How to Go Green(er) With Sustainable Banking
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Editor’s note, June 16, 2023: Ando was previously included on this page but the environmentally conscious mobile banking app has been defunct since fall 2022. Its accounts were offered through its partnership with Community Federal Savings Bank. Per the Ando site, account holders can get information about their accounts by emailing [email protected] or calling (646) 929-8106.
This Earth Day, you may be wondering how you can reduce your negative impact on the planet. Where you spend and keep your money can affect the kinds of sustainability efforts that are funded and the harmful practices that aren’t. The bank that you use may have some surprising effects on the amount of deforestation and fossil fuel use that occurs worldwide.
If you want to align your money with your values, there are moves you can make to be more intentional about funding environmentally sustainable practices.
What is sustainable banking?
There’s no set definition of sustainable banking, but it generally describes banking philosophies, products and services that are focused on socially and environmentally ethical banking practices. We’ll focus here on financial institutions that are working to be environmentally sustainable.
What impact does my bank have on the environment?
You may be thinking, “I don’t invest in deforestation or fossil fuels, so my money aligns with my environmental values already.” But did you know that if you keep money in a bank account, your bank can lend it out to or invest in industries whose practices negatively impact the environment? Quite a few major banks put a lot of money toward these industries — some banks spent close to $100 billion each from 2016 to 2020 — and you might not know that your cash is part of the process.
What is 'greenwashing'?
“Greenwashing” is when a company portrays its business as more environmentally friendly than it may be in reality. The company may use misleading statistics or marketing ploys to make its sustainability efforts seem bigger than they are. Greenwashing can be prevalent at investment firms as well as banks.
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How can I tell if my bank is environmentally conscious?
There’s no perfect way to measure whether a bank is entirely green, but there are several certifications and organizations that help show what specific efforts a bank supports. Usually you can find these certifications in the footer of the bank's website, but you can also search online for the bank and the certification or organization to see if it's a member.
B Corp certifications. Certified B Corporations — including some banks — have demonstrated that they have met high standards for company transparency and social and environmental performance, as well as accountability to stakeholders.
1% for the Planet. Businesses, including banks, can participate in 1% for the Planet by committing to donate the equivalent of 1% of gross sales — a combination of monetary, volunteer, in-kind and approved promotional support — to environmental nonprofits.
Global Alliance for Banking on Values. The GABV is a worldwide network of organizations and leaders aligned to make the banking industry more transparent and more supportive of economic, social and environmental sustainability. Banks that are GABV members are committed to these efforts.
Fossil Free Certification. This certification from the volunteer watchdog group Bank.Green is for banks and credit unions that don't finance fossil fuel companies or projects and have pledged not to do so in the future.
The bank’s website. If your bank is open about its environmental efforts, it may have information available online about those efforts. Be aware, however, that many terms related to environmentalism — such as “green,” “eco-friendly” and “sustainable” — aren’t regulated, so banks can use them as they see fit. Take what you read on the bank’s site with a grain of salt and look out for greenwashing.
Search online. If you want to see what news sites and industry watchdogs have researched and written about your bank, search for keywords related to your concerns plus your bank’s name.
What is the most environmentally friendly bank?
There isn’t an official, standard way of measuring how environmentally friendly a bank is. However, a growing number of banks and financial services companies have donated to environmental nonprofits, committed to lowering their carbon footprints, made pledges to not invest in fossil fuels, and instituted other environmentally focused policies.
Here are some financial institutions that have made steps toward more sustainable practices.
Aspiration. Aspiration has some environmentally focused features: cash back for spending at sustainable businesses, no investments in fossil fuel exploration or production, an option to plant a tree with every debit card swipe, carbon offsets for gas purchases, and debit cards made from recycled plastic.
Atmos. Atmos uses customer deposits to invest in renewable energy, regenerative agriculture, electric transportation and other eco-friendly industries. It doesn’t invest in fossil fuels, fast fashion, industrial agriculture or livestock production, generic real estate, or clean energy projects that displace marginalized groups. Customers can also invest in climate nonprofits directly by rounding up purchases or donating from their savings.
Clean Energy Credit Union. When customers make deposits at Clean Energy Credit Union, the funds are used to help members finance clean energy products and services, such as clean energy vehicles, solar electric systems, electric bicycles and green home improvements.
Climate First Bank. Climate First Bank is B Corp certified and participates in 1% for the Planet. It's working toward being part of GABV as well, but the bank needs to be operational for two years or more to qualify. The bank also operates with net-zero carbon neutrality, and in addition to bank accounts, it offers special personal loans for solar and energy retrofits.
Spring Bank. Spring Bank is B Corp certified, which means it's committed to being transparent in its efforts to have sustainable business practices.
Banking writer Spencer Tierney contributed to this article.
