The COP26 global summit will focus on tackling the climate crisis, but there are ways we can all do our bit through our finances.
Nearly 200 countries will attend the summit in Glasgow this weekend to discuss their plans to cut carbon emissions. If you’re keen to make your money matter in the battle against climate change, there are a growing number of ‘green’ savings accounts, investments and mortgages which offer environmental benefits.
Here’s our rundown of some of the options on offer.
Green savings accounts
NS&I launched its new Green Savings Bonds last week, pledging that any money raised through them will be used to fund green projects, including those which prevent pollution and improve energy efficiency.
However, although the bonds are environmentally friendly, don’t expect competitive returns. Savers will earn just 0.65% annual interest and will have to commit to locking their money away for three years. The bonds can be opened with a minimum deposit of £100.
In comparison, Gatehouse Bank’s three-year fixed rate bond pays 1.78% annual interest on a minimum investment of £1,000. The Bank will plant a tree for each new savings account opened.
The government wants lenders to aim toward all properties on their mortgage books having an average Energy Performance Certificate (EPC) rating of C by 2030, although currently only 40% of homes meet this standard.
Several lenders offer green mortgage products, which usually provide cashback or other incentives to homebuyers purchasing homes with a high energy efficiency rating, or who take steps to make their properties more energy efficient.
Coventry Building Society, for example, offers a £500 ‘Green Together Reward’ to its mortgage borrowers who improve their homes energy efficiency. Similarly, Nationwide Building Society’s ‘Green Reward’ mortgage scheme, provides £500 to those buying a home with an Energy Performance Certificate (EPC) A rating, or £250 if the property has a B rating.
The Government recently proposed offering grants of up to £5k for those looking to install new carbon-friendly heat pumps in their homes when they need to replace their gas boilers, but critics argue that installation costs are often much higher than this.
Latest findings from interactive investor’s Great British Retirement Survey this year show that interest in ethical investing is growing, with nearly half (46%) of respondents investing ethically at least some of the time. A further 7% are not currently investing ethically but said they would like to do so.
Myron Jobson, personal finance campaigner at interactive investor, said: “The rise to prominence of ethical investing is down to a combination of factors: more availability, increased awareness, and long-term performance that shows that an investor does not have to sacrifice performance to invest in a way that aligns to their moral values.”
There are numerous green investment funds to choose from, but when deciding where to invest, make sure you check exactly where your money will be invested, and what the fund is hoping to achieve.
Gareth Griffiths, head of retail banking at Triodos Bank UK, said: “With many different investments labelled as ‘ethical’ or ‘sustainable’, it can be difficult to sift through the greenwash to find funds that actually deliver the impact investors are hoping for. Looking at independent websites and digging into which companies a fund invests in can really help you to understand how sustainable the product actually is and what aligns with your values.”