If you’re like most people, you haven’t given a moment’s thought to how banking affects climate change. But if you do pause, it makes sense that such a major institution could, and does, impact everything from forests to water. As a customer, your choices at the bank can mean the difference between burdening the planet and benefitting it.
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At first glance, you may be thinking about environmental aspects like how much paper your bank uses. We all know financial institutions like their paper trail. Obviously, that’s an important consideration, and as banks move further into the digital realm, the paper consumption becomes a fraction of what it used to be.
Then there’s the energy consumption throughout the process of banking. Heating, cooling and lighting large banks, especially older or very large ones, is the opposite of energy-efficiency. As a central industry for the nation, banks carry a huge responsibility to invest in ways that reduce waste of things like paper and energy at every level of the organization.
Even with all that in mind, perhaps the best way a bank can change the course of its environmental impact is to control where its money is invested. While it’s great to consider your individual part in the larger scheme of things, the truth is that the gas you save making an e-deposit instead of driving to the bank for a deposit isn’t even a drop in the bucket compared to the massive power a bank entity holds in driving the course of climate correction.
That’s because banks make money through investments. Where they invest that money — our money — controls who has funds to pursue its interests. For example, banks often invest in the fossil fuel industry. And why not? It’s been a money maker for generations. However, banks who invest in green energy and refuse to fund fossil fuel projects are leaders in environmental solutions.
Green bank means sustainable banking
If you know where your bank invests, it gives you the power to make wise eco-friendly banking choices that support environmental goals. Ando is one example of sustainable banking with environmental protections at its core.
According to the company, “Ando invests 100% of customer deposits in green initiatives exclusively, like renewable energy and regenerative farming, allowing users to have the single greatest individual impact on reducing carbon emissions and healing the planet.”
While sustainable finance is a catchy headline phrase, the current actions are woefully insufficient. The percentage of banks heavily focused on investing in regenerative farming, carbon reduction and efficient waste systems is miniscule. As the zeitgeist continues to shift, however, your decision about what bank to support becomes even more crucial.
Avoid the biggest banks
The most commonly-found banks in the country are nearly all associated with funding non-renewable resources. According to the Rainforest Action Network, JP Morgan Chase, Wells Fargo, Citi, Bank of America, TD, Morgan Stanley, and Goldman Sachs are the seven most-popular banks. They also fund the most fossil fuels.
Look at sustainability statements from your bank
You can start to get a feel for your bank’s sustainability focus by reviewing its sustainability statements. If the highlight reel involves paperless bank statements and energy-efficient lighting, it’s fair to say it is not proud of its investment profile when it comes to environmental protections.
Just like other businesses who practice corporate responsibility around social and environmental actions, banks can also earn B-Corp status. Achieving this certification is a good indicator the bank is working with environmental goals in mind.
Fossil-fuel-free banks and credit unions
Just like their big brothers, smaller community banks are not obligated to disclose where they invest their funds. However, many will proudly disclose if they refuse to invest in fossil fuels. Look for a public commitment against financing dirty energy. The list is growing every day.
Credit unions vs. banks
Unlike banks, credit unions are developed for groups of people with common goals. Also unlike banks, credit unions are in business to meet the needs of their members, not a paid board of directors. Since credit unions exist to fund loans within their community, the focus isn’t on investing in the larger fossil-fuel industry. Holding your accounts at a credit union, therefore, means your money stays and supports locally.
Go digital, go green with your banks
Several online-only banks have launched a banking platform specifically centered around sustainable banking and investments. Check out Aspiration, ATMOS and Ando to see if their service options work for you.
Lead image via Pexels