Much of the media coverage around climate change focuses on big business, governments and, of course, banks. But one of the biggest impacts individuals can have is where they put their savings and how they spend their money. Putting your savings in the hands of the right financial institution can make a big difference. In the following lines, we tell you how to make your savings more ecological and responsible.
You may find that banking with an online depository institution is the best bet, simply because it keeps overhead costs and a lower carbon footprint by not operating individual branches. With online savings, you also usually get more for your money. This is because online banks offer higher returns on your money.
If the environment is your primary concern, you might want to choose a location that cares about sustainability. It could be an institution like Active Seed. As always, look for an account with the best rate and terms that suit your individual financial situation. Limiting your trips to depository institutions by instead using its online portal to track your transactions could also help reduce your bank’s carbon footprint.
The easiest way to start making your finances sustainable and greener is to switch banks. Any bank can claim to have green products, but having those products does not always make them thematically green. There are financial institutions that offer environmentally friendly products, but then invest in the coal and mining industry. In a way, this defeats the purpose of going green.
It’s one thing to make individual changes to promote sustainability, but if there aren’t systemic changes at the same time, improvements usually don’t happen. Over the past two years, consumers have become increasingly concerned about where financial institutions invest. Customers therefore take more time to determine where their money is going and what their money is doing.
Nowadays, you can switch banks with just a few clicks. So if you’re unhappy with your bank’s ethical values, find one that matches yours and make the switch. Moving your money to another bank may not seem like a huge impact on environmental protection, but you are actually helping to stop investment in the fossil fuel industry.
The world’s largest banks have financed fossil fuels to the tune of .8 trillion, according to the Banking on Climate Chaos 2021 report. If enough people start choosing their banks ethically, there could be a chance to reduce the amount of money that goes to these climate-damaging industries.
Tackle the capital market to invest in a greener future and reduce your carbon footprint can seem a bit overwhelming, compared to changing your consumption habits. But as always, what seems like the most immediate action to take isn’t always the most important, because it’s not necessarily the solution with the greatest positive impact! Here is a small example:
If you invest €10,000 in an investment fund, this generates approximately 1.8 t CO2e. A lot, no? Now if, for example, you decide to go vegan, you can save 0.8 t CO2e per year.
Looking at these two numbers, you will notice that your investment is actually causing twice the carbon footprint compared to adopting a vegan diet. This means that the impact of your investment far outweighs the impact of your consumption.
In the future, instead of spending €20 per month on certified ethical, vegan, organic products, why not consider investing the same amount in climate-friendly businesses with ambitious carbon reduction targets? By investing your money with impact, you can actively vote for the greener future we all hope to experience one day.
“By saving money, I do no harm”. It’s wrong ! Although it would surely ease your conscience to know that as long as you don’t spend your money, you don’t have to worry about its negative impact on the planet, but unfortunately that’s wishful thinking. If you really care about green finance, you should start with your savings!
The first thing you need to know about money in your savings account is this: your money is not physically present in your savings account, but is lent and invested by your bank. This is a problem because the international banking world is pouring large sums of money into climate-damaging industries every day.
JP Morgan Chase, for example, one of the largest US banks, was the largest funder of fossil fuels in the four years following the Paris agreement. This bank has provided more than 0 billion in financial services to extract oil, gas and coal.
The Banking on Climate Change study by several environmental organisations, including Rainforest Action Network and BankTrack, further revealed that UK banks Barclays, HSBC and RBS have all helped fund the Dakota Pipeline, an 1,886 km underground oil pipeline to the United States. United States which has been heavily criticized due to concerns about its impact on the environment.
In other words, when you save money, you actually lend it to your bank, which then often uses it in ways that fuel the climate crisis. There is a lot to be said for better control of your money, to ensure sustainable management, instead of hoarding it in your savings account.
Here is good news for you: not all banks are “bad banks”. Due to a growing awareness of their environmental responsibility, some banks have found solutions to this problem by providing more sustainable savings accounts. So how can you, as a climate-conscious individual, make sure your bank isn’t pumping billions into fossil fuels?