How are we trying to secure our future?
At some point in our lives, we all start to think about our future. What can we do today, in order to ‘secure’ it in some way? Invest in it, obviously – and for most people this happens by the way of money. Invest in a business or a fund, with the hope that it will grow in line with inflation, or better.
But is money enough to secure our future in a world riddled with climate breakdown, conflict and more pandemics on the horizon? And how does ethics sit in this equation?
How do banks currently use our savings?
Ethical investment - these two words are not normally taken together in today’s world, driven by the race to get monetarily wealthy as fast as possible. The financial return is the bottom-line, regardless of which natural resources get depleted or how many lives are taken in the process. Yes, you read that correctly. Have we considered how our money is really being used, when we ‘save’ it in banks for a measly interest, or ‘invest’ it in stocks, shares, bonds and funds?
Have we ever asked these financial institutions about how they are using our financial energy, in terms of which companies they are loaning our money to?
For most of us, the answer would be a flat NO. I mean, who has the time for that? And we are not directly choosing how they use our money, so we can’t be held responsible for the consequences! Right? To answer that, let’s try and understand what money really is, in terms of 'active' (as opposed to 'passive') income.
Simply put, it is what we have exchanged our life for. Those precious hours, days, months and years, that we have spent working, have been transformed into another form of vital energy – money – that we subsequently use to carry on living, entertaining ourselves, and ensuring that our tomorrow is relatively secure. What remains of this living, breathing energy we then give to banks (who thank us with ‘interest’) and to other financial institutions for a potentially higher return.
These institutions then actively take our ‘life energy’ and pass it on to businesses and corporations as loans, insurance or capital, again with the hope of making an even higher return i.e. making themselves wealthier using our savings. In a nutshell, banks and financial institutions pass on ‘our life energy’ to businesses, who then use it as fuel to ‘process’ or ‘use’ resources, to make a profit. These ‘resources’ include land, soil, minerals, rainforests, oceans, animals and people.
So what? Why does it matter?
There was a time when humans lived somewhat harmoniously with the rest of the species we shared this planet with. Living within our means, in a relatively balanced way, giving and taking in a more or less equal measure. But somewhere along the way, members of our species decided that we were entitled to more than an ape’s fair share of this world, coupled with the concept of perpetual security from anything that could possibly harm us. This widely accepted greed and ever-growing selfishness started the slide downwards from the ’Garden of Eden’ to the mass extinction event we find ourselves surrounded by today.
Our species’ collective footprint on Earth is now so heavy and so far beyond the point of ‘balance’, that anything we touch ensures genocide for countless other individuals, coupled with the destruction of their homes.
But here we are today. Considering our dire state of unsustainability, it is absolutely vital that we think carefully about how our actions impact our planet. Our ‘life energy’ can be used to either heal what we have broken, or carry on destroying what we have left.
There is now 8 billion of us, and we all need to earn a living in order to survive, so we exchange this ‘life energy’ for money (another form of energy), the excess of which we then deposit into banks and financial institutions for them to use as described above.
It was only recently that I realised this, and it upset me greatly to consider the very real possibility that our ‘life energy’ could be contributing to the destruction of our precious planet, and/or causing suffering to our fellow Earthlings. In effect, this would more than negate any positive contribution we may be making in society, perhaps several times over.
To counteract this collective demise, how can we utilise our savings in a way that promotes justice, equality and healing?
How deep does the rabbit hole go?
Thankfully, research carried out by Ethical Consumer magazine (Sep/Oct 2020) shed much-needed light on how banks, investment vehicles and pension funds are using their customers’ hard-earned savings. This magazine’s main goal is to make global businesses more sustainable through consumer pressure, and I would highly recommend their website for an incredible wealth of useful information.
During their research on financial institutions, one calculation revealed that moving your pension fund to a more sustainable one, had the potential of saving around 2200 tonnes of CO2 emissions, in comparison to taking one less international flight – saving around 19 tonnes.
Banks play a central role in determining the direction that the economy and society takes, because of their decisions on what projects to finance. In June 2020, it was found that British-based banks and finance houses had given more than 2 billion dollars to Brazilian beef companies connected with Amazon deforestation.
