How Traditional Banks Fall Short When It Comes to Climate Change

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Did you know that traditional banks are some of the most significant contributors to climate change

By investing in fossil fuel projects banks are contributing to the destruction of our planet and the worsening effects of climate change. 

But all isn’t lost – eco-friendly banks and credit cards provide an alternative to traditional banking options, and come with a whole host of benefits for you and the planet. 

In this guide, we’ll explore why eco-friendly banking is so important, and provide you with a list of recommended banks for you to switch to.

Here’s what to expect in this guide, you’ll learn:

  1. Why traditional banks generate so many greenhouse emissions
  2. Ways to spot when a bank is greenwashing 
  3. How to tell if a bank is contributing to the climate crisis
  4. Alternatives to traditional banks

Traditional banks generate massive greenhouse emissions

Investments, lending, and underwriting by financial institutions result in greenhouse gas emissions more than 700 times higher than the institutions’ own operations.

Traditional banks produce a lot of greenhouse gases for the following internal reasons:

  • The manufacture and transport of paper money
  • Processing and moving customer data
  • Air travel for executives
  • Fueling office buildings

However, these internal operations are not the only way that banks contribute to climate change. 

Banks are major investors in fossil fuels

When traditional banks invest in fossil fuels, they are contributing to the climate crisis. Fossil fuels are one of the biggest sources of greenhouse gas emissions, and if we want to avoid dangerous levels of global warming, we need to phase them out as much as we can.

The burning of fossil fuels releases greenhouse gasses into the atmosphere, trapping heat and causing the Earth to warm. This process is responsible for much of the climate change that we are experiencing today.

How can we stop banks from investing in fossil fuels?

Remember that the long-term profitability of our planet is more important than the short-term profits of banks. The best way to stop banks from investing in fuels is by putting pressure on traditional banks to stop investing in fossil fuels, and we can do this by switching to eco-friendly banks.

There are a growing number of banks and credit card companies that are committed to eco-friendly practices. Some banks have stopped investing in fossil fuels, while others are working to reduce their environmental impact.

If you’re looking for a bank that doesn’t support the fossil fuel industry, here is a list of eco-friendly alternatives that you can switch to:

Aspiration

Aspiration is a neobank that is dedicated to social and environmental responsibility. 

They offer several products and services designed to help you save money and live more sustainably. Through a collaboration with Eden Reforestation Projects, Aspiration will plant a tree on your behalf each time you make a purchase with their carbon-neutral Aspiration Zero credit card

Spring Bank

Spring Bank is focused on sustainability. They offer many products and services designed to help you live more sustainably, and also provide financial assistance to low and middle-income neighborhoods and new enterprises in their area.

UMB Bank

UMB Bank is an excellent choice for beginners looking for an eco-friendly bank. They are committed to fostering strong community relationships through integrating volunteerism and corporate philanthropy in their efforts. 

According to Forbes, UMB was ranked one of the best banks in the country for the sixth year in a row. 

Additionally, UMB Bank is looking for innovative ways to develop the communities it serves by focusing on financial education, arts, agriculture, financial education, and self-sufficiency.

PNC Bank

In addition to lending to small businesses, PNC Bank makes an effort to reduce the negative impact of its operations on the environment. 

They feature a section on environmental protection, and they are devoted to developing sustainable, high-performance buildings and are continually searching for ways to increase operational efficiency. 

They positively contribute to the context of the low economy by aiding clients in funding power-efficient and renewable energy-related projects.

And more!

These are just a few examples of the many eco-friendly banks you can switch to, but you may want to do your own research to find one that is a good fit for you. 

Overall, eco-friendly banking is a great way to reduce your impact on the environment and to support banks that are working to make a difference.

Sustainable, Green Finance and ESG Trends in 2019

Ways to recognize a greenwashing bank institution

Jay Westerveld, an environmentalist from New York, coined the term greenwashing in 1986 in reference to the attempts companies make to try and make themselves appear eco-friendly or sustainable without investing in being so. 

Here are ways to spot whether a financial institution is genuinely eco-friendly or simply aiming to appear so through greenwashing:

They don’t use recycled materials

A whopping 381 million tonnes of plastic garbage are generated each year, which is expected to double by 2034. 

Approximately 50 percent of this waste is single-use plastic, while the recycled materials are fewer than 10 percent. This plastic is harmful to our waterways and gets into our food and clothing. It can damage the delicate ecosystems they are meant to protect.

So if a bank is claiming they’re eco-friendly but not using recycled materials, it’s a sign that they’re not as committed as they could be. Look up to them and see if they have a partnership with recycling companies.

Reduced paper usage

The pulp and paper business is a significant contribution to the deforestation crisis, and it is also responsible for the extinction of some forest-dwelling species. Beginning with removing a tree and ending with its combustion, paper creation releases carbon dioxide into the atmosphere. 40% of the world’s commercially cut timber is used to make paper.

If a bank claims eco-friendliness but still relies heavily on paper statements and other paper-based products, they’re likely not as eco-friendly as they say they are. Look for banks that offer e-statements, phone app notifications, and other paperless alternatives.

How to tell if a bank is contributing to the climate crisis

There are a few questions you can ask to identify whether a bank is contributing to the climate crisis:

  • Does the bank offer an environment-friendly policy? If not, then chances are they’re not doing enough to prevent their operations from harming the environment.
  • Is the bank associated with the coal and gas industries? If yes, then search for another trustworthy eco-friendly bank.
  • What kind of investments does the bank make? If they’re investing in fossil fuels or other environmentally harmful practices, they might be one to avoid. 
  • What kind of eco-friendly initiatives does the bank support? If they have partnerships with recycling companies or other environmental programs, this is a good sign as it shows that they care about more than just their bottom line.

When doing your research, it may be helpful to cross-check their website and information with other sources, as well as to take a look at any partner organizations, investors, or other affiliated companies. 

By being aware of these things, you can make sure that your money is going to a bank to prevent the climate crisis rather than contributing to it. 

Ready to aspire to make a change?

Looking for an eco-friendly alternative to traditional banking?

Here at Aspiration, we’re committed to sustainability. We offer a range of sustainable products and services that are designed to help you put the planet first. 

Every time you make a purchase with our Aspiration Zero credit card, we will plant a tree to aid in the fight against climate change and reduce pollution caused by deforestation.

Apply now and make a change!

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