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Can I fight climate change by investing sustainably?

3 minute read

Can I build my wealth without hurting the planet?

We all want to be financially comfortable. Investing our money can be an important part of achieving that goal. However, there’s a growing recognition that we shouldn’t pursue wealth at the cost of the environment. The good news is that it’s possible to turn our investments green to help fight climate change whilst growing our investment portfolio.

Why should I invest anyway?

For many people, it's not realistic to expect to fund your retirement solely from money that you’ve accumulated in savings accounts. Investing, whether through a workplace pension, an ISA or a self-invested pension plan (SIPP), will likely be an important part of achieving our retirement goals.

The impact of inflation

4.2% rate the highest in a decade

Inflation measures how much the price of things is going up. If you had a savings account paying 0.5% and inflation was running at 0.6% then the purchase power of the money in your savings account would actually be going down rather than increasing.

This month, the inflation rate rose by 1.1% to a 10 year high of 4.2%. That’s partly why financial experts recommend that people maintain a financial portfolio balanced between savings and investments. 

Greening your pension is one of the most effective things you can do to combat climate change

Research on behalf of Make My Money Matter found redirecting your pension wealth is 21 times more effective at reducing your carbon emissions than going vegetarian, giving up flying, and switching your energy provider combined.

Make My Money Matter is a campaign committed to helping businesses turn their pensions green. You can find more on the Make My Money Matter website.

Green and ethical investing

Ethical investing has been around for a surprisingly long time. That broad ‘ethical investing’ label still includes ensuring that funds aren’t benefitting oppressive regimes or industries that profit from tobacco or the sale of weapons, but it has also extended to include environmental factors.

More and more, investment strategies place importance on sustainability and green fund options as well as the potential financial gains.

For example, fund managers may limit their fund selections to companies that support decarbonisation, or to organisations engaged in renewable energy research.

Find out how we're committed to responsible investing

pension schemes generate 330 million tonnes of carbon every year

Analysis carried out by Make My Money Matter and Route2 found that the amount of carbon release enabled by pension schemes was larger than the entire country's carbon footprint. 6% of pension funds are invested in fossil fuel companies; that equates to £112bn.

Make My Money Matter is a campaign committed to helping businesses turn their pensions green. You can find more on the Make My Money Matter website.

What can I do to green my money?

There are so many ways we can do our part to tackle the effects of climate change. Often, it's the more obvious everyday changes in our lives that we may tend to overlook. Our money can have a big impact on our carbon footprint, so why not think about how you could make your finances greener? 

We've outlined 5 ways to green your money below.

  1. 01

    Switch to a greener bank

    Last year, a Which? survey found that three quarters of consumers didn't know what their bank's climate change policy was. We're hoping that's changed in the last 12 months. If it has, customers are better equipped to put their money where their values are, and choose a bank with green credentials. 

  2. 02

    Make ethical investment choices

    We've spoken a lot in this article about the reasons why it's important to be mindful of your investment choices, whether buying shares, opening ISAs or managing your pension. 

    The investment industry has been responding to the growing demand for ethical options. There are now over 2,500 ethical funds to choose from, though not all of these are open to investors.

  3. 03

    Explore NS&I Green Savings Bonds

    In the March Budget, Chancellor Rishi Sunak announced the creation of a new Green Savings Bond. By investing in NS& I Green Savings Bonds, you will be contributing to green projects selected by the Government.

    Details will be published about how the money is being spent and what the environmental benefits are, so you can see the difference you’re making.

  4. 04

    Apply for a green mortgage

    Whether you're a first time buyer or remortgaging to a new deal, consider a provider who offers a green mortgage. Put simply, a green mortgage rewards customers with more favourable terms for buying or owning an energy-efficient home. 

    Customers usually benefit either by being offered lower interest rates when they buy an energy efficient home (usually with an EPC rating of A or B), or by receiving cashback when they make energy efficient improvements to their home.

  5. 05

    Get a green energy deal

    More than ever, customers have a varied choice when it comes to green energy deals. Tariffs which are partially or wholly reliant on renewable energy are growing in popularity, and so is supply. 

    Switching to a greener energy deal means you are doing your part to reliance on fossil fuels to heat and power our homes.

Shostra Bank blog team

Updated November 2021
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