The Art of Green Finance

If you have emergency savings or savings over and above an emergency fund, congratulations! But, did you know that the money you have saved in a bank or a building society has a carbon footprint, based on how that bank or building society uses that money. MotherTree estimate that £10,000 saved with one of the big offenders has an annual carbon footprint equivalent to 11 flights from London to Rome.

Ideally, it would be good to have your emergency funds in an easy access account with an institution that doesn’t fund fossil fuel projects where you can also earn a reasonable amount of interest (in order to avoid inflation reducing the real value of those savings). Unfortunately, most league tables of savings accounts only look at interest rates and don’t also look at bank ethics. However, the accounts I have listed below have been identified by cross referencing widely available best buy tables with Bank Green‘s list of sustainable banks. Unfortunately, Bank Green only covers the larger institutions at the moment. I have therefore not included any bank not listed by Bank Green unless I have found independant verification that the bank avoids funding the fossil fuel industry.

Suitable instant access accounts for emergency savings might include:

1. Tandem Bank (Bank Green rating: Great ; interest rate 4.9% with top up)
2. Leeds Building Society (Bank Green rating: Great; interest rate 4.15% 5 access saver).

If you are willing to fix for longer, and this may be something to consider given that interest rates are predicted to fall this year, the current best options include:

1. Charity bank. 1 year fixed rate account paying 4.51% or 3 year fixed rate account paying 4.06%
2. Triodos 1 year bond paying 4.25% or 2 year bond paying 4.0%

Be aware that the compound interest is paid at the end of the term on most fixed savings accounts, so make sure you don’t go over your tax free savings allowance for that year. Check how much you will earn using the compound interest calculator.

If you have enough savings to be in danger of crossing your tax free savings allowance and still have money to save, it’s time to look at cash ISAs. See – What are the different types of ISAs and what are the best ethical options.