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Banks Vs Credit Union Vs ESG Funds

Posted by Mike Mulrenan on July 5, 2021

When it comes to investing we’re all well aware of the traditional routes of saving with banks and credit unions but we’re also becoming aware of the low return our money will see in these institutions. That’s why it’s time to consider alternative methods of investing such as ESG funds.

Current Situation

Households have been saving like never before. This is largely on the back of the Covid-19 pandemic which has led to lower consumption. Across the EU the household saving rates are at a record high of 24.6% while in Ireland, deposits are at record levels in excess of €120 billion.

With all these extra savings many have been turning to the traditional avenues of savings accounts in both banks and credit unions but being extremely disappointed when they realise their money is likely to see close to zero return!

That’s why we’ve decided to compare and contrast banks, credit unions and other options for investing your money, including ESG Funds -  more commonly referred to as Ethical or Sustainable Funds.


It’s a well-known fact that banks have been slashing their savings interest rates over the last number of years. With each year that goes by your hard earned cash is stagnating, often earning less than 1.00%. Most recently AIB made a large number of cuts to its savings returns with just three of the bank’s saving accounts now offering a return on your money. Already, Ulster Bank and Bank of Ireland have imposed negative rates on larger depositors.

Credit Unions

For many years now Credit Unions have been actively discouraging savings. Credit Unions across the state have introduced restrictions on savings above €40,000 but this restriction is reducing. In December 2020, Progressive Credit Union in North Dublin which has nine branches told its members that they must cut their savings to €15,000. This was due to a significant increase in deposits. Anyone who had funds over €15,000 were asked to withdraw the balance over this amount to allow the Credit Union to cope with regulatory requirements and negative interest rates. A Credit Union must keep a minimum of 10% of its total assets in reserves so the more it has in savings the more it must keep in reserve which reduces the amount it has available to pay out. Balancing this fine line means that the Credit Union is no longer a viable investment option for many members.

ESG Investments

With banks offering low to zero rates of interest and credit unions actively discouraging savings, where can you find a more strategic way of saving that will produce a good rate of return? That’s where ESG investments comes in.

ESG Investing offers a way for the public to invest in funds that consider environmental, social and governance issues.

If you’re looking for a profitable investment fund that you can feel good about then ESG funds are the perfect option. Investing in socially responsible companies is not only a great ethical choice but can also have excellent long term financial benefits.

ESG investments are gaining huge traction thanks to research showing that this method of investing can reduce portfolio risk, generate competitive investment returns and help investors to feel good about the investments they own.

The COVID-19 pandemic has strengthened the case for ESG funds with the market turbulence seen during this time providing evidence that the stocks of companies with strong performance on ESG issues are often less volatile. The COVID-19 pandemic helped to increase public awareness of social issues which fall under the ESG category while it also led to further decreases in banks interest rates.

Of course when it comes to investing in ESG funds, like all forms of investment there are some risks, the most significant of which is that there is no guarantee of return. However, its return/risk benefit should be weighed up when compared to non-returning options such as Banks and Credit Unions deposit/savings accounts.

Overall, ethical Investing is a smart choice for many which will help you to get the best value on your savings.

Ethical Investments: Your best choice

When it comes to choosing the best investment for your hard earned savings, the traditional routes of Banks and Credit Unions are no longer favourable. ESG funds offer the potential for great returns as well as reduced portfolio risk and the knowledge that you’re investing in something which will make a real difference. However, simply choosing an ESG fund is not a guarantee of success or that ESG funds are right for your financial goals. That’s why here at Linked Financial we offer impartial advice to help you navigate the complex world of ESG investing to determine which ESG fund, if any, is right for you.

Where can I get more advice on ESG Investments?

Here at Linked Financial, we are making a commitment to actively promote ESG Investing as a viable alternative to more traditional options for our clients. We will take you through our rigorous and interactive risk profiling and fact-finding process and recommend ESG funds for you which match your personal preferences. To learn more about ESG Investments be sure to read our blog that looks at the future of investing in ethical funds.

Get in touch with us here for an initial consultation and to discover the possibilities that ESG Investing can provide you