Two US banking giants which launched accounts in the UK have been ranked among the “worst” providers by researchers because of their policies on issues such as the climate crisis and weapons.
Goldman Sachs and JPMorgan Chase both scored poorly due to their records on the environment, human rights and paying tax, according to a new study by Ethical Consumer magazine.
Both of the banks were downgraded by the ethical organisation largely because of their investment in fossil fuels in the latest study, which scrutinises financial institutions’ practices against a range of criteria.
Triodos Bank, which describes itself as “one of the world’s most sustainable banks”, has been awarded a “best buy” for current and savings accounts in the survey, which is undertaken every two years.
It was awarded the highest ranking among 31 current accounts with a green, or good, “Ethiscore” based on its transparency and investment strategy.
Meanwhile, the Chase current account, JPMorgan’s consumer brand in the UK, was the fourth-worst ranked current account with a red – or poor – rating and a recommendation that this was a “brand to avoid”.
Ethical Consumer is an independent, not-for-profit co-operative founded in 1989 and based in Manchester. It aims to make businesses more sustainable through consumer pressure.
In the study, banks were scored against ratings on climate and the environment as well as on financial issues such as director pay and tax avoidance. It also looked at the activities that are funded by the banks and the ethical policies in place to prevent financing of harmful practices.
Triodos was applauded for publishing information about every organisation that it lends to. Customers are able to review every organisation in their portfolios, which is not possible with other banks, according to Ethical Consumer.
The determination of how ethical a bank is was largely determined by where their money is invested, according to the co-operative, including how transparent they are and whether there are robust policies to stop them funding harmful practices. If a bank was found to have invested in mining, for example, it would lose marks under sections on human and workers’ rights as well as pollution.
Only Triodos, Co-op, Nationwide and Cumberland building society did not lend to problematic areas, according to the study. If a bank held shares in, as well as lending to, companies which had unethical practices, they were also deducted marks.
Ruairidh Fraser, one of the authors of the report, says banks have a huge impact through their loans and investments. “That’s why it’s so important for customers to know what banks are doing with their money and what policies, if any, guide their choices. But our survey of the banking sector showed that this information is still very hard to find,” he says.
Triodos’ current account dropped slightly in its score since the last survey due to what was claimed to be “excessive” executive pay, but remained a leading product as a result of its transparency and positive investment strategy.
Goldman Sachs’s Marcus savings account, which has attracted significant interest from UK consumers on the back of attractive rates, also emerged with a poor Ethiscore.
‘It’s so important for customers to know what banks are doing with their money. But this information is still very hard to find’ Ruairidh Fraser, researcher
Of the savings accounts that were rated, it was one of 22 which received the middle or worst ranking for the likely use of tax avoidance strategies. “The biggest banks all fail miserably on tax,” claims the report. Three financial institutions – Charity Bank, Ecology building society and Triodos – were awarded best buy status in this category.
Most of the providers got the worst rating around their carbon management and reporting, as they did not discuss the carbon impacts of their investments and were found to have funded sectors which were deemed to be climate destructive.
Goldman Sachs and JPMorgan Chase, both relatively recent entrants to the UK banking market, were singled out for criticism in the report. Goldman Sachs did not respond to requests for comment.
A spokesman for JPMorgan defended the banks’ green credentials. “In 2021, JPMorgan Chase facilitated more than $100 billion for green activities like renewable energy, energy efficiency and sustainable transportation, doubled our green investment banking activity and were the largest underwriter of green bonds,” said the spokesman. “These efforts help put us well on our way to our target of $1 trillion for green initiatives over 10 years, including for technology that will tackle climate change but does not even exist yet. We are also taking pragmatic steps to meet our 2030 emission intensity reduction targets in oil and gas, electric power and automotive manufacturing, while helping the world meet its energy needs securely and affordably.”
Bevis Watts, the chief executive of Triodos Bank UK, called on other banks to adopt similar levels of transparency and accountability. “If the financial industry is truly going to be play a part in tackling the combined threats of the environmental and social issues that we are facing, we need each and every bank to reflect these values and make real commitments to investing only in areas that contribute to a sustainable future for everyone.”