Is Your Bank Financing Climate Change? (And What You Can Do About It)
We all keep our hard-earned cash in a bank or building society account to “keep it safe”. But do you know what your bank actually does with your money? Is it using it to fund fossil fuel companies or deforestation?
If you bank with a UK high street bank it’s highly likely your money is being invested in dirty energy and destructive industries such as deforestation, tar sands, Arctic oil and gas, offshore oil and gas, fracked oil and gas, liquified natural gas, coal mining or coal power. This means your money is directly contributing to worsening the impacts of climate change.
Just last week, a report found that despite making sustainability pledges, Europe’s 25 largest banks are still failing to show plans to tackle the climate crisis and biodiversity loss. Also last week, scientists warned fossil fuels must stay in the ground to keep global warning below 1.5C.
The good news is that you have the power to choose where you put your money and switching to a greener bank or building society is one of the most impactful ways to reduce your environmental footprint. And it is incredibly easy to switch to a better provider!
Apparently, banks can lend up to nine times the amount of money you have in your account, so even if you don’t have a lot of savings, if everyone changed their bank, we could collectively make a huge difference.
Read on to learn which banks deal in dirty cash and, most importantly, what easy, positive steps you can take to make sure your cash is invested in a bank with a moral compass
Do you bank with Barclays, HSBC, Santander, Natwest or Lloyds?
Shockingly, the UK’s “big five banks” (Barclays, HSBC, Santander, NatWest, Lloyds) have actually increased investments in fossil fuels since the 2015 Paris Agreement to limit temperature rise to 1.5C of pre-industrial levels (see this article for more details).
Barclays is the worst offender, according to the Banking on Climate Chaos report 2021, which looks at investment in companies involved in the extraction, transportation, transmission, combustion, or storage of any fossil fuels or fossil-based electricity between 2016-2020.
Barclays invested $144.897 billion in fossil fuels, ranking 7th in the global league table of 60 banks associated with fossil fuel investment, making it the biggest banker of fossil fuels in Europe. HSBC comes closely behind at $110.745 billion, followed by Santander, NatWest and Lloyds.
UK high street banks are also financing deforestation for soy plantations, with Amazon deforestation in Brazil alone increasing by 57% this year In addition, over half of the Cerrado savanna has been destroyed to make way for soy plantations (mainly to grow feed for the meat and dairy industry).
It’s outrageous that UK high street banks are financing fossil fuels and deforestation in the face of the climate and biodiversity crises.
What can you do?
Finance is one area where it’s easy for you to massively reduce your environmental impact and make a big difference for relatively little effort. Here are our top tips:
1. Avoid these banks
You can check how your current bank is doing at SwitchIt.Money. These are the worst offenders in terms of investing their customers’ money in fossil fuels and deforestation and, in our opinion, should be boycotted:
HSBC (including First Direct, M&S Money)
Santander (Cater Allen)
NatWest Group (NatWest, RBS, Coutts)
Lloyds Banking Group (Lloyds, Halifax, Bank of Scotland)
2. Move your money to a greener bank or building society
Switching bank account is one of our easy Eco-Actions You Can Do at Home. The process is quick and simple. By law the switch has to be completed within 7 working days (including moving your money, direct debits and standing orders and closing your old account).
These banks and building societies are recommended by Ethical Consumer as eco-alternatives to the main high street banks:
Nationwide Building Society
Cumberland Building Society
Triodos is top of the table in terms of ethics and transparency. There is a small monthly charge for its current account, but there are often switching incentives such as a free £60 voucher for Ethical Superstone. The others offer free banking, physical branches and additional options such as credit cards. Do your research to switch to an account that best meets your needs.
Triodos (publishes details of every organisation it lends to and funds, for example, social housing, sustainable energy, fair trade and arts and culture projects)
Ecology Building Society (funds community-led affordable housing, sustainable building and community projects)
Charity Bank (owned by charities and social purpose investors, it supports UK charities and social enterprises)
Chelsea Building Society
Cumberland Building Society
Yorkshire Building Society
Leeds Building Society
Coventry Building Society
Nationwide Building Society
Newcastle Building Society
Principality Building Society
Skipton Building Society
West Bromwich Building Society
Triodos, Ecology Building Society and Charity Bank are Ethical Consumer “best buys” for savings accounts. Building societies are also generally recommended as a more eco-friendly choice than the big high street banks.
3. Tell your old bank why you left
Once you’ve switched, it’s important to take a few minutes to contact your old bank to tell them why you left. The more customers that make it clear than investing in fossil fuels and deforestation is not acceptable, the more banks will realise they need to change.
You can use this template letter, write your own or contact your old bank on social media.
4. Sign petitions
Another easy eco-action you can take is to sign petitions (see The Power of Petitions). The following petitions are all putting pressure on the banking industry to clean up their act:
5. Move your pension
Pensions aren’t something we really know much about, but if you have a pension, find out what it’s invested in. If it’s invested in damaging or destructive industries, get independent advice on climate-friendly pensions and move it if you can. There’s more info on pensions and investments at Good With Money and Make My Money Matter. According to Make My Money Matter, making your pension green is 21 times more powerful than giving up flying, going veggie and switching energy provider. There’s a useful link on the Make My Money Matter website through which you can send your pension provider an email asking them to go green.
Investing your money in a climate-friendly bank, building society or pension is one of the most powerful things you can do to protect the planet and consign fossil fuels and deforestation to history. So, what are you waiting for? Switch your money today – you can even do it without leaving your sofa, so there’s no excuse!
*Disclaimer: We are not financial experts and we are in no way offering financial advice. This article offers guidance only.