What Is Green Banking? (2024)

A Sustainable Solution For Saving & Spending

We’ve always believed consumers can vote for the world they want using their money; how we spend matters. But how we save matters deeply, too.

In last year’s Banking on Climate Chaos Fossil Fuel Finance Report, 60 of the world’s major banks—ones most of us have accounts with—were found to have contributed $3.8 trillion to fossil fuel companies over a five-year span, starting from when the Paris Agreement on climate change was adopted in 2015.

JPMorgan Chase, Citi, Wells Fargo, and Bank of America, among many others, were continuing to finance coal mining, fracking, and fossil fuel initiatives harmful to our planet. And they’re still able to do this today, because of our money.

Green banks are an alternative solution, prioritizing finance and sustainability. These institutions invest in clean energy, climate action, and eco-conscious projects, ensuring your money is sustainable for both you and the planet. Here’s how it works and how you can get involved.

Why Green Banking > Climate-Threatening Banking

Banks hold a substantial amount of power within a capitalist society. Our current economies can’t survive without banking institutions, which means everyone from local mom-and-pop shops to global corporations depends on them for financing. This includes savings, lending, debt, and equity.

Fossil fuel companies like Chevron, Exxon, BP, and Shell—also known as some of the worst polluters of greenhouse gas emissions—turn to banks for funding, leveraging a mix of loans, profits, or equity.

When banks make that money available to them, they often use our collective savings, checking, IRAs, and 401Ks as the investment, hoping for a high ROI. While some banks restrict financing for supporting coal, gas, or oil, not all do—and most haven’t phased out fossil fuels altogether yet.

With our money in hand, these companies go on to frack in Argentina, expand pipelines in Uganda, and build coal plants in Bangladesh, just to name a few. Eventually, they repay any loans or equity, and the bank turns a profit.

But the ROI from these projects also comes with climate-threatening side effects, from a heightened risk of natural disasters to increased emissions and smog. Our money enables these companies, so long as our banks agree to continue to finance them. And the climate consequences affect everyone while disproportionately affecting Black, Indigenous, and marginalized communities.

That’s why it’s imperative to consider green banking, which is more than paper-free statements or online access to accounts. In contrast to mainstream banks, green banks support clean energy and environmental projects fighting against climate change, instead of actively contributing to it.

Plus, many green banks go the extra mile to invest in local community development initiatives, provide carbon-offsetting or green-energy loan options, and even earn certified B Corp status, which focuses on people, profit, and planet.

For example, Amalgamated Bank, a certified B Corp, maintains a fossil fuel-free portfolio for simple and socially responsible investing. Every mutual fund and ETF the bank invests in helps make a positive impact with regards to renewable energy, efficient water use and recycling, sustainable agriculture, and more.

While the model of green banks varies from the mainstream, rest assured that the service usually remains the same. While not every bank will have regional offices, they’re just as accessible. Many even tout stronger personal ties with customers thanks to the one-on-one relationships and smaller client base, like a local credit union. And most banks and firms are registered with the government and protected by the FDIC, so your money stays in good hands.

Put simply: Green banks can use our money for a better world—which is especially important when we’re in the midst of a climate emergency.

How To Shift To Green Banking

If you’ve decided to move away from your existing bank, there’s still one crucial step to consider before you close out any old accounts: advocacy. Banks know that they hold power not only financially but also environmentally; our voices (and money) can force them to make a change.

Use the Banking on Climate Chaos scorecard to see where your bank falls, filtering by either “total financing” or alphabetically. Or reach out to the bank directly to inquire. You can frame the conversation by saying, “I’ve been a longtime member of [bank]—could you share more about the projects you invest in with my money?”

You may get a vague or greenwashed answer—sometimes, that tells you all you need to know. As Ernst-Jan Kuiper, a Climate Campaigner at BankTrack, shares with Extinction Rebellion, “If a bank does not clearly state that it does not finance the fossil fuel industry, then you can assume it does.”

If the answers aren’t up to your standards, let them know. Having multiple conversations with a bank? Mention your concerns each time so they’re on record. Demand accountability, speak up on social media, and be clear that you are no longer a customer due to their support of fossil fuel companies or pipelines or deforestation or wars, or all of the above.

Then, when making the switch to green banking, don’t just open an online account with the first green bank you see. Research your options first and ensure that a specific bank will meet your needs. (Check out the green banks and financial firms we particularly love.)

Consider asking these questions or comparing these features to find the right one for you:

• Where does this bank or firm invest monetarily? What kind of clean projects do they support: renewable energy, sustainable farming, eco-friendly community initiatives?

• What kind of accounts or services do you need? Some banks only offer personal or private banking, while others include business lending and banking, financial advising, nonprofit services, and more.

• Which features are most important to you? Do you need accessible ATMs, mobile check deposits, or a rewards program?

• Are there in-person offices near you? Keep in mind some green banks are region-specific or online-only.

• What’s your annual interest rate, and how does that compare to your current/average rate?

• If you are based in the US, is the bank insured by the FDIC? With an FDIC-insured account, if the bank fails and you lose your money, the Federal Deposit Insurance Corporation—a government agency—will reimburse you.

If you can, we encourage you to work with a financial advisor or expert to make this transition, identify your regular transactions, and set up your new payments and bills.

Once you’re all set up, we promise you won’t look back. In fact, green banking makes us want to look ahead—to a shared climate future we can be excited about.

Henah Velez (she/her) is an Editor at The Good Trade. She holds a Master’s in Social Entrepreneurship and is a proud Rutgers grad. Originally from NJ, Henah’s now in Santa Barbara, CA, where she loves shopping small, hanging with her pets, or traveling. Say hi on Instagram!

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