Lots of banks offer incentives to open a bank account with them. In 2022, an average of 87,500 people switched their current account every month.
But not all banks share your values. That’s why many people are now looking for ethical UK banks. Ethical banks usually avoid investing in certain industries, such as fossil fuels, arms, and tobacco, while lending to socially responsible projects and businesses. They often run initiatives based around sustainability, community, and charity.
So which banks are the most ethical in the UK? Here’s Bloom’s guide to the top ten most ethical UK banks.
Top 10 ethical banks in the UK
The Good Shopping Guide rates banks based on how they impact people, animals, and the environment. So it’s a good place to start when looking for an ethical bank. Here are the top ten ethical banks in the UK according to the Good Shopping Guide.
1. Charity Bank
GSG ethical score: 100/100
Why choose Charity Bank? Charity Bank gets a perfect score in the GSG thanks to its responsible investment policy. They only invest in non-profit organisations, so communities and charities can benefit from their investments. Plus, they’re wholly owned by charities, trusts, and social enterprises.
Are there any downsides? While Charity Bank is very responsible, its offerings for individuals are quite limited. It doesn’t offer current accounts, only ethical savings accounts. Plus, you can’t take out a loan unless you’re an organisation that needs funds for a social purpose.
2. Ecology Building Society
GSG ethical score: 90/100
Why choose Ecology? Ecology Building Society is a leader in sustainable banking. As well as measuring and reporting on their carbon footprint since 2012, they’re also an accredited Living Wage Employer, and were the first UK building society to be awarded the Fair Tax Mark. They also offer ethical mortgages for would-be homeowners.
Are there any downsides? Like Charity Bank, Ecology Building Society doesn’t offer a current account product. So you can’t use it for everyday banking.
3. Triodos Bank
GSG ethical score: 90/100
Why choose Triodos? Triodos caters to people who want an ethical current account, as well as savings and loans. So it’s one of the most versatile ethical banks in the UK.
Triodos was the first bank to create a green fund for environmental projects. They also publish a report of all their investments each year, so you know exactly where your money is being invested. They won Best Ethical Financial Provider at the British Bank Awards 2023.
Are there any downsides? Triodos charges a fee for opening and using each of its bank accounts.
4. Monzo
GSG ethical score: 85/100
Why choose Monzo? Probably the most mainstream of the top five ethical UK banks, Monzo is committed to conscientious banking. They don’t invest in fossil fuel-based energy companies, are signed up to the Women in Finance charter, and have even launched a gambling block feature for customers struggling with addiction.
Are there any downsides? Monzo isn’t the cheapest option for using your current account internationally. So if you travel a lot to see friends and family overseas, prepare for higher card usage charges than with other banks.
5. The Co-operative Bank
GSG ethical score: 85/100
Why choose the Co-op? The Co-op Bank has a long history of ethical banking, having launched their first ethical policy back in 1992. Now, they’re committed to carbon neutral operations, and they don’t fund or invest in companies that manufacture or market products like weaponry and tobacco.
The Co-op bank also has some high street branches, which can help those who prefer an in-person service.
Are there any downsides? Co-op banking app users have reported frequent problems. In addition, there’s minimal functionality on the app, so if you make use of budgeting and other features, you may prefer a more advanced banking app.
6. Coventry Building Society
GSG ethical score: 80/100
Why choose Coventry Building Society? Coventry Building Society offers mortgages and savings accounts, and has plenty of sustainable credentials. As well as setting net zero emissions targets for 2040, they’re also committed to sustainable energy, paper use, and waste disposal.
In addition, they don’t lend or invest in businesses that have a negative impact on the environment, such as those in the fossil fuel industry.
Are there any downsides? Coventry has great green credentials, but its responsible investment policy may not extend to other controversial industries.
7. Leeds Building Society
GSG ethical score: 80/100
Why choose Leeds Building Society? Leeds Building Society is transparent about its tax strategy, which is increasingly important to lots of banking customers. It’s also a Real Living Wage employer, which means they pay all their employees more than the national minimum wage.
Leeds Building Society is also a net carbon neutral organisation, and has committed to future sustainable practices.
Are there any downsides? While they are transparent about their tax affairs, it’s not clear which organisations Leeds Building Society lends to and invests in.
8. Skipton Building Society
GSG ethical score: 80/100
Why choose Skipton Building Society? Skipton has set out a clear plan for its immediate priorities, which include transitioning to net zero emissions, supporting more charitable causes, and advocating for positive social change. With ambitious, wide-ranging ethical targets, Skipton may climb the table in the coming years.
They also recently launched a deposit-free mortgage scheme, which aims to help long-term renters transition to home ownership.
Are there any downsides? Unlike other ethical banks, Skipton Building Society is not yet a net zero emissions bank, though they plan to become one in future.
9. Yorkshire Building Society
GSG ethical score: 80/100
Why choose Yorkshire Building Society? Yorkshire Building Society has recently signed the UN Principles for Responsible Banking — proving its commitment to responsible lending, saving, and investments. They also have a long-standing pledge to local communities, with several fundraising and volunteering initiatives.
Are there any downsides? Like Skipton, Yorkshire Building Society is not yet a net zero emissions bank. However, it has set out clear information about its current emissions and aims to be net zero by 2035.
10. Nationwide Building Society
GSG ethical score: 75/100
Why choose Nationwide Building Society? Nationwide is one of the UK’s best known and most popular building societies. As such, it has a larger range of products than many other building societies, including current accounts and credit cards.
Nationwide has also committed to a responsible investment approach, which means they don’t invest in certain industries, including arms, coal, deforestation, tobacco, oil and gas, and many others.
Are there any downsides? Nationwide receives the Good Shopping Guide’s middle rating (rather than high) for its carbon disclosure and reduction targets, environmental report, and responsible investment policy.
Are these ethical banks Sharia-compliant?
Not all ethical banks are Sharia-compliant. Many are focused on sustainability and climate action, rather than avoiding haram industries and activities. So if you’re looking for a bank that complies with UK Islamic finance principles, consider a bank that offers Sharia-compliant savings accounts.
