Does your bank really care about the planet, or is it possibly bankrolling destruction?

Let’s say you’ve socked away a few thousand dollars in a term deposit for a rainy day. How would you feel if that money was being used to help finance deforestation, a coal fired power station, fracking for coal seam gas or other forms of coal mining?

During the December 2011 climate talks in Durban, South Africa, it was revealed that 20 of the world’s largest commercial banks are responsible for 75% of emissions from the coal industry, in that they provide the financial support for those emissions to be generated. 
 
The study, entitled “Bankrolling Climate Change“, names these banks and just for good measure, also notes their corp-spin in relation to their supposed commitment to battle climate change.
 
A really green bank is so much more than one that just uses recycled paper and energy efficient light bulbs in their branches. Banks can make or break polluting industries; so why are they continuing to assist them with finance? That’s a rhetorical question; we all know the answer. Profits. But it may be more than just that – in some instances it could just be because that is the way they have worked for so long.

Past the really filthy top 20 institutions, the “Bankrolling Climate Change” study looks at a total of 93 banks around the world and their support of coal – and there are some surprises in the list; including one of the banks I do business with.

Green vs ethical banking

So, these banks that say they are environmentally conscious are liars? Well, it depends upon your definition of “green”. To some, green banking is about their day-to-day business processes being environmentally friendly; such as the recycled paper I mentioned or a branch sticking solar panels on its roof. Some may even provide green loans that offer a lower interest rate if you’re using the cash to insulate your home, install a solar hot water system or carry out other energy efficiency measures. These things are great but..

Ethical banking is the big picture that builds on the warm and fuzzy green stuff – the understanding that funds are only channelled into investments that are environmentally friendly and also observe the principles of social justice.

What to do?

Figuring out which bank operates under green and ethical (as explained above) principles can be a really time consuming process; so perhaps the first thing to do is ask your bank if it invests in coal mines, coal fired power generation or other industries of concern to you. Tell them that if they do, it troubles you. Ask them how their investments in fossil fuels stack up against those in renewable energy.

If enough depositors start kicking up a fuss, this will filter through to the boardroom and may help facilitate change. I don’t expect they’ll drop their coal interests like a hot potato, but they may start at least offering more green investment options. The more people take up on these options, the faster portfolios and focus will shift.

Clean coal – don’t believe the hype.

If your bank comes back to you and state they are investing in the coal industry, but it’s next generation coal, clean coal, CCS or other similar spin – reject that explanation. Clean coal is an oxymoron and carbon capture and sequestration (CCS) is still unproven on a commercial scale. 

Banks that put their faith in these yet to be fully realised technologies may as well just be betting their depositor’s money on a horse race in my opinion and they are certainly betting against the planet. In the not too distant future, I believe coal based investments will be a liability, not an asset – and then some banks are going to find themselves in very hot water.

Time to change banks? To who?

This is the big question – and it really depends on where you live; but skimming over the list of 93 institutions listed in the report I mentioned above, I think the general rule of thumb is the bigger the bank, the more likely they support the coal industry. 

If you aren’t happy with the way your bank treats the environment, perhaps start looking at smaller banks, building societies and credit unions – you’ll often find they offer better interest rates on deposits and loans too. Some small banks have also started up in recent years with green and ethical banking has their focus rather than as a feature.

A good place to start looking for these really green financial institutions is via Google – and instead of searching on “green banks”, as that will bring up the shallow stuff, try using the search term : ethical banking.