Ethical Savings Accounts

Finding an ethical savings account

As more people are becoming aware of the ethical implications of who they bank with, what does it mean for a savings account to be ethical?

Ethical savings accounts range from those that do not invest in tobacco, the arms trade and fossil fuels, to those making a more positive impact on the world. We also look at tax avoidance, director's pay, lending transparency, and carbon claims for the companies behind 50 savings account brands. 

With almost 14 points difference between the top and the bottom of our score table, how well does your bank rate for looking after your savings in an ethical manner? The answer if you're with one of the big high street banks is 'not very well', but building societies and green banks tend to do much better. 

Do the high street banks offer ethical savings accounts?

As the head of Natural England recently commented in The Guardian, “even bankers need to eat, drink and inhale clean air”. But, given what some banks fund and invest in, you’d think they didn’t get the memo.

When you deposit your savings pot into an account with a bank or building society, that company can then use your money to lend to others, including other companies. Some of the banks we rated were involved in financing some really damaging companies and projects, with the same names cropping up again and again: HSBC, Barclays, Lloyds, NatWest, Santander, and Banco de Sabadell (TSB).

These and some other banks have essentially been fuelling abuses at the intersection of animal rights, human rights and the environment. Many other organisations are now tracking the activities of banks and reporting on them in detail, including but not limited to:

• Banks for Animals (Banco de Sabadell, HSBC, Barclays, NatWest)
• Banking on Amazon Destruction, and Complicity in Destruction by Amazon Watch (HSBC, Santander).
• Beef, Banks and the Brazilian Amazon by Global Witness (Santander, Barclays, HSBC).
• Don’t Bank on the Bomb by the International Campaign to Abolish Nuclear Weapons (Santander, Lloyds, Barclays, HSBC, NatWest, Banco de Sabadell)

How do banks rate for climate change activity?

Out of all the savings accounts rated, only four got a best rating for Carbon Management and Reporting: Charity Bank, Ecology Building Society, Triodos and Metro Bank.

The majority of companies received a worst rating. This includes the big high street banks.

Many did not discuss the carbon impacts of their investments and were also found to be funding climate destructive sectors. It is hard to believe that banks are still providing billions of pounds in funding for fossil fuels in a climate crisis, but for a number of the companies rated in this guide, this was very much the case.

Our article on who’s financing fossil fuels has a more detailed overview of which banks are contributing to the climate crisis.

Banks and excessive pay for directors

Almost all the savings accounts were marked down under Anti-Social Finance for excessive directors' pay.

The majority were found to be paying over £1 million in total compensation annually to individual directors. For example, HSBC, Barclays, Lloyds, NatWest and Santander all paid over £4m in the latest year.

In a time where an increasing number of people are not only unable to save, but more likely to be in debt, this type of compensation from the companies behind the savings accounts is inexcusable. More information on this appears in a separate feature article on banking and excessive pay.

Banks and tax avoidance

Out of the companies rated, 22 received Ethical Consumer’s middle or worst rating for likely use of tax avoidance strategies.

The biggest high-street banks all fail miserably on tax. Santander and Barclays had been criticised by the Independent for allegedly dodging multi-billion pounds in tax. And HSBC, who came bottom of the table, had been repeatedly criticised for tax avoidance in multiple countries.

Ecology Building Society, Leeds Building Society and Coventry Building Society had all been independently verified by the Fair Tax Foundation as paying the right amount of corporation tax.

Transparency and financing problematic sectors

We have recently begun to use a new lending transparency ranking. Companies were rated on their lending transparency and policies for ethical lending practice as well as lending to companies in problematic sectors.

No surprise, HSBC, Barclays, Lloyds, NatWest and Santander were amongst those who lost marks for lending to particularly problematic sectors.

You can find out more about who was funding arms, fossil fuels, Amazon destruction and animal cruelty in separate feature articles.

Digital challenger banks and savings accounts

How well do 'newer' digital or app-based banks perform in our ratings for savings accounts? Our ratings system places digital banks like Monzo, Starling and Revolut, in the middle of the score table. Currently they are not challenging the more ethical banks and building societies who are at the top of the score table, but they score better in many ratings than the big high street banks.

We discuss digital banks in more depth in our guide to current accounts, including Revolut's status as an e-money institution.

Building society savings accounts

For all the harms that banks can be involved in, thankfully there are more ethical options for your savings.

Member-owned building societies and credit unions are not focused on corporate shareholders and can be a great alternative to high-street banks like Barclays, Santander, HSBC, NatWest and Lloyds. You automatically become a member when you open a savings account with a building society or credit union.

Although there was some variation, building societies generally scored pretty highly in our table.

