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Banks around the country are “going green,” a trend in which traditional banks and newer banks with explicitly sustainable business models are participating.
For instance, Citizens Bank has a sustainable initiative that focuses on reducing its emissions, supporting customers in a sustainable transition, and partnering with communities for local impact.
Meanwhile, NY Green Bank, a sustainable bank based in New York, has introduced a new model for financing solar panels. The model bases revenue streams on subscribers rather than on contracts like power purchase agreements (PPAs), which have created a multitude of problems for customers.
As banks shift their business models to be more sustainable, there are also steps you can take to participate in the transition. Here’s how to go green as a banking consumer.
What is sustainable banking?
There are several definitions of sustainable banking, and they don’t always mean the same thing. However, one of the most common ways to define sustainable banking is the planning and execution of banking activities while considering ESG (environmental, social, and governance) factors.
In other words, sustainable banking is an approach that emphasizes a positive impact on the environment, the community, and company culture.
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Ways to implement sustainable banking
As a consumer, there are many choices you can make to implement sustainable banking. Here are some to consider.
Opt into e-statements
Opting into e-statements and other electronic communications is one of the quickest and easiest ways to be a more sustainable banking customer.
Receiving paper statements every month means more paper and ink use, as well as more emissions from transporting your mail. When you receive your statements electronically, there is less negative environmental impact.
Research your bank’s lending and investment portfolio
We’ve all heard the phrase “vote with your wallet” — the idea that making certain consumer choices can help enact the changes we want to see in the world. Banks have a similar power, perhaps to an even greater extent, since they lend and invest large amounts of money.
For instance, some banks may lend to or invest in environmentally harmful industries and practices such as fossil fuels or deforestation. If sustainability is important to you, avoiding banks like this may be something to consider.
It isn’t always easy to find out where your bank’s money is going, but there are tools that can help. For instance, if your bank is publicly traded, disclosures such as SEC Forms 8-K and 6-K may contain information about its lending.
You can also visit BankTrack, a nonprofit organization that tracks the sustainability of banks worldwide, focusing on their involvement in controversial projects.
Moody’s ESG Solutions and S&P Global’s ESG Scores also provide detailed ratings of banks’ ESG performance.
Choose a sustainable bank
One of the best ways to implement sustainable banking in your life is to choose a sustainable bank.
To start, check whether your current bank is taking the right steps around ESG. For instance, it should have ethical policies and practices, invest in industries like renewable energy, and have transparency and accountability.
If this isn’t the case, you may need to select a new bank with the right ESG philosophy. There are many sustainable banks in operation today. Banks such as Southern Bancorp & Trust, National Cooperative Bank, and Decorah Bank & Trust are all certified B-corps or part of the Global Alliance for Banking on Values (GABV).
Beware of “greenwashing”
Greenwashing occurs when a company uses its involvement in green projects to distract from its involvement in the not-so-green ones. Typically, the things the company is saying about sustainable projects are true. However, when a company is greenwashing, it fails to mention the fact that its environmentally damaging practices are much larger than those that are sustainable.
For example, suppose a bank lends and invests a few million dollars in solar and wind projects. Of course, that probably sounds great to the average consumer. But it’s not so great to find out the bank is still putting billions of dollars into environmentally harmful projects.
This is why it’s important to have the full picture, even if a bank promotes itself as “green” or sustainable.
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