Can you save the planet and make money?
We’re all being encouraged to go green at home and in the office. But is it really possible to save the planet by switching your mortgage or savings provider? Business editor Chris Starkie reports.
Concern about the environ-ment is a hot topic right now, with consumers being encour-aged to consider how their purchases will impact the planet.
As a result, sales of gas-guzzling cars are declining, while the trade in energy-efficient light bulbs has never been brisker.
Financial services providers are getting in on the act, with eco-friendly labelling being applied to everything from mortgages and savings to insurance.
Some of these products promise to plant trees or invest in renewable energy projects, others donate money to ethical charities. But are consumers getting a good deal, and are the benefits more than just a gimmick?
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We've looked at some of the growing number of mort-gages, savings and insurance products that are being sold with green credentials.
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There is a wide range of green and ethical savings products in the marketplace, with several banks and building societies specialising in this area.
Three leading providers are the Cooperative Bank, the Ecology Building Society and Triodos Bank.
The Cooperative offers the instant access Cashsaver account with a miserly 0.93pc rate on balances of £1. But its Smart Saver, which is also instant access, gives you a better 4.5pc on the same balance.
The Ecology's accounts, the instant access Eco Instant and six-day notice account Eco 60 are only open to members of green organisations.
The interest rate on the instant account is 2.10pc for balances of £25 or more, while the Eco 60 offers 3.15pc for £500, which is the minimum investment.
Yorkshire-based Ecology was set up in 1981 to support sustainable construction projects and now has 10,000 members.
Triodos Bank has the biggest range of accounts, including the Earth Saver, which has a 33-day notice period, pays 2.6pc on balances of £1 or more, but also donates 0.25pc to Friends of the Earth annually.
The same rate applies to its Fair Trade account which donates to the Fair Trade Foundation instead.
Its Charity Saver gives customers the chance to donate all interest earned to charity.
Triodos is Dutch-owned bank which specialises in ethical lending and investments. Its renewables division owns the Gulliver wind turbine in Lowestoft.
Andrew Hagger, of Norwich-based money search engine moneyfacts.co.uk, said: “Although the interest rates offered on green and ethical savings products don't make the best-buy tables, consum-ers that are keen to do all they can to help the environment are often prepared to accept a lower rate of return, as a trade-off.”
Motoring insurance is the latest area to go green, with new products such as Cooperative Insurance's Eco-insurance policy.
The policy offers to offset 20pc of the carbon emissions from your vehicle, by invest-ing in re-forestation projects and renewable energy.
And motorists with cars in Band A - the least polluting vehicles - get a 10pc discount.
Cooperative Insurance even uses an eco-friendly vehicle repair network.
Carbon reduction company Climatesure has teamed up with a number of major insurance companies, includ-ing Norwich Union and Axa, to offer green motor insurance.
For every policy sold, Climatesure will estimate the consumer's carbon footprint and invest money in a number of carbon off-set projects, ranging from installing energy-efficient lighting in Kazakhstan to restoring the rainforest habitat in western Uganda.
Climatesure claims its policies won't cost any more than conventional policies as green consumers are seen as less of a risk.
Phil Denman, of Climate-sure, said: “We know that people want to be more environmentally responsible, but they're tired of paying over the odds for doing the right thing.
“Insurance is one area where being responsible is rewarded with lower prices, so we're delighted that Climatesure will make tackling climate change a simple and effective part of everyday life.”
But Richard Mason, director of insurance at the website moneysupermarket.com, is sceptical about whether green policies can compete on price.
He said: “Drivers are increasingly concerned about their impact on the environ-ment and in an effort to 'go green' many may be tempted to opt for eco-friendly car insurance.
“But until insurers make green premiums more competitive, my advice is to shop around for the cheapest deal that meets your needs and give some of the money you save direct to eco-friendly causes.
“Not only will you have the peace of mind that your charity is receiving the money directly, but you will get value for money on your policy.
“I predict more financial service providers will enter the green motor market, especially as more emphasis is given to climate change issues.
“But I urge these companies to be more competitive - More Than, for instance, are in many cases very competitive for normal car insurance, so I would urge them, and all other providers, to review their premiums for eco-friendly cars.
“However, with the maintenance costs so high on dual fuel vehicles, I cannot see premiums dropping significantly, especially with insurers such as RBS and Norwich Union going so far as to announce hikes in their premiums.”
Green mortgages are starting to feature in the market place, with some providers special-ising in lending on properties that respect the environment.
One of the leaders in the field is the Norwich & Peterborough Building Society, which from January is the first building society to go carbon neutral.
It offers a green mortgage, which is a four-year fixed-rate mortgage at 5.79pc. It is available to people in new houses or consumers who are taking steps to make their home more energy efficient.
For every green mortgage taken out, the N&P will plant 40 trees, and the society is planting woodland in Lincolnshire and Norfolk.
In addition, the N&P holds an annual competition for home-owners who have undertaken a “self-build” that is kinder to the environment.
The winner of the £5,000 prize is the property that is the most environmentally friendly.
The Ecology Building Society was established to lend on properties that respect the environment. Its product range includes a variable rate mortgage at 6.6pc.
The Cooperative Bank is another provider of green mortgages, offering a two-year fixed rate at 6.19pc. For everyone taking out one of these mortgages, the Coop gives a free energy report and makes an annual donation to the Climate Care charity.
Andrew Hagger, of moneyfacts.co.uk, said: “It is unclear at this stage whether the government will offer incentives to encourage mortgage lenders to create products that reward house buyers who borrow money to buy energy-efficient homes.
“Whilst zero carbon houses are a key target area for the government, nobody seems to have a clear understanding of what constitutes 'zero carbon' status.
“You can get an 'A' - rating on a new property for its level of energy efficiency if it is fully insulated, has efficient boilers, and double glazing, but what more do you need to add or install to achieve a zero carbon rating?”
t Ecology Building Society: 0845 674 5566, www.ecology.co.uk.
t Triodos Bank: 0500 008 720, www.triodos.co.uk.
t Cooperative Bank: 08457 212 212, www.co-operativebank.co.uk.
t Cooperative Insurance: 0845 746 46 46, www.cis.co.uk.
t Norwich & Peterborough Building Society: 0845 300 2511, www.npbs.co.uk.
t Climatesure: 0845 6003074, www.climatesure.co.uk.