There are currently 43 building societies and 7 credit unions listed as members of the Building Societies Association, ranging in size from relatively small, e.g. Ecology Building Society, to very large, e.g. Nationwide, Skipton.

For some people, part of the appeal of a building society might include the fact that they aren’t all headquartered in London. Some operate nationally and others locally, so it’s worth checking what your local building society offers, as we couldn't include all of them in the guide.

As well as operational structure, for a savings account to be ethical it is important for it not to contribute to social and environmental harm. Some companies also actively finance positive social projects. Charity Bank, Ecology Building Society, Triodos and The Cooperative Bank all scored at the top of our table and had positive lending policies.

Ethical or Green savings accounts

As its name suggests, Ecology Building Society is unique in the fact that it states that it’s “dedicated to improving the environment by supporting and promoting ecological building practices and sustainable communities”. It does not lend to projects involved in the fossil fuel and arms manufacturing industries.

Triodos publishes details on every institution it lends to in its industry-leading ethical policy of transparency. If you choose to open a savings account with them, its website says, “While you earn interest on your savings, we use your money to finance projects that make a positive and lasting impact on society, culture or the environment.”

The Cooperative Bank are generally known as being an ethical high-street bank and it prides itself on having a customer-led ethical policy. It is kept accountable by a Customer Union for Ethical Banking, which has links to Ethical Consumer. It doesn’t finance fossil fuels or other environmentally damaging projects, and has a commitment not to lend to organisations abusing human rights, manufacturing weapons or promoting hate.

When it comes to environmental claims, a Which? survey from 2021 found that, “69% [of respondents] said they would not know how to find information about a bank’s green credentials, making it difficult to compare providers”.

Triodos, Ecology Building Society and Charity Bank all received a Best rating in our environmental reporting and climate change categories, meaning they had been clear and transparent in what their environmental impacts are and what actions they are taking to manage this.

Ethical options: credit unions

Another great option for a more ethical savings account can be finding your local credit union.

In a cost of living crisis, credit unions can also provide vital loans to poorer members of the community, as explained in the Q&A below. So joining a credit union not only avoids problem banks but can also be good way of acting in solidarity with your local community.

We didn’t include credit unions in our ratings table as there are so many in the UK. But they are another more ethical alternative to a traditional savings account from a bank if you’ve gone off banks altogether. Operating at the local level and offering different types of services to a high-street bank, they are owned by their members, rather than shareholders, and are essentially built for the local community by the community.

If you would like to save with your local credit union, use the website Find Your Credit Union to help you find what’s available in your community:

We also have a more in-depth article on credit unions.

Savings in a cost of living crisis

Economic inequality in the UK is one of the worst in Europe and, as we experience a cost of living crisis, it is getting worse.

Widening inequality has been increasing the disparity between those who are financially vulnerable, with little to no savings, and those who have been able to save more than before. This is something to think about when choosing a savings account, and saving in a credit union could contribute to supporting others in your community.

Around 1 in 4 (24%) UK adults currently have low financial resilience according to the Financial Conduct Authority’s latest Financial Lives survey and 60% of all adults, equivalent to over 30 million people, said that they were finding it a burden to pay their bills. Economic inequality highlights clear social biases with women and disabled, migrant and Black, Asian and Minority Ethnic (BAME) populations disproportionately affected.

The cost of living crisis has meant those already financially vulnerable will be the hardest hit in a system that is designed to fail them.

Not only is the number of people unable to save increasing, so is the number of people in debt and, as a result, the number of people forced to borrow from illegal lenders. In March 2022, The Centre for Social Justice (CSJ) published a report discussing loan shark victims which found that most victims already faced an intersection of disadvantages. Racialised communities in the UK are more than twice as likely to be in debt than white people, with Black African and Bangladeshi households having ten times less wealth than white British people.

Whilst banks' profits are in the billions, illegal lenders are using psychological, and sometimes, physical intimidation to prey on those already struggling with household debt. The CSJ report stated that over a quarter of all victims surveyed had considered or attempted to take their own lives at some point, with almost 75% saying they’d done so while borrowing money from an illegal lender.

On the flip side, a recent article in The Guardian pointed to the fact that approximately £270 billion is gathering dust in accounts which pay no interest, and about half of people have either never changed savings accounts or changed over five years ago.

Some of the big bad banks discussed in this guide are fuelling the inequality crisis through excessive directors' pay and tax avoidance. The ability to save is becoming more and more of a privilege. If you have that privilege, it is all the more important to choose a savings account from our list with ethical values, not one that continues to exacerbate existing social inequalities.

Additional research and writing for the guide by Sorcha Perris.