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What is ethical when it comes to credit cards, loans and mortgages?

Looking for ethical credit cards, loans and mortgages, Charlotte Reid looks at the small print to find the best ethical options available.

When deciding which bank to borrow money from, it is inevitable to want to know what you will get in return for being their customer, rather than thinking about which bank is doing the best in terms of the environment and ethics.

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Looking for ethical credit cards, loans and mortgages, Charlotte Reid looks at the small print to find the best ethical options available.

When deciding which bank to borrow money from, it is inevitable to want to know what you will get in return for being their customer, rather than thinking about which bank is doing the best in terms of the environment and ethics.

Banks are generally thought of as unethical because of whom they are lending to. This can be from lending money to people who they know will not be able to repay the money, to investing in questionable companies.

When we do think about the ethics of banks, we think of cases like Amnesty International campaigning against the Royal Bank of Scotland (RBS) to stop investing in companies that make cluster bombs, which RBS eventually agreed to earlier this year.

Credit cards

The country owes £57 billion on credit cards alone, according to a speech Prime Minister, David Cameron made in September.

As the country is living in the red it is important that banks do not encourage unnecessary spending. The Office of Fair Trading had already cautioned credit card companies in 2002, for misrepresenting their cards to a large number of people, who would not be able to handle the debt they would acquire.

As a result, 28 credit card companies agreed to change the way that they advertised their introductory interest rates. The OFT said they were too easily confused by the APR and “expressed concern that this practice breached consumer law and could mislead customers”.

There is one ethical alternative that has proved popular – charity cards. They are on offer from banks, such as The Co-operative, to brands like Virgin, and even directly from some charities themselves. A spokesperson from the Co-operative Bank says charity credit cards are popular “because they give customers a simple way to donate to charity as they spend”.

A card that raises money for a chosen charity from the moment it is first taken out. From then on it takes a small percentage on everything that is spent on that card.

However, moneysavingexpert.com has slammed charity credit cards, saying there are other cards available that give more to charity. They suggest cashback cards instead of charity credit.

The reasoning is that most charity credit cards give charities 0.25% on everything you spend, which is how The Co-operative Bank’s Think credit cards works, giving 25p per £100 spent. Whereas cashback cards can give more like £5 from every £100 spent, which could then be given to charity.

A spokesperson for The Co-operative Bank says, “The amount given to charity is balanced by the offers made available to customers and is comparable to the cashback offered on the ‘smile classic card’.”

With a credit card, do not take one out if you are concerned about repayments. The greatest part is that when making purchases, a credit card gives better protection than a debit card if something goes wrong.

Flashing the plastic

When it comes to credit cards, there is not only the question of debt to think about, they are made using polyvinyl chloride (PVC), which isn’t biodegradable.

PVC is used in credit cards because it allows the card to survive years of transactions along with the strains of living in back pockets and purses. It also helps that PVC is cheap. The Co-operative Bank, along with Greenpeace, did launch a card in 1998 that was not made from PVC and would biodegrade whilst lasting as long as a normal card, but there have been no such cards like this since.

However, with smartphones becoming more popular – in the UK 27% of adults and 47% of teenagers own a smartphone – there is a move to do banking on them instead, with one of the first to attempt it being Google with Google Wallet.

Loans: “Focus support on organisations we want to see flourish”

Finding an ethical personal loan could be difficult, as even established ethical banks, like Triodos, only offer their full services to businesses.

Will Ferguson, from Triodos, explains that it is about “impact and scale”, as they only have about 80 people working for them in the UK, so instead “focus our support on organisations we want to see flourish”.

Likewise, the Co-operative Bank have got stricter on who they are lending to, excluding companies that are involved in animal testing and ones that cause environmental damage.

Another alternative is the Unity Trust Bank, an offshoot of the trade union movement, which provides banking services to businesses and charities in the UK. Since the economic problems began in the UK, the bank has seen a rise in its loan book, which managing director Kevin Turmore says is “borne out of our socially responsible ideals”.

However, for a more local touch, there are credit unions, a self-help cooperative where a community pools together their savings to provide each other with credit at a low interest rate.

Members of a credit union generally share something in common like living in the same area or working for the same employer. You can see if there is a credit union near you using the Find Your Credit Union website.

