Written by 11:21 am Money & Lifestyle

Banking on climate change: How can your wallet save the planet?

About 6 minutes to read

Want something to feel smug about? 

If you, like me, identify as a millennial then you’re part of the ‘green’ generation, the age bracket most likely to buy things that are ‘good’ for the planet – even when they cost more.  

From our groceries to our clothes, our beauty products to our holiday destinations, as a demographic of global consumers (what a catchy phrase) we’re among the most focused on spending sustainably. This is according to Neilsen’s well-known 2015 study, which showed that, whilst 66% of global consumers are willing to pay more for sustainable fashion, food and other goods, a full 73% of millennials are too. That’s nearly three in four of us. And it shows. 

Over the past few years there has been a huge push from people like us – young consumers who want to spend in line with their values – and the result has been a wave of brands that have created eco-conscious fashion lines, cruelty-free beauty products, ethically sourced and freetrade goods, alternatives to meat and dairy, and so much more. It’s all about sustainability, aka sustainable living: building a lifestyle that reduces your carbon-footprint and in turn your negative impact on the planet.  

It’s even impacting our laws. In recent weeks legal experts from across the globe drew up a brand-new definition for ‘ecocide’ – AKA “unlawful or wanton acts committed with knowledge that there is a substantial likelihood of severe and widespread or long-term damage to the environment being caused by those acts” – which is intended to be used by the international criminal court. According to Lottie Hanwell, a behavioural analyst at Canvas8, ‘it reflects a growing consciousness surrounding the inextricable link between the wellbeing of humanity and the wellbeing of the planet’. 

It’s fair to say that awareness of the climate crisis is at its peak – and much of the narrative has been driven by outrage and frustration. 

Because so many of us are angry. We’re anxious about the future and furious about how it came to be this way. Pew Research Center’s survey of social media engagement with climate content shows that 59% of millennials and 69% of Gen Z feel anxious when they see stories online compared to just 46% of Gen X and 41% of Baby Boomers.  You only have to think back to the climate marches and Extinction Rebellion takeovers to remember how loud, vibrant, and disruptive it can be – boarding the line between hopeful and hopeless.

Yet the shift towards conscious capitalism has been a much quieter thing. This part of the climate movement has been driven by acts of everyday activism rather than placards and protests. In the wake of Covid-19, more of us every day are looking for ways to use our cash to make a positive impact on the planet and society.  

So how does it work? How can you bank on climate change? How can you put your wallet to work on making a positive impact on the world we live in? 

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Spending in line with our values 

One of my favourite quotes from educator and activist, Anna Lappe, who said, “Every time you spend money, you’re casting a vote for the kind of world you want.” 

I like it because it’s true: where you spend your money is a signal for what you value, what you prioritise. 

For example, according to The British Science Association, millennials aren’t very good at recycling. But recent data suggests it’s not because we don’t care, it’s because we’d rather buy things that are more sustainable to begin with. Things like reusable cups and ugly fruit. 

But other than buying what’s obviously labelled “green” and carrying a tote bag, what else can we do? 

The key is to spend in line with your values – making your shopping decisions based on the world you’d like to see. We’ve written about how to work out your spending values on several occasions, but there are also some easy ways to get started.   

Start by questioning your shopping habits.

I don’t know about you, but I can’t count the number of times I’ve come home excited over a beautiful new thing I’ve bought, only for my sister to comment on how similar it is to something I already have. We all have spending habits, quirks that mean we sometimes spend more on what we don’t need than the things we really want. 

When it comes to fashion, for example, a quick way to start shopping more sustainably will likely mean taking a step back before spending and ask why you need it, how it was made, what it adds to your wardrobe and how many times you’ll wear it (I like to use the slow fashion, ’30 wears rule’ – which is when you ask whether you’ll wear something on at least 30 occasions). And if it checks all the boxes, great!

On the other hand for food or beauty products, it might include understanding how far the item has travelled, how it’s packaged, whether it’s cruelty free and so on. It means checking the labels, but it’s worth it if it means you feel better about spending your money. 

Shopping locally can also make a huge difference.

