Younger savers are prioritising ethical saving even if it means lower returns despite the growing strain on household finances from rising energy bills and food costs.
(Picture: PA Archive)Younger savers are still opting to put their morals before returns when it comes to saving, even as it becomes harder to put money aside due to decades-high inflation.
Two-thirds (65%) of 18-24 year olds are prioritising ethical saving over financial returns, and they would stick with this even if an ethical product offered lower returns than a non-ethical alternative, new research from Gatehouse Bank shows.
This attitude stands in contrast to older savers, with just over a quarter (27%) of 45-54 year olds prioritising ethical saving, and less than a fifth of those aged 55 and over doing so, the bank found.
However, if the cost-of-living crisis persists, the research suggests that the commitment of savers to ethical products could be tested.
More than a third (36%) of all respondents stated that economic pressures had lowered their interest in ethical saving options.
The prominence of ethical saving and investing has been growing in the UK for several years now, with a total of £11.6 billion invested into so-called ‘environmental, social and governance’, or ESG, funds since 2015, according to fund data provider Calastone.
The number of UK banks that are considered ethical is also growing, with independent analyst The Good Shopping Guide giving 11 banks a green ethical rating. Charity Bank and Triodos Bank top its table with an Ethical Index Score of 100.
Eight UK banks, including Atom Bank and TSB have an amber score, and twelve, including HSBC and First Direct, have a red score.
Ravi Kumar, senior product manager at Gatehouse Bank, said it was “encouraging” to see young people continue to prioritise their values amid the cost-of-living crunch.
“We are hopeful that the latest generation of savers are the most ethically conscious yet,” he said.
“However, the stark generational divide does reinforce the need to boost awareness around non-traditional savings methods.
“Finance and ethical values can and should work in tandem – they are not mutually exclusive.”
Gatehouse said rates on its fixed term Woodland Saver account had recently been increased, with rates ranging from 3.15% for a 1-year account and 3.51% for a 5-year account.
Gatehouse said it plants a tree for every Woodland Saver account opened or renewed. The Sharia-compliant bank also does not use deposits to support sectors such as alcohol, gambling, tobacco, adult entertainment or the arms industry.
