Being green doesn’t have to cost the earth - Money - News - Moneyfacts

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Being green doesn’t have to cost the earth

Being green doesn’t have to cost the earth

Category: Money

Updated: 30/06/2009
First Published: 11/05/2007

MONEYFACTS ARCHIVE
This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.

Every day it seems that we see the launch of yet another eco-friendly product claiming to help tackle climate change. But is there a high price to pay for being green and are companies merely trying to cash in on consumers' interest in green issues?

There's a wide range of environmentally friendly personal finance products to choose from, including credit cards, insurance, investments and mortgages. Raising the profile of climate change is a good thing, but it's important that you check that the latest eco-friendly product isn't just merely an exercise to increase their profits and do very little to actually reduce climate change.

Ask yourself the following questions:

  • Does the company have a good track record on environmental and ethical issues?
  • Is it charging a premium for the product and does this translate into the best deal for the eco-friendly initiative it claims to support?
  • Would you be better off shopping around to get a cheaper deal and donating the savings to an eco-friendly cause of your choice?
  • Would you make a more positive contribution towards climate change by merely switching to online bank statements and putting a stop to receiving unsolicited junk mail?

How do you know if a company is ethical?

Corporate Critic provides a really easy way of finding out how environmentally and socially responsible a company is. It indexes and rates the Corporate Social Responsibility records of over 50,000 companies and let you do a quick search on a company for free.

Failing that, trying looking for companies' Corporate and Social Responsibility reports on their websites.

Is the product more expensive and is it worth it?

  • Banking:
    • The Co-operative Bank is one of the best-known ethical and eco-friendly banks and offers a full range of banking services and products. It owns Smile, the internet bank which offers a current account paying 3.04% AER, plus a 12-month fee free £500 overdraft. There are more competitive deals out there, but the Co-op has been ethical and green way before these buzzwords were even invented.
    • Triodos Bank guarantees that your savings will only be used to finance businesses and charities that benefit people and the environment. Its Saver Account pays 3.14% AER on balances of £2,500 with 90 days' notice; whereas the Mini Cash ISA pays 4.55% AER. There are more competitive savings products, but Triodos does allow you to target specific environmental causes.
    • Check out our savings best buys to compare these against the market.
  • Credit cards:
    • Barclaycard plans to launch the Breathe credit card in the summer, which will donate 50% of profits to environmental projects and offer discounted interest rates when customers use it to spend money on purchases deemed to be green. The APR of 14.9% is reasonable; however, with no other introductory offers there are more competitive cards.
    • The Co-operative bank offers a wide range of affinity credit cards. If you take out a Greenpeace credit card, the Co-operative bank donates £15 when you open the account, plus 25p for every £1 you spend on the card and 25p for every £100 you transfer to the card. The Greenpeace Advantage Platinum card offers an APR of 14.9% plus 0% on balance transfers and purchases for 6-months.
    • And, there's American Express Red. The APR of 16.9% (variable) is less competitive than others, but it does donate 1% of your spend to the global fund to help fight AIDS in Africa.
    • Check out our credit card best buys to compare these against the market.
  • Insurance:
    • MoreTh>n plans to launch a green car insurance policy, with policyholders being given a "smart box" designed to help them monitor their driving and use their cars in a more environmentally friendly way. Is this just a marketing gimmick?
    • Co-operative Insurance Services offers green motor insurance to offset your emissions by investing in reforestation and renewable energy projects.
    • These insurance products are generally more expensive than the best deal on the market for the typical driver, so you are probably paying extra for buying green.
    • Climatesure is an online insurance broker that gives a percentage of the insurance premium to Climate Care, which operates Carbon offsetting projects. Climatesure states that the offsetting would not cost customers more, because the panel of insurers offering cover through the scheme are offering better deals on policies than are available elsewhere.
  • Investments:
    • Friend's Provident Stewardship Fund was the UK's first ethical fund when launched in 1984; however, most investment companies now offer ethical fund options.
    • People used to think that you had to be prepared to accept a lower return on your investment if you invested ethically – but not any more! The CIS Sustainable Leaders Trust has outperformed the UK equity market over the last three years. For the three-year period ending 29/09/06, the fund delivered a total return of 75.2%, compared with the UK FTSE All-share which delivered 65.6%. Source: Standard and Poor's Micropal.
    • The Observer recently reported that 70 per cent of the ethical funds in the UK All Companies sector were in the top quarter of the performance tables in 2006. The Observer also states Jupiter's Environmental & Ecology Funds and Henderson's Global Care Income Fund as strong performers.
    • Before you jump on the environmental bandwagon, please do your homework. Remember that investments can do down as well as up, so you may want to discuss your options with an independent financial adviser.
  • Mortgages:
    • The Ecology Building Society has a range of green mortgages and specialises in renovation and new build projects that benefit the environment. Its standard variable rate mortgage is 6.60% APR.
    • Norwich & Peterborough Building Society offers a range of green mortgages and plants 40 trees for every mortgage taken out. It offers a 4-year fixed rate mortgage at 5.79% APR and a 4-year discounted variable rate of 5.74% APR.
    • For every year that you hold a mortgage with the Co-operative Bank, it will make a payment for to Climate Care. It has a 3-year fixed rate mortgage at 5.79% APR and a 3-year discounted variable rate of 5.69% APR.
    • Check out our mortgage best buys to compare these against the market.
    • Remember that choosing a mortgage is one of the biggest financial decisions you will ever take, so do your homework first. Find out what's right for your needs and check out all the various rates and fees.
    • When you've got the best deal, by all means donate some of your savings to Climate Care or go and plant some trees in your garden!

So, does it cost more to be green? Probably a bit, but you also have to ask yourself what the cost is of not doing more to reduce climate change…

Plus, you can always offset the extra cost by going green and saving money:

  1. Switch to online bank account and credit card statements
  2. Contact the Mailing Preference Service to stop unwanted junk mail
  3. Search the market for the best deal, but set up a monthly direct debit to an eco-friendly charity to pass on some of your the savings.
  4. Reduce your carbon emissions by walking, cycling, using public transport or by switching to a more fuel-efficient car, cutting running costs and road tax in the process.
  5. Insulate your loft to stop money literally leaking out of your house!
  6. Save energy by replacing light bulbs with energy efficient ones, turning off appliances, turning off lights when you're not in the room or turning down the thermostat.
  7. Save water by not running the tap when you clean your teeth, by taking showers instead of baths or installing a water butt.
  8. Think before you print!

Disclaimer: Information is correct as of the date of publication (shown at the top of this article). Any products featured may be withdrawn by their provider or changed at any time.

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