Hello everybody! This is part one of a larger series about sustainable investments, money, banks, and everything that has to do with the financial field. I asked you guys in the video about my own budget and how I spend money as a zero waster, if you wanted more content about this stuff – and I am overwhelmed by how many of you guys said yes. And I get it, this world is super complicated, it not rarely something that we are taught in school, and furthermore, as a woman, I feel that it is especially important to know something about this, because globally women generally investment less, and are less involved in finance. I decided to make this into a series of more videos because otherwise, this would be… a lot. So next time we’ll be talking about stocks, and after that, pension funds. But for now, let’s look at banks. As a zero waster I learned over the years that we have to look beyond the physical trash to see the full impact because most of the impact is invisible to the consumer and it has never been truer than when we look at banks and how our banks invest on their own, and our behalf.
How banks make money: Banks are businesses, which means that they make money from their clients, aka us. We pay certain fees for services like having an account, and that money goes directly towards the bank. They also earn money via loans and interests, and deposits. Of course, there is also the notion that when we deposit our money in a bank the money won’t just sit there in a vault, our money becomes part of the banks’ worth. But do all the money a bank earns go towards paychecks and maintenance? No, not really. As certain billionaires show us, you cannot really work your way to excessive wealth, you have to invest and for decades one of the most profitable fields of investments have been fossil fuels.
I want to go over some of the really bad, and really good banks of some countries, however, I cannot include everyone, and from every country. So I would recommend that you search online to find more info about banks in your country. These reports are often available to the public, however, not something the banks widely advertise. I searched for “green banks in Denmark” or banks and fossil fuels Denmark” to find specific Danish info.
US: The largest American banks JPMorgan Chase and Bank of America are leading the financing of deep-water oil and gas projects to extract fossil fuels. JPMorgan Chase has provided $75 billion to companies expanding fracking, and Arctic oil extractions. The New York Bank is one of 33 big financial institutions that provided $1.9 trillion to the fossil fuel sector between 2016 and 2018. Figures show fracking has been the focus of intense financing, with Wells Fargo, JPMorgan Chase, and Bank of America providing about $80bn over three years, much of it linked to the Permian basin in Texas
Canada: The financing of the tar sands crude oil projects in Alberta, Canada, is dominated by the Royal Bank of Canada and Toronto Dominion, among others. The tar sands fields in north-west Canada are the third-largest known reserves of crude oil in the world, but extraction has caused widespread damage to ecosystems and forced indigenous communities from their homes.
Russia: Extraction in the Arctic region is typically dominated by Russian firms such as Gazprom and Rosneft, about which there is less transparency in business data
UK: HSBC Holding, RBS/NatWest, Barclays, Santander, The Royal Bank of Scotland, and Lloyds Banking Group have invested £66 billion in oil, gas, and coal extraction. While it remains a significant banker for the fossil fuel industry, it has reduced its support to many projects allowing them to drop investments from $13.1bn in 2016 to $5.2bn in 2018. An analysis of Europe’s 20 largest banks in 2014 found that Barclays had the highest volume of “high carbon” loans, as a proportion of its total lending, of any of the banks, while Lloyds had the highest amount invested in high-carbon equities. However, Barclays seems to be decreasing its investments in fossil fuels, which is a nice change.
Denmark: Danske Bank and Nordea have invested over 40 million DKK in companies that are expanding coal power plants. Coal power plants generally run for about 30 years, which means that we are binding us to fossil fuels years into the future, which is directly against the goals of the Paris Agreement (an agreement made by 195 countries to reduce greenhouse gas emissions). A new report from Fair Finance Guide shows that banks invest 9 times more in fossil fuels than they do in green projects – this is true for Jyske Bank, Sydbank, Danske Bank, and Nykredit. Nordea invests 4 times more in fossil fuels than green projects.
How to find green banks: Firstly I would search online for my respective country and then “green bank” it usually allows you to find a list of banks who invest in greener projects or who are entirely value-based. In Denmark, I found that alternative banks like Merkur and Oikos are good options as neither of them supports fossil fuels and furthermore helps you invest in green projects and sustainability. Those banks are value-driven which means that will not offer loan to people buying petrol cars and will provide microloans and support projects in areas affected by poverty.
Green banks in the United States include:
- Connecticut Green Bank.
- NY Green Bank.
- California Lending for Energy and Environmental Needs.
- Rhode Island Infrastructure Bank.
- Montgomery County Green Bank
- Hawaii Green Energy Market Securitization.
Green banks in the UK include:
- Triodos Bank
- The Co-operative Bank
- Ecology Building Society
- Charity Bank
- Reliance Bank
The future of fossil fuel projects: We have yet to see the fossil fuel industry take an active part in the debate about climate change when the CEO of The Bank of England raised the question of how investors will adapt to a world of unknown climate change, and how their own projects will fossil fuels will look in the future, his commentary met with criticism from fossil fuel companies. However, it is an interesting question, as an increasing number of experts warn investors to pull out of goal and oil projects over the coming years. It is estimated that the fossil fuel industry will drop $22 trillion dollars in worth over the next 25 years. Furthermore, BlackRock, one of the largest investment management corporations in the world, estimates that more than 500 investment companies with stock worth more than $3,4 trillion are slowly backing out of fossil fuel projects, according to The Economist.
How to switch banks: first of all, you should be letting your old bank know the reason why you are moving, speaking and communicating your interests to companies matter a lot, also in the world of finance. So when you change, don’t go silently. When you have found a bank that you prefer, contact them and fill out their application form. Most banking is already online, and that is the case for the changing process as well. This also enables you to switch banks even though they do not have a physical department in your area. The switching process itself is rarely something that includes you a ton and happens digitally, usually with your previous setting intact. Other actions to take: you can also contact your bank and ask them about their recent investments and projects to get a better idea of what they are involved in, you can communicate to them that you do not wish to support fossil fuel projects and will change banks if they do not change policies. You can sign petitions that push for political action on the issue, and then, of course, you can look at green funds, pension funds, investments, and sustainable stock – which we will be talking more about in the next video in this series, so stay tuned