Ethical finance: using your money as a force for good
We’ve teamed up with our friends at Your Juno to talk all things ethical finance and help you get started.
You’ve probably heard the view that money is the root of all evil and similar, but what if your money could be used for positive change? That’s where ethical finance comes in.
Ethical finance is a term used to describe banking and investing which takes into account not only financial returns but also environmental, social, and governance factors (ESG).
Over recent years, as the climate crisis has progressed and younger generations have become financially responsible, there’s been a boom in banks and investment platforms offering to manage your money in a way that doesn’t harm the environment or support exploitative practices. With more and more coverage of huge corporations making money through ‘dirty investments’, it’s no surprise that 64% of millennials are likely to make investment decisions based on societal problems that are important to them.
So you want to manage your money ethically: what next? Well as you might be able to tell, the term ethical is pretty broad and the ESG factors are wide-ranging. This means that there isn’t a consistent set of requirements for a bank, fund, or financial institution to adhere to in order to call themselves ethical. Plus, financial institutions have cottoned on to the business opportunity and greenwashing - when a company exaggerates their ethical credentials for marketing purposes without any concrete efforts to back up their claims - is everywhere.
We might not be able to stop the big banks from funding fossil fuel projects just yet, but the good news is that there are financial decisions you can make on an individual level to actually support the causes you care about. Here are a handful of steps you can take right now:
Switch to a sustainable pension instead of sticking to the default option. They perform better and are a quick way for you to do your bit! If you’re employed, find out who your pension provider is through your HR department and investigate whether you can switch to an ethical fund.
For any investors out there looking to make sure their money has a positive impact, explore platforms and apps that specialise in impact investing. Impact investing focuses on investments with a concrete social or environmental benefit, rather than simply avoiding harmful investments.
Keep an eye out for greenwashing. Before you choose to bank or invest with an institution based on their ethical or sustainability claims, make sure to do your homework to check that the companies walk the walk rather than just talking the talk, and that they align with your values.
Have you made any changes or got any tips you’d like to share? Hit us up at hello@theknowmedia.co