Plant trees. Get arrested. Stop eating meat. Say no to plastic. Abseil down a government building in a bumble bee costume. Close a road with a broken caravan and two tambourines. There are many ways to fight for climate justice, but each of us possesses a powerful, often-forgotten weapon: our money. Is your bank funding climate chaos right now? How do you switch to an ethical bank? Find out here.
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Where is your money?
When was the last time you considered what banks are for? I haven’t deeply thought about it since I opened my first-ever bank account as a child. Banks offer an alternative to keeping your cash hidden in the freezer. Great! Banks reward you for storing your money with them by paying you interest. Great! Banks invest in thousands of projects and loan your money to others. Great? Not always...
In February, I read an article by The Guardian called 50 Simple Ways To Make Your Life Greener. The British journalist Donna Ferguson writes in this article that ‘nearly £150 billion [British pounds] has been invested in fossil fuels by UK banks since the Paris climate agreement was adopted in 2016’.
A massive number of bank account holders in the UK (my home country) have loaned almost ONE HUNDRED AND FIFTY BILLION POUNDS to the fossil fuels industry in the past four years. And that’s just the UK.
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Banking around the world
California’s Rainforest Action Network (RAN) reports on the investment activities of banks, globally. Since 2009, RAN has published the annual Banking on Climate Change report, in collaboration with the Indigenous Environmental Network (USA), Oil Change International (USA), Reclaim Finance (France), Sierra Club (USA) and BankTrack (The Netherlands).
In 2020, Banking on Climate Change concluded that banks’ support for fossil fuels is rising. According to the report, the world’s top 35 fossil fuel financers are based in either Canada, China, Europe, Japan or the USA. Here are the top ten, ranked by how much each has invested in fossil fuels since late 2015. This date is used because that’s when the UN Framework Convention on Climate Change’s Paris Agreement commenced:
- JPMorgan Chase, USA: 269 billion US Dollars
- Wells Fargo, USA: US$ 198 billion
- Citi, USA: US$ 188 billion
- Bank of America, USA: US$ 157 billion
- RBC, Canada: US$ 141 billion
- MUFG, Japan: US$ 119 billion
- Barclays, Europe: US$ 118 billion
- Toronto-Dominion, Canada: US$ 103 billion
- Mizuho, Japan: US$ 103 billion
- Scotiabank, Canada: US$ 98 billion
To make it as globally relevant as possible, Banking on Climate Change looks at the world’s top 20 commercial and investment banks according to asset-size. An additional 16 banks from the world’s top 60 are included, which are selected due to their major presence in key parts of the world.
I talked to RAN spokesperson Laurel Sutherlin about the purpose of Banking on Climate Change:
‘This report makes it clear which institutions are most responsible for endangering our collective future. We hope readers will use this information as a tool and join the growing international movement mobilizing people and piling pressure on the financial sector to stop funneling hundreds of billions of dollars into the fossil fuel industry.
‘In particular, we hope people will lend their support and solidarity to the many Indigenous and community-led resistance efforts directly confronting the human impact of big banks' investment decisions. For example, the campaigns to stop projects concerning the Line 3, Keystone XL and Coastal GasLink pipelines in the US, or the exploitation of Indigenous territories in the Amazon.’
Why is this so bad?
By investing in or lending money to the fossil fuels industry, these unethical banks are funding the continued mining and burning of oil, coal and gas. When these materials are burned, they release greenhouse gases that steadily increase temperatures on earth. These temperature increases lead to drought, floods, extreme weather and more.
For anybody who is concerned about the climate crisis, RAN’s report is incredibly bad news.
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Take back your power
So, what power do we have to reduce fossil fuel financing? As consumers living in capitalist societies, we have almost all the power – but we’ve given It away. It is up to us to rediscover our power and harness it for good causes.
I spoke to Ernst-Jan Kuiper, a Climate Campaigner at BankTrack (and the national representative for Extinction Rebellion Netherlands) who is an expert in ethical banking matters:
‘In almost every western country, consumers can switch to an ethical bank. Banks do not have a legal obligation to tell their customers how they make investments or who they finance. However, they could be much more open than they are, as we can see from some ethical banks that publish full details of all their business customers.’
A bank’s power lies in having financial knowledge and expertise that we do not. Banks can make this topic confusing and it benefits them to do so. Luckily, Ernst also has some brilliant clarity to offer amongst this maze of confusion:
‘If a bank does not clearly state that it does not finance the fossil fuel industry, then you can assume that it does.’
This advice is golden and I urge you to remember it.
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The 5 steps to positive action
1. Investigate your bank
I have mentioned some already, but there are many online tools and campaign groups that might provide information about your bank. They can help you to figure out if you are using an ethical bank or not. Here are some useful links:
Bank Track keeps records for hundreds of banks around the world, including ‘dodgy deals’ (and good bank news, too)
Market Forces primarily investigates Australian banks but also conducts research in Indonesia, Japan, Singapore and Vietnam, as well as offering excellent practical advice
Reclaim Finance specialises in highlighting the good, the bad and the ugly of the French financial system, including a tool that explains banks’ policies related to coal mining
This London-based organisation supplies a very simple and user-friendly UK banks comparison guide on its website
If you have money invested in a mutual fund in the USA, Fossil Free Funds is a tool that rates the options to help you can make the best choice
You could also talk directly to your bank. My bank in England is NatWest, so I checked its website. I couldn’t find anything there that helped me to understand what happens to my money, so I called the NatWest customer service line:
Me: Hello, I would like to know what NatWest is doing with my money.
