invest, but even these can differ greatly in their composition, so it is important to look closely at the whole portfolio.

Funds also change the makeup of their portfolios over time, so even if you know which investments you held to begin with, it’s worth checking at least quarterly to see if anything has changed.

This is an example of how, particularly if you’re investing significant sums, having a trusted financial adviser can really benefit you. If they understand your preferences, values and goals, they can make sure your investments always reflect this and make suggestions of other suitable options you may be interested in, taking a lot of the hard work away from you.

3. Do research into companies you buy from

Vote with your wallet. We all make financial decisions on a near-daily basis, whether it’s the coffee you buy on the way to work (when we’re actually allowed in the office!), the dress you ordered from ASOS, or your Netflix subscription. It’s always worth asking yourself ‘does this company support my values and beliefs?’

Fast fashion has rightly come under fire for its detrimental environmental impact, but it’s also important to consider the impact of all online purchases. When you stop and think, Amazon’s service, where you can order a book at 8pm and it will arrive by 11am the next morning, may be incredibly convenient but cannot be good for the environment. Waiting a bit longer for it to be delivered or popping to your local independent store may be slightly more time consuming but could have a much lower environmental impact.

I completely understand there are times when you can’t boycott a shop on ethical grounds, whether due to your financial circumstances, lack of alternative availability or time constraints. But it can be a useful principle to consider, particularly when making more extravagant or indulgent purchases.

4. Switch your pension

Personally, I found this the easiest change to make. The vast majority of full-time employees in the UK qualify for auto-enrolment into a workplace pension scheme. If you’re not sure what this is, you can read more about pensions and your entitlements here.

Like most people, I didn’t pay too much attention to mine at first, other than checking I could log onto my online account and that the payments were going through correctly. However, a few months ago I logged on to see how much the pandemic had impacted my pension pot. While I was doing this, I realised there was an option to select which fund my pension was invested in.

By default, I had been investing in the standard fund, but simply by clicking a button I changed it to the provider’s sustainable fund. The whole process took about 2 minutes, hasn’t impacted my investment performance (yet) and made a genuine difference to funding sustainable businesses.

5. Consider switching energy providers

This tip not only helps you contribute to a more sustainable society but may also save you money – which is rarely a bad thing!

Some energy providers focus solely on renewable energy sources and reinvest their profits to develop new and sustainable energy sources. In the UK, one of these is Bulb. All of its energy is renewable and 100 percent of its gas is carbon neutral. In fact, the average Bulb member lowers their carbon impact by 3.4 tonnes of CO2 a year. That’s the hard work of around 1,689 trees.

Bulb also offers a referral discount, so if you can convince a friend to switch too you could both save around £25.

There are other options available such as Green Energy UK and Octopus Energy, both of which also offer 100 percent renewable energy to their customers.

If you found this post interesting, please like it and share across social media or send it to your friends. I’d also love to hear your thoughts and experiences, especially if you have any green finance tips, so please do leave a comment!

By The Twenty Percent

Hi I'm Katie and I use my blog to help young people take control of their personal finances.

26 replies on “5 ways to make your finances more sustainable”

Fantastic post! Sustainability and the climate crisis are becoming more of a concern for us as well. I love the tips you suggest on how to optimize your finances for a more sustainable outlook. Another thing we did was significantly reduce the amount of meat we eat. The only animal products or by-products we purchase are eggs and cheese. We rarely, if ever, purchase meat with our groceries (but occasionally will have meat while out at a restaurant). This also SIGNIFICANTLY reduced our grocery bill. Win-win all around. Healthier, better for your wallet, and most importantly – better for the environment.

Would love to see more posts like this – great work, keep it up!!

Checking your investments is the most actionable item here. If you don’t like how a company behaves then you shouldn’t invest in them. Where you bank is adjacent to this sentiment. When you leave money in a bank account the bank uses your money for other profitable ventures. This is why they pay you interest. Leaving your money in a bank account is essentially an investment. With every dollar you spend or invest you are voting. We should all be careful what we vote for.

Thank you so much for sharing this. I find finance a challenge but I know it’s important to learn and know as much as we can. Money revolves around money, unfortunately, it’s essential to study the best way to sustain it. Thank you again for sharing😊✨

Thank you for sharing this! In this day and age, it’s certainly important to know where it is you’re putting your money and the greater environmental impact this has. The trading software I use when trading stocks now has environmental filters and data to help pick more environmentally-friendly companies which I will definitely start utilizing more after reading this!

I didn’t know about the pensions selection, I’ll have to look into that. And our energy contract is coming up for renewal at the beginning of August so this time I want to make sure we switch to a renewable company as well. Great tips, thank you for sharing! Lisa

I work for a bank and I 100% have never even considered moving my money to a more ethical bank… which now that I think of it is freaking insane. As someone who’s worked in the finance industry for the past year and a half, I really don’t know why this conversation doesn’t come up more often – but I am looking into ethical banks as we speak. This is a great post!xx

These are all such great tips on how to make your finances more sustainable. I am always looking for ways to do that so thanks so much for sharing all this information!

I hadn’t thought about banks being ethical/not ethical so thats such an interesting point that I need to look into. I’ve been trying to support small businesses rather than buying from larger corporations but this is a great post!

I enjoyed reading this post, Katie. And wow it’s given me a fresh perspective when it comes to investing and really thinking if the companies I invest in support my beliefs and values and if they are sustainable. I wonder if there are any sustainable banks where I’m from! Great tip too on switching energy providers. Will definitely share this post 🙂

This is so interesting! A lot of points here that I’ve never considered before – thanks for bringing them to my attention.

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