Lifestyle banking: where else can your finance make a positive impact?
As individuals, we have the power to make a real impact through our personal financial choices. There are many ways to do this, and one important approach is to consider the environmental and social impact of the financial products and services we use.
Some of the options available include:
1.????Green savings
2.????Green investments
3.????Products that support a more sustainable lifestyle – green loans, green mortgages, green insurance, green energy.
In this article, we’ll talk about sustainable lifestyle financial products in more detail. Look out for the ones on green savings and green investing! ?
We’ll also talk about greenwashing and how to spot it.
Green lifestyle financial products
There are a number of green financial products available which are designed to help people adapt their lifestyle to be more sustainable. These products not only make financial sense – offering competitive pricing to standard products – but making the lifestyle change can also pay back more than your initial investment.
Green loans – these loans are taken out to fund energy efficient home improvements, for example solar panels, heat pumps, insulation or double glazing windows. Green loans can also be used to finance electric vehicles.
These loans often have a lower rate of interest than your typical loan – there’s even one on the market at the moment offered at 0% if you also have a mortgage with that provider!
Given the cost of energy prices, this up front investment will not only offer the opportunity for long term savings – it will also make you feel good about your footprint.
Green mortgages
Under a green mortgage,?a bank or mortgage lender offers a house buyer preferential terms if they can demonstrate that the property for which they are borrowing meets certain environmental standards.
A green mortgage is?meant to increase the appeal of owning a green property. On top of the savings you'll make on your energy bills each month, the idea is that lenders give you cashback and/or a better interest rate when you take out a green mortgage on an energy-efficient property. Lenders are willing to offer incentives of this nature because they increasingly see energy-efficient properties – in this era of combating climate change –?as less risky purchases and more likely to hold their value. Plus, if a homeowner is spending less on their energy bills each month, there's less of a chance they'll struggle to meet their mortgage repayments.
Green insurance
Once your home is outfitted with sustainable materials and facilities – you may be eligible for green insurance. Just like lenders, insurers view climate change as a major risk and if your home is energy efficient – you can benefit from more competitively priced insurance products. Similarly, you can insure your new electric or hybrid vehicle and benefit from discounts.
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Greenwashing and financial products
In recent years, as we all collectively have become more aware of the risks of climate change and our ability to act as individuals, greenwashing has also become a significant issue across many industries, with companies marketing themselves as sustainable or environmentally friendly, often lacking evidence to back it up.
Greenwashing can take many forms, from companies using vague language or making unverified claims about their products' environmental impact to outright false advertising.
To address this issue, regulators in the UK are taking a more proactive approach to protecting consumers from greenwashing. For example, the Financial Conduct Authority (FCA) has issued guidelines for firms on how to communicate their environmental and sustainability credentials to consumers, and it has emphasized the importance of providing clear and transparent information.
As a consumer, there are several things you can look out for to spot greenwashing in financial products.
One major red flag is vague or ambiguous language. If a company claims to be "eco-friendly" or "sustainable" without providing any specific details or evidence, it may be more likely that they are engaging in greenwashing.
Look for proof points, such as third-party certifications or independent ratings that verify a product's sustainability credentials. It's also a good idea to do some research on a company's environmental track record (the sustainability of impact report is a good place to start, if your chosen company publishes one); and to check whether they have been involved in any high-profile environmental controversies or scandals.
Another important factor to consider is transparency. Companies that are truly committed to sustainability should be open and transparent about their environmental impact, including their carbon emissions, resource consumption, and waste generation. If a company is not willing to provide this information, it's a sign that they may not be as committed to sustainability as they claim to be.
Finally, it can be helpful to have a healthy dose of scepticism for products or services that promise unrealistic or unverifiable environmental benefits. For example, a financial product that claims to be able to "offset" all of your carbon emissions may sound appealing, but it's unlikely to be effective in practice. Similarly, investments in companies that claim to be working on breakthrough technologies to solve environmental problems should be approached with a good dose of pragmatism, as there is often a significant amount of uncertainty involved in these types of ventures.
In conclusion, greenwashing is a significant issue in the world of sustainable finance, and it's important for consumers to be vigilant when considering financial products and services.
By looking for proof points, transparency, and realistic environmental benefits, you can make informed choices that truly align with your values and contribute to a more sustainable future.
This concludes our five-part series exploring how each individual's financial choices can make a positive difference and support a more sustainable lifestyle.
We hope you find it helpful!
Remember: your individual financial choices matter and can have a positive impact on the climate crisis.
By considering sustainability in your personal finance, you can make a difference and also achieve good financial returns.?
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