Sustainable Banking: How to Make Earth-Friendly Choices With Your Money
If consumer consciousness surrounding the climate change crisis and the need to protect the planet can be said to be progressing along a spectrum and evolving, that evolution looks something like this:
One of the earliest waves of realization and adoption was sustainable food and the acknowledgment that our food choices have an impact on the overall health of the Earth, thus the growing shift toward eating less meat and dairy and following a plant-based diet.
"Most people agree that sustainable food was the first one that broke through to the mainstream because it's personal; we literally put food in our bodies," says John Oppermann, executive director of Earth Day Initiative.
Next came fashion, and the gradual understanding that the fast fashion industry does significant harm to the planet as well, including through the use of natural resources, greenhouse gas emissions, and labor practices.
"I view it as concentric circles moving out from a person," continues Oppermann. "Food goes in our body…fashion goes on our body…"
Now, taking Oppermann's spectrum of consumer consciousness one step further, we have more recently begun to move outside the body and focus on things that humans interact with on a daily basis. And thus, a shift to educating consumers about the impact of our daily money and financial habits. Specifically the devastating impact our banking decisions have on the planet.
Perhaps the most eye-opening and unsettling call to action on this front came in the form of a recent report from the Rainforest Action Network (RAN) called "Banking on Climate Chaos," which highlighted the ways in which global banks are a leading contributor to climate change.
As the report reveals, in the five years since the Paris Agreement, the world's 60 biggest banks have financed fossil fuels to the tune of $3.8 trillion. That funding has resulted in everything from increased indigenous rights violations to wildfires, pollution, and health impacts, as well as humans and animals being forced out of their homes by extreme weather disasters.
The players behind all of this are the world's most well-known banks. Leading the pack is the bank the RAN report calls the "world's worst contributor to climate chaos"—JP Morgan Chase, which the report says is the top offender when it comes to financing projects that exacerbate climate change. The bank has spent a staggering $317 billion financing fossil fuel projects since the Paris Agreement, says RAN.
Many of the other banks that are next in line, according to the report, are household names as well, including: Citi ($237 billion), Wells Fargo ($223 billion and also the world's top fracking financer), and Bank of America ($198 billion).
"Despite clear warnings, these banks continue to finance fossil fuel projects and companies that impact communities every single day," states the RAN report, adding that runaway funding for fossil fuel extraction and infrastructure continues to cause climate chaos and threaten the lives and livelihoods of millions of people across the planet. JP Morgan Chase, Citi, Bank of America, HSBC, and Barclays, for instance, all continue to finance fracking in Argentina's treasured Patagonia region, negatively impacting indigenous communities.
In Northern Mozambique, where 14 of the world's biggest banks, including JPMorgan Chase, BNP Paribas, and MUFG fund LNG projects (liquid natural gas) many communities no longer have livelihoods—and the LNG work has led to local increases in poverty and malnutrition, says RAN. These same extractive projects also trigger increasing conflict, human rights abuses, and militarization.
What's the key takeaway for you as the consumer here? It's that banks have a massive impact on communities around the world that are on the front lines of climate change. What's more, the money banks have available to provide funding and loans for these types of environmentally harmful projects comes from you, the consumer, and from your checking and savings accounts. Meaning the choices you make about where to bank have very real consequences.
"The only reason banks give us checking and savings accounts is because they need our money to give these loans," explains JP McNeill, founder and CEO of San Diego-based banking service Ando, a start-up that launched earlier this year to address this very issue.
Here's what to remember when making banking choices—and how to put your money where it matters.