diff --git a/changelog.d/6921.docker b/changelog.d/6921.docker
new file mode 100644
index 000000000..152e72333
--- /dev/null
+++ b/changelog.d/6921.docker
@@ -0,0 +1 @@
+Databases created using the compose file in contrib/docker will now always have correct encoding and locale settings. Contributed by Fridtjof Mund.
diff --git a/contrib/docker/docker-compose.yml b/contrib/docker/docker-compose.yml
index 2b044baf7..5df29379c 100644
--- a/contrib/docker/docker-compose.yml
+++ b/contrib/docker/docker-compose.yml
@@ -56,6 +56,9 @@ services:
     environment:
       - POSTGRES_USER=synapse
       - POSTGRES_PASSWORD=changeme
+      # ensure the database gets created correctly
+      # https://github.com/matrix-org/synapse/blob/master/docs/postgres.md#set-up-database
+      - POSTGRES_INITDB_ARGS="--encoding=UTF-8 --lc-collate=C --lc-ctype=C"
     volumes:
       # You may store the database tables in a local folder..
       - ./schemas:/var/lib/postgresql/data