An ethical bank aims to run in such a way that it doesn't have a negative impact on society or the environment.
The principles of an ethical bank will have a direct impact on how it invests and lends its money.
An ethical bank will have a policy that outlines what it will and won't invest its customer's money in.
For instance, if you have a savings account with the Co-op, that money will not be subsequently invested in a company that trades in fur, as this is against their ethical policy.
Ethical banking isn't just about not investing in certain things – they will often try to encourage positive social change and promote environmental sustainability in their policies too.
Some ethical banks also aim to be more transparent than regular banks, and to share more information about their practices with their customers.
If you are concerned about your bank profiting from unethical investments or ones that will have a negative impact on society or the environment, then you may want to consider ethical banking.
Ethical banking can positively impact societies worldwide because it does not help to fund companies that deal in morally questionable businesses.
It also means that you gain more control of how and where your bank invests its money and you are safe in the knowledge that your money will not be used by businesses which have a negative impact on the world.
Although there are not many ethical banks, there are a few examples of banks who subscribe to an ethical code.
The Co-operative was the UK's first ethical high street bank, with a policy of not investing in companies which are deemed unethical by its customers.
Other examples of ethical banks in the UK include Smile, which is part of the Co-operative Bank and Triodos Bank, which deals in everyday banking and savings accounts.
No, it's possible to compare the savings and investment accounts alongside regular banks. They offer many of the same personal finance products as any other bank.
However, ethical banks may profit less than non-ethical banks as they have several more criteria that have to be met before they invest your money in a business.