Virtuous banking

An organisation’s bank is a service provider like any other and can have a significant impact on the climate. By choosing a bank that is reducing emissions from its own operations and factoring in climate impacts when considering loans, an organisation can reduce emissions and help accelerate the transition to a low-carbon economy.

What is the solution?

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.

Why is it important?

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.

Key facts

$4.6 trillion

In the six years since the adoption of the Paris Agreement, fossil fuel financing from the world’s 60 largest banks has reached $4.6 trillion (1)

 

4 of the 15

biggest Swiss retail banks were rated inadequate by WWF for sustainability screening of loans (2)

 

© rupixen.com/Unsplash.

Key solutions

  • #1 Question your current bank

    Start a dialogue with your bank about their efforts to decarbonise their operations and investments. What policies and targets have they established?

  • #2 Change banks

    If your bank is not taking climate change seriously, switch to a bank that is. WWF Switzerland have rated the sustainability of Swiss retail banks (3). The Global Alliance for Banking on Values has 69 members who meet certain sustainability criteria (4).

  • #3 Lobbying banks as a shareholder

    If you hold a bank’s shares in your investment portfolio, speak up at the Annual General Meeting and demand that the bank stops funding companies and projects that have a high carbon footprint, such as financing fossil fuels

Success stories

Triodos Bank

Triodos Bank has become one of the most sustainable banks in the world by implementing extensive minimum standards for the companies it invests in and thus excluding fossil fuel companies and favouring renewable energies. It has been a certified B Corp since 2015 and is a member of the Global Alliance for Banking on Values. (5)

La Banque Postale

La Banque Postale – a French major bank with $901.7 billion in assets – published in 2021 a commitment to end financing for all companies expanding oil and gas, and exit the sector completely by 2030. Banks such as Crédit Agricole and Nordea Bank have made similar commitments on coal. (6) (7)

UBS

The UBS was given the highest overall sustainability rating amongst the 15 biggest Swiss retail banks in a 2020/2021 study by WWF Switzerland. It was the only bank in the study to score above-average marks across all the elements of corporate governance, savings, investments and pension provision, and loans and financing. (8)

Alternative Bank Switzerland

The business activities of Alternative Bank Schweiz AG are strongly oriented to furthering the common good, humanity and the natural world. Founded in 1990, ABS has total assets of more than CHF 2.2 billion and over 42,000 customers. As a socially and environmentally responsible bank, it emphasises its ethical principles and appears to be moving away from the priority ‘maximising profits’ above all else. (9)

Tools and good practices

  • How to pick a bank on a dying planet

    Eight questions to ask your bank in 2022. Is your bank hurting or helping the planet? Here’s how to find out

    Read here
  • Resources for moving your money to a greener bank

    By stopthemoneypipeline

    Read here
  • Fossil free banking options in the USA

    A tool developed by Bank for Good to find a bank, credit union, or other financial institution that does not fund fossil fuel

    Browse here
  • Find a socially & environmentally responsible credit card

    A list of American socially and environmentally responsible credit cards, made by Green America

    Browse here
  • Choose your bank guide

    Only in French

    Read here

To go further

  • Banking on Climate Chaos

    Fossil Fuel Finance Report 2022

    Read here
  • Green Bank

    Three actions to make the right choice. Only in French.

    Read here

Sources

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

(2) Sustainability in the Swiss Retail Banking Sector: WWF Rating of the Swiss Retail Banking Sector 2020/2021, WWF Switzerland 2021. 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) The Global Alliance for Banking on Values website. Visit here.

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

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

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

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

(9) Alternative Bank Switzerland, Exclusion Criteria (in German), Read here.

 

Cover photo © Tony/Pexels.