Green Up Your Banking

This is the first in our series of articles on the power of personal finance as a vital tool to fight climate change.

At Youth Climate Strike (1st Photo – Polly Esterbrook, 2nd Photo – Katherine Markova)

Moving our money to a greener bank is one of the most impactful and least disruptive strategies we have to help stop the climate crisis.

By Katherine Markova

Problem: for every $100 deposited with any of the Big 4 high street banks,* $24 ends up funding fossil fuel infrastructure. Only these banks have sufficient funds to lend to these large projects.

If you deposit your money with a “green” bank, greenhouse gas emissions associated with those funds will be much lower. There are two types of green banks:

1. Those that do not lend to the fossil fuel sector.
2. Those that affirmatively, and sometimes exclusively, lend to certain environmentally-beneficial projects, such as community solar.

This chart shows the carbon footprint of $10,000 sitting on deposit with a Big 4 American bank and $10,000 lent by a green bank to community solar.

Based on the EPA’s data, we can derive that by moving $16,700 from a high street bank to a green bank that only lends to clean energy companies and keeping it there for a year, an average American can eradicate their entire annual carbon footprint.

Sounds too good to be true? A little…One person taking this action will not stop the construction of a new pipeline but 1 million of us doing this together may achieve that outcome.

Here are some practical steps I recommend you take.

1. Use NerdWallet and bank.green to check out available options. A neo-bank is not actually a bank. It does not hold a banking license. Instead, your FDIC-insured bank account will be with its partner (typically a community) bank. Do your due diligence on both companies.
2. If you have several bank accounts and many direct pays, open a savings account first, and transition over time.

Katherine Markova is a climate consultant and is an Instructor for UCLA Extension’s Sustainability Certificate Program.  

*This includes Wells Fargo, Bank of America, Chase and Citigroup.

> Read Part 2 and Part 3.