Mortgages

Mortgages are likely to be the biggest financial responsibility that an individual will take on in their lifetime, and make up most of Britain’s £1 trillion debt. Although recent figures (September 2011) show that there has been a drop in the number of approved mortgages as households get tighter with what they can afford.

Some green mortgages help to counteract the fact that homes are one of the largest sources of emissions. The Green mortgage that the Co-operative offers makes sure that each year 20% of the emissions from a home are offset. The bank funds several climate change projects on behalf of its mortgage holders, from helping to replant the Kibale National Park to providing Indian farmers with manual pumps to irrigate fields.

Where to borrow from: “Just start thinking about it”

Credit cards, loans and mortgages all contribute towards the country’s massive debt. So the first step would be to check that whatever bank you end up with has a good advice service, if you do encounter problems repaying any debt.

Ferguson from Triodos also suggests that if you are beginner to ethical banking then “one of the main things is to just start thinking about it”. Before the credit crunch only a small proportion of people knew what their bank was doing. Ferguson suggests starting by asking your current bank what they are doing with your money.

If you would like to know more about ethical borrowing ask your financial adviser if you have one, or complete our form and we’ll connect you with a specialist ethical adviser.

Picture sources: kennejima & Duncan

Economy

How Going Green Can Save A Company Money

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going green can save company money
Shutterstock Licensed Photot - By GOLFX

What is going green?

Going green means to live life in a way that is environmentally friendly for an entire population. It is the conservation of energy, water, and air. Going green means using products and resources that will not contaminate or pollute the air. It means being educated and well informed about the surroundings, and how to best protect them. It means recycling products that may not be biodegradable. Companies, as well as people, that adhere to going green can help to ensure a safer life for humanity.

The first step in going green

There are actually no step by step instructions for going green. The only requirement needed is making the decision to become environmentally conscious. It takes a caring attitude, and a willingness to make the change. It has been found that companies have improved their profit margins by going green. They have saved money on many of the frivolous things they they thought were a necessity. Besides saving money, companies are operating more efficiently than before going green. Companies have become aware of their ecological responsibility by pursuing the knowledge needed to make decisions that would change lifestyles and help sustain the earth’s natural resources for present and future generations.

Making needed changes within the company

After making the decision to go green, there are several things that can be changed in the workplace. A good place to start would be conserving energy used by electrical appliances. First, turning off the computer will save over the long run. Just letting it sleep still uses energy overnight. Turn off all other appliances like coffee maker, or anything that plugs in. Pull the socket from the outlet to stop unnecessary energy loss. Appliances continue to use electricity although they are switched off, and not unplugged. Get in the habit of turning off the lights whenever you leave a room. Change to fluorescent light bulbs, and lighting throughout the building. Have any leaks sealed on the premises to avoid the escape of heat or air.

Reducing the common paper waste

paper waste

Shutterstock Licensed Photo – By Yury Zap

Modern technologies and state of the art equipment, and tools have almost eliminated the use of paper in the office. Instead of sending out newsletters, brochures, written memos and reminders, you can now do all of these and more by technology while saving on the use of paper. Send out digital documents and emails to communicate with staff and other employees. By using this virtual bookkeeping technique, you will save a bundle on paper. When it is necessary to use paper for printing purposes or other services, choose the already recycled paper. It is smartly labeled and easy to find in any office supply store. It is called the Post Consumer Waste paper, or PCW paper. This will show that your company is dedicated to the preservation of natural resources. By using PCW paper, everyone helps to save the trees which provides and emits many important nutrients into the atmosphere.

Make money by spreading the word

Companies realize that consumers like to buy, or invest in whatever the latest trend may be. They also cater to companies that are doing great things for the quality of life of all people. People want to know that the companies that they cater to are doing their part for the environment and ecology. By going green, you can tell consumers of your experiences with helping them and communities be eco-friendly. This is a sound public relations technique to bring revenue to your brand. Boost the impact that your company makes on the environment. Go green, save and make money while essentially preserving what is normally taken for granted. The benefits of having a green company are enormous for consumers as well as the companies that engage in the process.

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Energy

5 Easy Things You Can Do to Make Your Home More Sustainable

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sustainable homes
Shutterstock Licensed Photot - By Diyana Dimitrova

Increasing your home’s energy efficiency is one of the smartest moves you can make as a homeowner. It will lower your bills, increase the resale value of your property, and help minimize our planet’s fast-approaching climate crisis. While major home retrofits can seem daunting, there are plenty of quick and cost-effective ways to start reducing your carbon footprint today. Here are five easy projects to make your home more sustainable.