NatWest: Hello. What do you mean?
Me: I have money in several accounts with you, which you use to invest and lend to companies and projects. Is that right?
NW: …yes, that’s right.
Me: I would like to know what those companies and projects are, so that I can understand what my money is being used for.
NW: Ok… please hold while I try to find out who to transfer you to…
This phone call was difficult, presumably because NatWest (and probably a lot of banks) does not get asked questions like this by its customers. Talking directly to your bank about this subject is complicated, but at least they will know that you are concerned – and that’s a fantastic way to speed up the change that we all desperately need.
2. Don’t be intimidated
Do you feel silly asking your bank what they are doing with your money? That’s totally normal! I felt quite silly. But without our money, banks simply would not exist. They serve us, so they should answer our questions. In my case, NatWest eventually asked me to email its Communications and Corporate Affairs department. This is the email I sent:
Thank you for your time on the phone earlier today. I have been a NatWest account holder for most of my life and I recently realised that I don't know what NatWest uses my money for.
I would like to know, but I'm struggling to find information about it on the NatWest website. Can you please tell me what NatWest uses my money for?
This began a long but informative email conversation with NatWest, which is excellent. The information NatWest shared with me included its annual report, as well as links to many other documents. I am not an expert and this information was confusing at first, so I chatted about it with a friend who works in finance. If you know anybody with knowledge of the banking industry, talk to them. You will learn a lot and knowledge is power.
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3. Don’t let them distract you
Many banks are now making a big effort to be ‘green’ and ‘sustainable’, which is a distraction from the purposes of this article: you simply want to know if your bank is using your money to fund activities that contribute to the climate crisis.
Here are some examples of the distraction tactics that NatWest’s Communications and Corporate Affairs department used while we were emailing each other:
We don't publish a list of all the companies we lend money to, however we do publish our Environmental, Social and Ethical policies, which clarify Prohibited and Restricted areas of lending across a number of sectors
- This is a distraction: I want to know how much money NatWest lends to particular industries, but instead it’s describing its positive policies to me.
- This is not an answer to my original question.
NatWest will provide an additional £20bn in funding and financing for Climate and Sustainable finance between now and 2022
- This is great news. If NatWest is able to describe these figures to me, however, why can’t NatWest give me any figures on how much it has lent to companies in the gas, oil or coal industries?
- This is not an answer to my original question
We are making our own operations net carbon zero in 2020 and climate positive by 2025
- This is also great news, but this is not an answer to my original question
Twenty billion pounds in funding and finance for ‘climate and sustainable finance’ by 2022 and net carbon zero operations by 2020 are both good policies. But if my bank is also pumping billions of pounds into gas, oil and coal, it is still financing the climate crisis.
In general, be wary of the term ‘sustainable’. For example, a sustainable bank could say ‘we are sustainable because we recycle all of our waste and use solar energy to power our offices’. If that bank is also helping others to extract fossil fuels however, it might as well put its solar panels in a cave on the moon. ‘Ethical’ can be a more reliable term, especially when investigating banks.
When you begin talking to your bank about this, I advise saying nothing about the climate crisis or fossil fuels. You simply want to know which sectors your bank is financing with your money. When I first called NatWest, I mentioned the climate crisis. I really regretted saying this, because they simply began trying to distract me with their environmentally-friendly activities.
I think banks would like their customers to be confused about these matters. If you’re confused, it’s more difficult to challenge your bank. I know NatWest is much, much better than some banks, but the environment is certainly not one of its primary concerns. For example:
NatWest will stop lending to and underwriting companies with more than 15% of activities related to coal, unless they have a credible transition plan in line with 2015 Paris Agreement by end of 2021; full phase-out from coal by 2030.
NatWest will stop lending to and underwriting major oil and gas producers unless they have a credible transition plan in line with the 2015 Paris Agreement by the end of 2021.
After several phone conversations and two long and complicated emails, these extracts show NatWest finally telling me that it lends money to the fossil fuels industry. Not only that, but NatWest is not in a very big hurry to stop this lending. I finally have a partial answer to my original question. I don’t think NatWest is an ethical bank.
4. Find an ethical bank
Whether or not you are satisfied with your bank’s activities is completely your decision. I hope I have shown that there are many things to consider and there are no simple answers.
If you do decide to find a more ethical bank and move your money, it can be quite challenging, depending on where you live.
For example, I am temporarily living in Australia and I needed to open a bank account. I used campaign group Market Forces’ step-by-step guide to find Australia Bank. On its website, Australia Bank clearly states that:
We're working to create a healthier planet by refusing to put money into the fossil fuel industry. It's an important part of what makes us a responsible bank, and why we're recommended by fossil fuel divestment advocate Market Forces as a green banking alternative.