According to YouGov, 64% of people in the UK want to support local businesses and buy local products in the wake of the pandemic. The great thing about this way of shopping is that it cuts down things like your ‘food miles’, reducing how far your produce is travelling from farm to table as well as reducing emissions as we walk more and take cars or transport less. 

Likewise, studies actually show that deliveries from local shops generate less than half the carbon emissions that deliveries from large online retailers do. Plus there’s the benefits of investing in your community, creating jobs by proving demand – roughly 63p of every £1 spent at small or medium-sized businesses stays in the local economy, compared with just 40p at large businesses – so there’s a lot of sustainability positives to shout about. 

Donate as part of your budget.

Another consideration might be how you can donate as part of your budget. For me, this includes donating to places like mental health charities, debt and financial education support networks, and women’s empowerment initiatives. For some of my friends, it means supporting the Wildlife Trust, local social care networks, and so on. If you’re passionate about certain issues, then making donations part of your budget can help you feel like you’re genuinely making a difference. This is especially true for grassroots causes and non-profits. 

Saving responsibly 

Going green can save you money. 

In fact, there are dozens of articles about how shopping ethically can help your pocket as well as the planet. For example, using green energy providers, turning off your devices or lowering the thermostat, cold washing clothes, cycling or walking instead of driving, reducing your meat consumption, eating seasonally, buying second-hand and getting a library card (I should probably listen to that last one). 

Then there’s the flip side of saving – ie. where you put your money. Recently, there’s been a wave of environmentally-focused savings products – including green savings accounts and green savings bonds – with National Savings and Investments (NS&I) announcing their green savings bonds for anyone over 16 in June 2021. This allows you to put between £100 and £100,000 into a saving product specifically with a view to being sustainable. 

The issue with some of the green saving accounts currently is their low-interest rates and how flexible they are, as many lock you in for a certain amount of time in order to see any benefits. 

The other consideration is that whilst they’re labelled ‘green’, not all providers or offers will actually fit with your priorities. As Which?’s Danielle Richardson points out, “The terms ‘ethical’, ‘green’ and ‘sustainable’ are often used interchangeably but they can mean very different things … planting trees to support the environment, only investing in companies that do good, or supporting a local community.” 

Do your research to find out what works best for you and how you can save in a way that fits with your values, and also helps you reach your long-term and sustainability goals. 

Investing in ethical, sustainable or impact funds 

Investing in line with your values is arguably the most powerful way to make a positive impact on the planet. Some suggest, investing sustainably has the equivalent impact as taking cars off the road, recycling every day for years, or going vegan. 

“From recycling our rubbish or going vegan, to using the car less often, many of us are making small changes to our daily lives to reduce harm to the planet,” writes Josephine Cumbo in the Financial Times on green pensions. “But choosing to go green on our pension investments could have a far greater impact, as the institutions managing our money may include both heavy investors in fossil fuels and those seeking environment-friendly alternatives.”

How? Well because investing into green or sustainable funds, or ESG investments – whether that’s through our ISA or general investment accounts or pensions – means we’re choosing to align our money with certain causes – often directly linked to the UN’s Sustainable Development Goals (SDGs). These are the 17 interlinked goals intended to act as a ‘blueprint to achieve a better and more sustainable future for all’. 

And yes, I’m aware there’s a lot of unsexy acronyms in there, but the nutshell version is that ESG stands for ‘environmental, social and corporate governance’. ESG investments are simply investments that are socially responsible, prioritising returns but also the impact of a company on the planet and society. 

Or as Holly Mackay, founder of Boring Money put it in Glamour, ESG investing means putting your money where your mouth is. 

Because it allows us to invest in companies that matter to us – that champion green or clean energy, have strong carbon neutral targets, follow sustainable practices and so on. 

What ‘ethical’ or ‘sustainable’ means exactly might be something slightly different for you than your brother or sister or best friend because of your personal values. For me, I always look at both the impact on climate and on women’s empowerment. For others, it might mean doubling down on renewables or green technologies or ethical supply chains. The point is it’s possible to research portfolios and stocks that align with you and your values in a very real and very deliberate sense.  

After all, “if we only back those companies which align with our priorities,” Mackay says, “We can collectively starve the bad guys of cash. Money talks!”

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Tags: , Last modified: 9 July 2021