Banks

Get information and choose a bank that is taking steps to reduce the carbon emissions, in particular by stopping financing fossil fuels and by expanding its investments in clean energy and sustainable businesses. This requires a defined and robust process for screening loan requests that will reject applications that are deemed too carbon intensive.

In general, shareholder-based banks are less virtuous, as they often focus on the short term and returns above all. Cooperative banks are generally more ethical or greener because of greater pressure from their members.

Banks play a key role in the climate equation. They are essential for financing the transition, but they can also contribute to worsening climate change by financing the development of activities that are incompatible with international climate objectives, such as fossil fuels. Depending on the bank where it is located, money can become the largest contributor of CO2 emission for an individual or an organisation. (4)

The carbon footprint of a bank has two elements: the operations of the bank itself (its office buildings, computer servers, executive travel, etc.) and the loans it makes to other entities. The efforts a bank makes to reduce emissions from its operations are the same as any service-provider: buying energy from renewable sources, using teleconferencing instead of flying, etc. The bank’s financing activities, however, have a potentially much greater impact on the climate and can drive major changes in our societies. Banks are relatively free to choose who to lend to and for what and typically have different criteria from bank to bank. For example, bank A may agree to provide a loan to a power company to establish a new open-cast coal mine, whereas bank B may refuse on the grounds of the project’s impact on the climate.

Most of a bank’s resources are based on deposits from customers (individuals, companies, communities). The volume of money deposited determines the lending capacity of a bank to other businesses, and thus its importance and influence. The financial volumes of aid organisations can sometimes be very large. To illustrate, the final ICRC budget in 2021 was 2.37 billion CHF. (5) If such a large organisation decided to withdraw its deposits from its bank and deposit them with a more virtuous bank, not only would the organisation contribute to significantly reducing its climate impact and financing more sustainability, but, given the large volumes of money involved, it would also send a strong signal to its bank, which would likely elicit a management response and possibly a change. If such organisation also decided to communicate publicly about its choice, it could even provoke reactions and developments from the wider financial community.  

(1) 20 Minutes, Climat : L’épargne est-elle un poids lourd de notre empreinte carbone ?, 2022. In French. Read here.

(2) Banking on Climate Chaos, Fossil Fuel Finance Report 2022. Read here.

(3) Sustainability in the Swiss Retail Banking Sector: WWF Rating of the Swiss Retail Banking Sector 2020/2021, WWF Switzerland 2021. Read here.

(4) Oxfam France, Comment les banques françaises aggravent les changements climatiques, 2022. In French. Read here.

(5) ICRC Annual Report 2021: Facts and Figures, Read here.

(6) Change de banque. In French. Read here.

(7) Oxfam France, Comment les banques françaises aggravent les changements climatiques, 2022. In French. Read here.

(8) Triodos Bank, ‘Our minimum standards provide the boundaries on what we finance’. Read here.

(9) Banking on Climate Chaos, Fossil Fuel Finance Report 2022. Read here.

(10) La Banque Postale, ‘La Banque Postale is stepping up its decarbonisation strategy’. Read here.

(11) Sustainability in the Swiss Retail Banking Sector: WWF Rating of the Swiss Retail Banking Sector 2020/2021, WWF Switzerland 2021. Read here.

(12) Alternative Bank Switzerland, Exclusion Criteria. In German. Read here.

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