1. Weather stripping

If you’re looking to make your home more energy efficient, an energy audit is a highly recommended first step. This will reveal where your home is lacking in regards to sustainability suggests the best plan of attack.

Some form of weather stripping is nearly always advised because it is so easy and inexpensive yet can yield such transformative results. The audit will provide information about air leaks which you can couple with your own knowledge of your home’s ventilation needs to develop a strategic plan.

Make sure you choose the appropriate type of weather stripping for each location in your home. Areas that receive a lot of wear and tear, like popular doorways, are best served by slightly more expensive vinyl or metal options. Immobile cracks or infrequently opened windows can be treated with inexpensive foams or caulking. Depending on the age and quality of your home, the resulting energy savings can be as much as 20 percent.

2. Programmable thermostats

Programmable thermostats

Shutterstock Licensed Photo – By Olivier Le Moal

Programmable thermostats have tremendous potential to save money and minimize unnecessary energy usage. About 45 percent of a home’s energy is earmarked for heating and cooling needs with a large fraction of that wasted on unoccupied spaces. Programmable thermostats can automatically lower the heat overnight or shut off the air conditioning when you go to work.

Every degree Fahrenheit you lower the thermostat equates to 1 percent less energy use, which amounts to considerable savings over the course of a year. When used correctly, programmable thermostats reduce heating and cooling bills by 10 to 30 percent. Of course, the same result can be achieved by manually adjusting your thermostats to coincide with your activities, just make sure you remember to do it!

3. Low-flow water hardware

With the current focus on carbon emissions and climate change, we typically equate environmental stability to lower energy use, but fresh water shortage is an equal threat. Installing low-flow hardware for toilets and showers, particularly in drought prone areas, is an inexpensive and easy way to cut water consumption by 50 percent and save as much as $145 per year.

Older toilets use up to 6 gallons of water per flush, the equivalent of an astounding 20.1 gallons per person each day. This makes them the biggest consumer of indoor water. New low-flow toilets are standardized at 1.6 gallons per flush and can save more than 20,000 gallons a year in a 4-member household.

Similarly, low-flow shower heads can decrease water consumption by 40 percent or more while also lowering water heating bills and reducing CO2 emissions. Unlike early versions, new low-flow models are equipped with excellent pressure technology so your shower will be no less satisfying.

4. Energy efficient light bulbs

An average household dedicates about 5 percent of its energy use to lighting, but this value is dropping thanks to new lighting technology. Incandescent bulbs are quickly becoming a thing of the past. These inefficient light sources give off 90 percent of their energy as heat which is not only impractical from a lighting standpoint, but also raises energy bills even further during hot weather.

New LED and compact fluorescent options are far more efficient and longer lasting. Though the upfront costs are higher, the long term environmental and financial benefits are well worth it. Energy efficient light bulbs use as much as 80 percent less energy than traditional incandescent and last 3 to 25 times longer producing savings of about $6 per year per bulb.

5. Installing solar panels

Adding solar panels may not be the easiest, or least expensive, sustainability upgrade for your home, but it will certainly have the greatest impact on both your energy bills and your environmental footprint. Installing solar panels can run about $15,000 – $20,000 upfront, though a number of government incentives are bringing these numbers down. Alternatively, panels can also be leased for a much lower initial investment.

Once operational, a solar system saves about $600 per year over the course of its 25 to 30-year lifespan, and this figure will grow as energy prices rise. Solar installations require little to no maintenance and increase the value of your home.

From an environmental standpoint, the average five-kilowatt residential system can reduce household CO2 emissions by 15,000 pounds every year. Using your solar system to power an electric vehicle is the ultimate sustainable solution serving to reduce total CO2 emissions by as much as 70%!

These days, being environmentally responsible is the hallmark of a good global citizen and it need not require major sacrifices in regards to your lifestyle or your wallet. In fact, increasing your home’s sustainability is apt to make your residence more livable and save you money in the long run. The five projects listed here are just a few of the easy ways to reduce both your environmental footprint and your energy bills. So, give one or more of them a try; with a small budget and a little know-how, there is no reason you can’t start today.

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