Dividends for Generations to Come: A Beginner’s Guide to Ethical Savings
This editorial was featured on Your Money.com
Ravi Kumar, Senior Product Manager
It is fair to say the world is overhauling the idea of ‘business as usual’ to make way for a cleaner, greener future.
The world is undoubtedly becoming more socially and environmentally conscious. Younger generations are questioning traditional attitudes and practices that have dominated society for hundreds of years, with the introduction of the now-famed United Nations COP meetings in 1995[1] as a key turning point for this shift.
A greater awareness of our impact on the planet is also being reflected in people’s financial behaviour. Even the cost-of-living crisis hasn’t deterred some from their plan for a more values-based society.
At Gatehouse Bank, we recently surveyed savers to put their ethical credentials to the test and discovered that two-thirds (65%) of 18–24-year-olds prioritise ethical savings over financial returns,[2] despite inflation hitting a forty year high. This was in stark comparison to a quarter (27%) of 45-54-year-olds and less than a fifth (18%) of 65+ year-olds who said the same.
‘Use money for good without compromising on returns’
Though the interest from younger savers is promising, the generational divide reinforces the need to boost awareness around how people can use their money for good without compromising on their own returns.
Banking with ethical organisations or opting for specialist savings accounts and pensions pots are just some of the ways you can invest in a more equitable future.
Ethical banks aim to mitigate negative impacts on the environment and society and ensure that your money is invested in socially and morally responsible ways. That is, they place social, environmental, and moral values at the heart of their decision-making.
These companies may further demonstrate their ethical principles by being member-owned, investing their profits into charitable causes, declining to invest or operate in certain sectors, or signing up to UN principles.
For example, as a Shariah-compliant Bank, Gatehouse does not invest in the arms, alcohol, tobacco, adult entertainment, or gambling industries.
‘Lasting change’
If ethical organisations place morals at the heart of their decision-making, then ‘ethical products’ are the output. Ethical savings accounts ensure that the money deposited is not invested in any sectors or businesses that might negatively impact society or the environment.
Savers might opt for a savings account that supports charitable causes, allowing them to create lasting change while their savings grow. Others might choose a provider that allows them to view every organisation that it is supported by the money they have deposited, along with the positive impact that those savings are making.
For example, Gatehouse Bank plants a tree in a designated woodland project for every Woodland Saver account that is opened or renewed, at no additional cost to the saver.
There are plenty of ethical options on the market at present. Which one is ‘best’ is up to the saver themselves but is worth looking in to as it is no longer the case that ethical accounts offer lower expected profit rates.
Ethical savings accounts are redefining the definition of ‘rewarding’ by pairing competitive returns with benefits for current and future societies to enjoy. Financial and ethical goals are not mutually exclusive – they should work in tandem to drive social and environmental improvement, not just for your own peace of mind but for the benefit of generations to come.
[1] https://www.metoffice.gov.uk/weather/climate/cop/what-is-cop
[2] https://www.standard.co.uk/business/younger-savers-ethical-money-inflation-costofliving-b1022674.html