Some 56% of workers with a pension are interested in investing in community projects, according to recent research .
Data from the Chartered Institute for Securities & Investment, also found that 61% were interested in investing in environmental projects.
However, the research also highlighted that 69% of pension holders would be concerned about investments in armaments or in countries with dubious human rights.
Pension holders also showed concern for investing in companies involved in the tobacco (56%) and gambling industry (54%).
In order for these customers to make sure they are investing in ethical projects, many have turned to ethical banking providers.
One of the most visible providers of ethical banking in the UK is the Co-operative Bank.
The bank has almost four million retail and SME customers and prides itself on providing an ethical banking service.
It claims that it will not provide any banking services to companies that don't reach the standards outlined in its ethical guidelines.
However, customers may feel uncertain about the bank given its sizeable, albeit decreasing, losses of £135.2m in H1 2017, down from £177m in H1 2016.
Given the concern that customers may feel about one of the biggest providers of ethical finance, what are the alternatives?
Where to look?
Triodos Bank – which was founded in 1980 – targets sustainable sectors with businesses and projects that will bring real and meaningful benefits for the wider community.
These include organic food, renewable energy, eco-development, education, healthcare, and art and culture.
The bank won't work with non-sustainable sectors, such as the gambling, nuclear energy, tobacco or weapons industry.
Through its crowdfunding platform, Triodos recently raised over £7m for five organisations offering ethical and community development solutions.
Bevis Watts, managing director at Triodos Bank UK, said: “Our mission as a bank is to help create a fair society that protects and promotes the quality of life of all its members and that has human dignity at its core.
“Our focus, therefore, has always been on lending money to organisations and projects that benefit people and the planet – [that] can prove that they make a positive impact on society, culture and the environment.
“It gives us in-depth knowledge within these sectors and, because we understand the opportunities and challenges that these organisations face first-hand, we can provide a flexible, genuine and personal service they won't find at other banks.”
Meanwhile, U Account's recently launched current account platform avoids the issue of unethical bank lending completely by not lending at all.
It aims to reach customers who are looking for a credible, ethical, transparent and fair alternatives to lending banks.
Another provider with a focus on ethical banking is Charity Bank, which supports charities with loans and provides ethically invested savings products.
The bank recently announced it had provided over £15.2m to the social sector during the first three months of 2018.
The sharia option
Islamic finance offers an ethical option by being compliant with Islamic law.
Any business seeking investment from a sharia-compliant firm must be certified by an expert in Islamic law.
This means that the financing of unethical businesses – such as tobacco, gambling, drugs, alcohol and weapons – is forbidden.
Sharia-compliant banks in the UK include Al Rayan Bank which has been in operation since 2004.
Al Rayan focuses solely on banking activities which are in keeping with the values of Islam and provides products to help families and businesses save as well as offering finance for homebuyers.
Another sharia-compliant bank is Gatehouse Bank and Charles Haresnape, CEO, said: “Conforming to the rules of Islamic finance means we must follow a set of stringent ethical principles that guide the way the bank does business.
“So ethical banking is at the very heart of every product we offer.
“Therefore, we have [to] look to more progressive types of investment, which increasingly appeals to a broad spectrum of clients.
“I suspect part of the reason for this is that they know all the products are effectively ethical by default, so they don't need to look forensically at every deployment of capital.”
Charles added that the bank was looking to expand its offering, but anything it does will have an ethical seal of approval.
SIGN UP TO OUR NEWSLETTER TO RECEIVE MORE NEWS LIKE THIS STORY
Monzo raises £20m in latest crowdfunding round
Monzo has raised £20m in just over two days via its third crowdfunding round...
Could more banks look to use gamification?
Gamification is defined as the application of typical elements of game playing to other areas of activity, typically as an online marketing technique to encourage engagement with a product or service...
Bank Leumi (UK) appoints chief business officer
Bank Leumi (UK) has announced the appointment of Andy Mallin (pictured above) as chief business officer...
Handelsbanken launches UK banking subsidiary
Handelsbanken has launched its new UK subsidiary Handelsbanken PLC as it looks to continue the next stage of its growth in the UK...
Making the most of savings in 2019
Personal finance headlines and best-buy tables are dominated by retail savings products, with very few column inches dedicated to helping businesses determine the best places to stash their cash...
PCF posts 44% pre-tax profit increase
PCF Group PLC has reported a 44% increase in pre-tax profits to £5.2m (2017: £3.6m) in its preliminary results for the year ended 30th September 2018...
Mortgage Sleep Out raises over £100,000
Mortgage Sleep Out has raised more than £100,000 for End Youth Homelessness (EYH)...
Gatehouse Bank launches home purchase plan product
Gatehouse Bank has announced the launch of its first home purchase plan product after securing regulatory approval...
Monese offers free premium current accounts for dual UK/EU citizens
Monese has announced the launch of free premium current accounts for those holding dual EU/UK citizenship...
Masthaven selects Dock9 as digital development partner
Masthaven has chosen Dock9 as its digital development partner...
Aldermore appoints head of mortgage omnichannel
Aldermore has appointed Jon Cooper (pictured above) as its new head of omnichannel within its retail mortgage business...