When it comes to making changes in our own lives, some of the most popular options are reducing reliance on fossil fuels through eating less meat or driving and flying less.
While these are all helpful steps to take, one of the most significant things an individual can do is to control how their money is spent by banks and pension funds.
You might be surprised to know that simply having a bank account could mean you’re funding the climate crisis.
In spite of many banks having net zero pledges, research by ShareAction shows that some of the largest world banks are still pumping billions into fossil fuel projects.
This means that banks could be using your money to loan or invest in oil and gas projects around the world, contributing to climate change without you even knowing about it.
It can be difficult to find out exactly where your money is going, but a tool from Bank Green allows you to easily check the record of your bank.
If you don’t like the idea of your money propping up fossil fuel investments, here’s everything you need to know to get clued up, and send your money elsewhere.
How much do banks invest in fossil fuels?
Between them, 35 of the world’s biggest banks have provided $2.7 trillion (£2tn) to fossil fuel companies since the Paris Agreement was officially signed at the end of 2015.
According to campaigners Urgewald and Reclaim Finance, the UK’s five biggest banks – HSBC, Barclays, Lloyds, Natwest and Standard Chartered – invested almost £40.4bn into the coal industry between 2018 and 2020.
More recent research from ShareAction shows that investments into fossil fuel projects have continued in spite of pledges from many banks to achieve net zero emissions in the near future.
Since joining the “Net Zero Banking Alliance” in 2021, 24 large banks have supplied $33bn in funding for new oil and gas projects, ShareAction estimates.
More than half of the total amount ($19bn) has come from four of the alliance’s founding members: Barclays, HSBC, BNP Paribas and Deutsche Bank.
Some of the fossil fuel giants receiving money included Exxon Mobil, Shell, BP, and Saudi Aramco.
According to research from Friends of the Earth, meanwhile, many pension funds are also continuing to fund fossil fuel ventures.
Their report found that the UK’s six largest pension funds had a typical fossil fuel investment of 4.3 per cent, amounting to £128bn or £1,916 per UK citizen.
Cash held in current and savings accounts is unlikely to link directly to greenhouse gas emissions because the law means retail banking and investment banking must be kept separate.
However, that doesn’t mean the bank you use to manage your money isn’t financing schemes which are bad for the planet.
How can I find out if my bank invests in fossil fuels?
Navigating the financial system can be tricky at the best of times and is made more difficult by a lack of transparency from banks, which is why Bank.Green’s free tool also provides resources for finding greener ways to store your cash and contribute to the global effort to keep temperature rise under 1.5ºC.
Enter your country and the bank you use, and it will provide a report on your bank’s fossil fuel record.
Banks which see customers moving their business elsewhere because of climate concerns are more likely to cut down on fossil fuel investments, the experts said. And removing funds such as your pension from banks which contribute to the climate crisis means stopping their supply of cash to loan out and invest in fossil fuels.
“In addition to campaign groups, banks also need to hear directly from their customers,” said Zak Gottlieb, a Bank.Green campaign coordinator.
“It’s one thing to ignore a campaign group, but if your customers are unhappy, your business is in trouble.”
Changing your bank account may take a few hours, Bank.Green said, but it could make a serious difference to the future of the planet.
What are banks doing to phase out damaging investments?
Too little, according to the campaigners. While finance sectors in other countries are taking steps to remove cash from emission-heavy industries – such as in France, where 19 of the biggest banks have developed bold anti-coal policies – none of the UK’s financial institutions have created similar frameworks.
Most UK banks and investors have already joined a net-zero initiative requiring a commitment to the UK’s climate efforts, but research from ShareAction shows that many banks are continuing to fund fossil fuel projects regardless.