Tasty money

Why do ethical consumers have a blind spot when it comes to choosing a bank?

If you care about the environment, you probably recycle, buy organic food, and may even have promised to cut down on air travel. But have you greened your bank account, too?

A recent report commissioned by Triodos Bank found that many active ethical consumers often don’t apply the same demanding criteria to their choice of bank as they do to their daily lives. The author of How Green is Your Money?, Professor Alex Gardner, says: “While they regularly recycle and are happy to pay more for ethical products, like Fairtrade coffee and organic food, they ignore their basic values when it comes to banking choices.”

Whereas we Brits spent £32.2 billion on ethical goods and services in 2006, we only have £5.5 billion of our money invested ethically. To put that figure in perspective, £180 billion sits in UK tax-free ISAs alone.

The qualitative research, which aimed to get to the bottom of this conundrum, came up with some interesting conclusions. For instance, while those with deep green values are prepared to spend more on ethical lifestyle choices, from buying organic food to carbon offsetting, they apply a ruthless criterion when it comes to banking. The one factor they say they are most interested in is financial return – not on where the money goes. Why is this?

Maybe it’s because banking isn’t yet dinner party conversation. Friends will often debate the merits of organic food and fair trade round the table, but we don’t tend to discuss money matters, even with close friends. We’re unlikely to know what they earn, what they’ve got saved away and who they bank with. So there’s little chance of picking up on the real stories behind banking – both the negative ones, and the uplifting projects that reflect the sort of changes we support through ethical shopping, such as the hundreds of organic farms that Triodos invests in.

Participants in the study picked out apathy as one of the factors holding them back. Because people don’t make financial decisions on a regular basis – it has been said that most adults are more likely to get divorced than switch banks – they don’t often have to think about the consequences. In contrast, every time they go shopping they make a choice about what to buy – especially when food and clothes are so visible. There’s always the risk of bumping into a friend at the checkout with a basket full of the ‘wrong’ products.

Gemma Thorogood from Bristol typifies the ethical consumers interviewed in the study. “What I put in my shopping basket is important to me,” she says. “When I can afford to, I buy my food from ethical suppliers – partly because I know the story behind organics and fairtrade.” She also suggests that “perhaps if there was more information about what the mainstream banks are doing I would have looked at the alternatives in more detail”.

Charles Middleton, Triodos Bank’s UK managing director, agrees that there’s a lack of understanding about how money works: “Best buy tables focus on interest rates, without explaining the hidden cost behind some headline figures. Generally, if it sounds too good to be true, it probably is.” What’s needed in the financial world, says Middleton, is “a more meaningful appreciation of value, which doesn’t just focus on interest rates”, and which allows money to become a talking point. Only then can the public buy into the story as well as the products, as they have done with organic and fairtrade goods.

Most of all, he urges those green consumers to pick up on their blind spots: “If people find that their bank doesn’t match their demanding green standards, they should consider moving to an ethical provider which reflects other aspects of their life.”

20 March 2008