Even if our deposits are minimal, banks are able to amplify their impact across the economy, because they can lend out up to 9 times the amount we have with them. Collating their research, EC magazine have been able to create a ranking table for banks and building societies according to how ‘ethically’ they operate. The criteria included: - - - - Climate change
- Pollution
- Habitats and resources
- Palm oil
- Animal testing
- Factory farming
- Human rights
- Arms manufacture and nuclear weapons.
Unsurprisingly, most of the well-known banks that we currently give our savings to, breached most of the above criteria. In contrast, several smaller banks refuse to fund dirty global conglomerates. A few of the highest-ranking banks went further to fund the transition to a more sustainable and fairer economy.
* It was found that Triodos Bank financed everything from green-energy projects to sustainable community-led housing.
* Barclays and HSBC, on the other hand, face ongoing campaigns against their investments in the fossil fuel industry (as reported by EC magazine Sept/Oct 2020).
* Since the 2015 Paris agreement, 35 of the world’s largest banks have provided a total of 2.7 trillion dollars to the fossil fuel industry, with lending increasing every year since. These include TSB, Barclays, Deutsche Bank, HSBC, Lloyds, Natwest, Santander and Virgin Money.
Check out - https://www.ethicalconsumer.org/money-finance/shopping-guide/current-accounts for more in-depth information on how your bank is using your money to impact the world.
TAX AVOIDANCE AND NUCLEAR WEAPONS
Many popular banks also scored poorly due to tax avoidance strategies. With billions of dollars avoided in tax, entire countries suffer due to reduced funds for public services like the NHS in England. Shockingly, a 2019 report revealed that many well-known banks were still also funding billions of dollars to nuclear weapons manufacturing companies, despite civil society turning away from their use.
WHO RANKED THE BEST?
In summary, the Nationwide, Cumberland Building Society and Triodos Bank ranked the highest in ethical scoring for current accounts. Thankfully, government intervention has now made it easier to switch accounts, taking on average about 7 working days. You are now offered this as an option when you open a new bank account.
For a comprehensive ranking of ethical savings accounts (including building societies), again check out - https://www.ethicalconsumer.org/money-finance/shopping-guide/ethical-savings-accounts
WHAT ELSE CAN WE DO?
Animal agriculture has the largest impact when it comes to the depletion of Earth’s vital resources, pollution of our biosphere, and contribution to the Climate and Ecological emergencies.
The meat, dairy and other animal-exploiting industries consistently attract huge investments and loans from banks, because demand for their body parts still remains at an all-time high amongst the general public. While most banks were found to heavily fund factory-farming, some of the smaller, more ‘ethical’ banks continue to lend money to so-called ‘small-scale, family-owned’ farms.
Considering the sheer suffering of forced pregnancies, separation of babies from their mothers, the stealing of their milk and eggs, and the brutal systematic murders of entire families, can any investment in meat, dairy, egg, fishing, wool, leather and fur businesses be considered ethical? ‘Small-scale’ or not? Moreover, none of these ‘products’ are even necessary for humans to thrive or survive.
Throughout history, all forms of slavery and oppression have been propped up by monetary investments, and redirecting them has been key to their abolishment. When it comes to the relatively more ethical banks that we now may wish to bank with, this is something that we need to ask them about, and challenge en-masse if they are found to fund such heinous violence towards the most innocent of individuals.
Until now, this kind of information has always been well-guarded. And even now, many financial institutions refuse to be fully-transparent about their loans and investments. We can do two things to address this:
1. Support and back campaigns that demand transparency by law, and
2. Ask them ourselves, prior to giving them our hard-earned savings.
► Concluding this on a positively empowering note, a reliable source recently informed me that he is shifting to Nationwide. The fact that it is a building society means none of the savings go to animal agriculture – it is all in housing and real estate (a relatively far less destructive option compared to all the other investments mentioned).
An informative article to check out - https://www.theguardian.com/environment/2020/jul/09/banks-and-pension-funds-among-investors-bankrolling-meat-and-dairy
In part 2, we uncover how pensions are destroying our world - and what we can do about it
Part 3 will cover investment in companies via shares and funds.
Part 4 will cover how the government invests our taxes, and what we can do to influence them
Part 5 will outline a broader approach to ‘ethical investing’ that yields greater rewards than personal financial gain.
Footnote:
I am still learning more about these vital topics.
Please email me - keval.a.shah@hotmail.co.uk if you have more information or links to websites that could help us collectively expand our knowledge on the above.
With gratitude,
K.