As Others Abandon Climate Initiatives, These Banks Focus on Clean Energy

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Several of the largest banks and asset managers in the United States recently decided to abandon climate initiatives. These moves corresponded with the arrival of the second Trump administration, which has also withdrawn U.S. participation from significant climate actions.

According to a recent report from Topo Finance, a climate and financial research nonprofit, if the largest banks and asset managers in the United States were a country, it would be third in terms of the most carbon emissions after China and the U.S. These financial institutions channel trillions of dollars into carbon-intensive industries, like fossil fuels.

With all of that in mind, it can be hard to know which of your financial choices can dovetail with your priorities as a consumer.

When you put your money in a deposit account at a bank or credit union, it usually doesn't just sit there doing nothing. The bank uses your money on the back end to issue loans, not only to other consumers but also businesses, some of which belong to carbon-intensive industries. This means that if your bank is investing in things that exacerbate climate change, then your money could very well be being used to do it.

A new way of banking: Swap fossil fuels for green lending

A growing number of banks and credit unions have broken away from the pack to create a new vision: financial institutions that can grow your money without relying on fossil fuels. (Here's more on how to go green(er) with sustainable banking.)

Climate First Bank is one such bank. It doesn’t invest in carbon-intensive industries and instead focuses on loans and investments in clean energy products such as solar panels, battery systems, energy retrofits and the cost of switching a home from fossil fuel-powered to electric. It also offers a variety of traditional deposit accounts with climate-focused incentives.

“Banks and other financial institutions are well-positioned to be a catalyst to accelerate clean energy in our communities,” says Chris Castro, executive vice president and chief sustainability officer of Climate First Bank.

Climate First Bank is focused on making clean energy more accessible to low-to-moderate income households by bundling certain loans — such as roof replacement and solar panels — and making longer terms available, per Castro.

» More from NerdWallet: Is your bank greenwashing? Here’s how to check

Some credit unions have also gone green

Credit unions — which are typically community-based and not-for-profit — are getting in on green banking and lending as well. Clean Energy Credit Union offers loans on a variety of products and services including home solar panel systems, electric vehicles, e-bikes and green upgrades like energy-efficient windows, insulation and appliances.

“One of the biggest barriers to clean energy is the upfront cost,” says Nicole Burford, vice president of market development and sustainability at Clean Energy Credit Union. Burford says that the credit union structures its solar loans so that a borrower’s monthly payment is similar to the savings they see on their bill, offsetting the cost.

But if meaningful strides are going to be made in the adoption of clean energy, Burford says that green banks, credit unions and lenders are going to need to be on deck.

“We need an army of lenders and other institutions who can offer affordable loans for clean energy projects,” Burford says.

Consumers have the power to vote with their dollars

Responsibility also falls on consumers to be conscious of the role they play with their financial decisions. When you choose to put your money somewhere, be sure to research what kind of businesses and projects that institution invests in.

“The question you have to ask is, ‘what is your money doing?’” says Burford. “Make sure that the answer aligns with your values, whether that’s climate or social justice.”

Beyond deposit accounts, there’s another place where your money may be funding climate change: your retirement account. Much like a deposit account, if you put your money into a retirement fund that invests in the stock market as a whole, you are probably investing in carbon-intensive industries. (Read more about sustainable investing.)

Castro calls this behind-the-scenes investing for both deposit and retirement accounts “an unsung climate problem.” However, there are steps you can take to minimize or eliminate the amount of money that you indirectly put toward fossil fuels:

• You can move your money to a socially responsible bank.

• You can reach out to the provider of your retirement account and ask about options for funds and portfolios that don’t include fossil fuel companies. 

• You can take your activism a step further and directly tell your former financial institution that you disapprove of their behavior around climate initiatives and that that’s why you’re taking your business elsewhere. This can have a huge impact on the banking industry if done in large enough numbers.