Protests outside Barclays branches and the recent arguments over Baillie Gifford’s sponsorship of book festivals have put the spotlight on the investments behind big banking institutions. For most people, choosing an ethical home for their current account will be the easiest way to ensure their money is being used in an environmentally friendly or socially responsible way.
The consumer group Which? names three “eco providers” for current accounts: the Co-operative Bank, Nationwide building society and Triodos Bank. These three also do well on the green money website MotherTree, which has ranked major UK banks on how much £10,000 in a current account contributes in carbon emissions. At the bottom of its table – so therefore the winner – is Triodos, followed by the Co-op Bank and then Nationwide.
But with the Co-op Bank heading for a takeover, and Triodos no longer offering overdrafts from Monday, you could be forgiven for wondering if these remain the best choices for you.
Here we look at those three providers and whether they still offer a good deal for those looking for an ethical home for their everyday account.
The Co-operative Bank
The Co-op Bank is famous for its customer-led ethical policy which focuses on “our planet, our people and our communities”. It is committed to not providing banking services to businesses and organisations that conflict with its policy due to their involvement with – for example – fossil fuel extraction.
The bank recently confirmed it was being taken over by Coventry building society. The Co-op Bank name may eventually disappear from high streets, and it is not clear what will happen to its ethical policy in the longer term.
The takeover – due to take effect in early 2025 – has left some Co-op Bank customers concerned. One account-holder, who banks with it because of its ethical stance, emailed Guardian Money to ask about other banks she could transfer to if necessary. “I can’t be the only Guardian reader banking with the Co-op who is wondering where to go from here,” she said.
While the Co-op Bank calls itself “the original ethical bank”, it has for some years been majority-owned by a group of hedge funds and fund managers. The deal will see the Co-op Bank return to mutual ownership and some customers may feel that a building society is actually a more ethical owner. Coventry is also a certified B Corp, which is meant to demonstrate that a company upholds high standards in its dealings with staff, the community, customers and the environment.
The Co-op Bank says it will carry on operating as normal while work takes place to provide “a joined-up service”. This is expected to take “several years”, and during that time, the bank’s ethical policy will remain in place. So bailing out now may be a bit hasty.
What’s on offer
Several current accounts, including its standard one with no fee. You get a PVC-free contactless debit card. There is also a packaged bank account that costs £15 a month, a student account and a basic bank account called Cashminder for people with no credit history or a low credit score.
Having a Co-op Bank current account gives you access to several savings accounts. These include Regular Saver, which pays 7% interest and lets you save up to £250 a month for 12 months. There are also several accounts open to everyone, including one-, two- and three-year fixed-rate savings bonds paying up to 4.53%.
Co-op is also offering incentives for new customers: if you move your main current account to it, deposit at least £1,000 and meet some other terms and conditions, you will get £75.
You can get an extra £75 – paid as £15 a month over five months – if you also open and use its regular saver account.
Triodos Bank
Ethical Consumer, a website and magazine, has awarded Triodos its “best buy” status for its personal current accounts. It is the only provider to get that accolade.
The bank, which has no high street branches, only lends to organisations making a positive impact for people and the planet. This means it says yes to renewable energy, sustainable farming and social housing, but no to sectors such as fossil fuels and fast fashion.
The bank publishes details of every organisation it finances on its website – high-profile ones include the health and beauty brand Neal’s Yard Remedies, Hugh Fearnley-Whittingstall’s River Cottage cookery school and farm in Devon and the Fairtrade coffee brand Cafédirect.
From 17 June it will no longer accept applications for overdrafts or extensions to existing ones. Up until now, Triodos offered an overdraft of up to £2,000. Customers have been messaged – the date the facility is removed will depend on their individual circumstances. If you want to switch to Triodos but have an overdraft on your existing account, you will need to pay it off before you make the move.
One Triodos customer contacted us to say that “an ethical bank removing critical services for its private customers sends a terrible signal”. He added that he had taken the matter to the Financial Ombudsman Service and that in the meantime “I will very reluctantly be changing banks”.
A spokesperson says the decision affects “a small proportion” of its customers, and that it is sorry for the inconvenience the removal of this option may cause. They add that “to remain sustainable and efficient, we must prioritise in certain areas”.
What’s on offer
Triodos runs a current account but there are a few potential stumbling blocks for new customers. There is a £3 monthly account fee (£36 a year), which may put some people off.
Another downside is that Triodos does not currently offer Apple Pay or Google Wallet/Google Pay. However, it is about to switch from Mastercard to Visa, with customers due to be sent new debit cards in the coming weeks, and says this will enable it to get mobile payments going “by the end of the year”.
The account, which can be operated online and via an app, comes with a contactless debit card (the Visa card will be made from recycled plastic). You cannot pay cash into a Triodos current account, so you cannot use over-the-counter services such as the Post Office.
Current accounts
Triodos offers six savings accounts, including two online-only instant access versions. One pays 3.45% interest, provided the customer makes no more than three penalty-free withdrawals a year, while the other has no limit on withdrawals and pays 3.05%. There are also one- and two-year fixed-rate savings bonds paying 4.25% and 4% respectively, an online instant access cash Isa offering a rate of 3.45%, and a two-year fixed-rate cash Isa paying 4%.
Nationwide building society
Nationwide is Britain’s biggest building society. It says it is reducing the environmental impact of its business operations – for example, it is in the process of becoming gas-free by the end of 2030 – and is also helping customers make their homes more energy-efficient.
It will win points from many people for its “branch promise”. While many of its banking rivals have been busy axing outlets, Nationwide says that “every one of our branches will remain open until at least 2028”.
But some will wonder what impact Nationwide’s £2.9bn takeover of the high street bank Virgin Money will have on the business. The deal, which is due to go through later this year, has been criticised by some members, though Nationwide’s bosses say it “will strengthen Nationwide financially”. It will add 91 bank branches to Nationwide’s 600-plus.
What’s on offer
Nationwide’s range of current accounts includes two for adults (FlexDirect and FlexAccount) that do not have a monthly fee, and a paid-for packaged account offering worldwide family travel insurance and other benefits (FlexPlus; £13 monthly fee). There is also a basic bank account, one for students and one for 11- to 17-year-olds.
The society is offering existing members £200 if they switch their current account to it. That will put them in prime position to receive a payment from its Fairer Share loyalty scheme in future years. This year, the scheme is paying out £100 apiece to nearly 4 million members.
Standout products include its “member exclusive” 18-month fixed-rate savings bonds paying 5.5%, and a regular savings account for current account holders that pays 6.5% and lets people stash away up to £200 a month for 12 months.
