The money sitting in your bank account might be funding climate change without you knowing it. Many big banks still pour billions into oil and gas companies. This happens even as these same banks promise to go green.
When you put your money in a bank, it doesn’t just sit there. Banks use your deposits to make loans and investments. Some of this money goes to fossil fuel companies that dig up coal or drill for oil.
A recent report from Rainforest Action Network found that since the Paris Agreement in 2015, the world’s 60 biggest banks have funded fossil fuels with $5.5 trillion. That’s a huge amount of money going into the very industries heating up our planet.
“Most people have no idea their savings are being used this way,” says Jane Goodall, climate finance expert at the Climate Money Tracker. “Banks don’t advertise that they’re using your money to fund new oil pipelines.”
But more people are waking up to this problem. They’re asking an important question: How can I make sure my money isn’t making climate change worse?
The good news is you have choices. Moving your money to banks that don’t fund fossil fuels is getting easier. Credit unions and community banks often have cleaner investment policies than big national banks.
Online tools like Bank.Green let you check if your bank is funding climate change. The site grades banks on their fossil fuel policies and suggests greener alternatives.
“Switching banks might seem like a small step, but it sends a powerful message,” explains Marcus Wong from Ethical Consumer Guide. “When enough people move their money, banks notice.”
Beyond banking, your investments can also help or hurt the climate. Traditional investment funds often include oil companies, coal miners, and other polluting businesses.
Green investment options have grown a lot in recent years. These include exchange-traded funds (ETFs) that avoid fossil fuels or focus on renewable energy companies. Some popular options include the iShares Global Clean Energy ETF and the Change Finance U.S. Large Cap Fossil Fuel Free ETF.
These funds have gotten more attention lately, and for good reason. A study from Morgan Stanley found that sustainable funds weathered market downturns better than traditional ones during the COVID-19 pandemic.
“The old idea that you have to sacrifice returns to invest ethically is being proven wrong,” says Elena Rodríguez, sustainable investing researcher. “Green investments are often less risky long-term because they avoid industries facing climate regulation.”
Climate-conscious investing isn’t just for the wealthy either. Apps like Betterment and Wealthsimple now offer sustainable investing options with low minimum deposits. You can start with as little as $10 in some cases.
Pension funds are another place where your money might be funding climate change. These massive funds control trillions of dollars worldwide. Many still invest heavily in fossil fuels.
“Ask your employer about your pension’s climate policies,” suggests Wong. “Many funds now offer sustainable options if employees demand them.”
Government policies are also pushing finance in a greener direction. The European Union now requires financial advisors to ask clients about their sustainability preferences. Similar rules are being considered in other countries.
Critics argue that simply moving money isn’t enough. They say we need stronger government regulation of banks and investment firms. But individual choices still matter.
“When you move your money for climate reasons, tell your old bank why you’re leaving,” recommends Goodall. “Companies respond to customer pressure.”
The growing movement of people aligning their money with their values is having an impact. Several major banks have already reduced funding for coal, the dirtiest fossil fuel. Some have pledged to stop financing Arctic oil drilling.
Looking forward, experts believe financial pressure could help speed up the shift to clean energy. As more investors avoid fossil fuels, it becomes harder and more expensive for these companies to find funding.
“Money talks,” says Rodríguez. “And right now, it’s starting to speak up for the climate.”
Making your money work for the planet instead of against it takes some effort. But with more green banking and investing options available than ever before, it’s getting easier to ensure your savings aren’t secretly funding climate destruction.
After all, what’s the point of recycling and reducing your carbon footprint if your money is working against you behind the scenes? By making thoughtful choices about where you bank and how you invest, you can help build the cleaner future we all need.