Simple! Unfortunately, it was difficult to find similar banking solutions for many other countries. That does not mean that there are no solutions in your local area, but you will need to do some research.
Here are some leads, ideas and inspiration to help you find an ethical bank:
The Global Alliance for Banking on Values represents 62 financial institutions and 16 strategic partners in Asia, Africa, Australia, Latin America, North America and Europe
Each member is committed to delivering sustainable economic, social and environmental development through finance
A location-based ethical banking tool for consumers in the USA
A very easy-to-use tool for UK residents who wish to know if their bank’s activities support a sustainable future or not
This UK-based news source, campaign group and magazine publisher has been showing consumers how to make ethical choices since 1989. Its annual subscription costs £29.95, but you’ll receive lots of resources in return
This ethical Dutch bank operates in the Netherlands, Belgium, the UK, Spain and Germany and it has an agency in France
This ethical bank operates in the UK, although its 2013 purchase by USA hedge funds left a proportion of customers unhappy
Ethical German bank
Ethical French bank
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5. Tell your old bank why you left
Market Forces – the Australian campaign group that I mentioned earlier – does a brilliant job of explaining why this final step is also the most important step:
If your bank doesn’t know why you’re closing your account and taking your money elsewhere, they can’t be expected to know how they need to change. Contact them before you start the bank switching process to let them know why you’re unhappy about their support of the fossil fuel industry. When they write back, keep up the dialogue – it only helps to emphasise that you care about the issue. Throughout the process, and when you leave the bank, contact them again to remind them why.
The more that customers speak up, the more the bank will be convinced that it is not worth lending to fossil fuels anymore.
If you are already talking to your bank (like I was with Natwest), remember to tell them that you’re leaving and why. Try to make sure that your reasons for leaving are recorded somewhere official and in writing. For example, ask to leave a complaint, state your reasons clearly in a letter or an email, or perhaps ask to speak to a senior member of staff on the phone. It is very important to make sure that the most powerful people at your bank receive your message.
If, however, you already know that you want to switch banks and don’t need to talk to your old bank about its activities, don’t forget to tell them why you are leaving before you do. Market Forces has excellent resources to guide you through the process of moving to an ethical bank, including this letter/email template that you could send to your old bank.
Even though I’ve included this template, please know that an original letter you’ve written yourself will always make a bigger impact. Companies develop workable strategies to deal with a wave of template letters, but these strategies cannot be applied to original letters. So if you can, take this letter as inspiration then write your own, because it will be more time-consuming for your banks and there make a bigger impact:
To the Sustainability Manager,
I am writing to ensure you are aware of why I have decided to close my bank accounts and leave your bank.
I have become aware of the extent to which your bank is involved with financing fossil fuel projects. Coal and gas are driving an array of unacceptable environmental risks. I don’t want my money helping an institution that is funding such destruction, especially when there is a wealth of clean, renewable energy alternatives available.
I also consider it an economic risk to retain my money with your bank. There is a growing awareness of the fact that fossil fuel assets will become risky investments as the world moves to combat climate change. I do not want my money with a bank that is investing in assets that may soon become stranded, and investing in companies whose value may plummet as the world turns away from fossil fuels.
I am moving my money to ensure my own finances do not support an industry that is polluting the environment, and I hope my action will also make your bank reconsider future investments in the fossil fuel sector. I hope you do not have to receive too many more letters like mine before you realise that investing in fossil fuels is no longer morally responsible or financially viable.
If there is anything you would like to say directly in relation to this letter, you are welcome to write back to me.
Yours sincerely, XXXX
You can find Market Forces’ full, step-by-step guide to switching your bank at www.marketforces.org.au/info/switch-banks. Here is a brief rundown of the steps:
- Choose a new, ethical bank
- Open a new account
- Identify regular transactions
- For example, your salary, subscriptions, bills or monthly donations
- Move regular transactions to your new account
- Temporarily leave some money in your old bank to cover any regular payments that might come out before you have fully transferred to your new account
- Close your old bank account
- Tell your old bank why you are leaving them
- Share your experience with friends, family and online
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The single most powerful thing an individual can do
Stopping airport expansion, campaigning for renewable energy, or protesting governments that accept donations from fossil fuel companies are all worthy and essential causes. They are also all time-consuming and incredibly challenging. Challenging or even changing your bank, however, is a simpler activity – and each of us can make a massive difference by joining in.
Here’s a recap of those steps to challenging and changing your bank:
- Investigate your bank – ask them what they are using your money for
- Don’t be intimidated
- Don’t let your bank distract you to avoid answering your questions
- Find a new, ethical bank
- Tell your old bank why you left
- Share your experience with your friends, family and online
Extinction Rebellion has proved that people power can change conversations, priorities and policies. We the public must change the system, because the system will not change itself. We have more power than we realise – especially when it comes to institutions such as banks – and that is a beautiful thing to remember. Enjoy using your power!
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