Katerina Swanson
Many people are concerned about climate change and are looking for ways to reduce their reliance on fossil fuels. While eating less meat, driving less, and flying less can help, one of the most significant things an individual can do is control how their money is spent by banks and pension funds. Despite pledges to reach net-zero emissions, many banks continue to invest billions in fossil fuel projects. This means that your bank could be using your money to invest in oil and gas projects without you even knowing about it. Several tools and resources are available to help individuals identify if their bank is funding fossil fuels and switch to more sustainable banking options.
| Characteristics | Values |
|---|---|
| Banks investing in fossil fuels | HSBC, Barclays, Lloyds, Natwest, Standard Chartered, Santander, Deutsche Bank, BNP Paribas |
| Number of banks in the Fossil Free Banking Alliance | 9 |
| Amount provided by 35 of the world's biggest banks to fossil fuel companies since the Paris Agreement | $2.7 trillion |
| Amount provided by 60 of the world's largest banks to the fossil fuel industry since the Paris Agreement | $6.9 trillion |
| Amount provided by 60 of the world's largest banks to the fossil fuel industry between 2016 and 2020 | $3.8 trillion |
| Amount invested by Barclays, HSBC, Santander, Natwest and Lloyds in companies active in the fossil fuel business | $35.4bn, $16.2bn, $17.3bn, $2.3bn, $1.6bn |
| Amount invested by the UK's five biggest banks into the coal industry between 2018 and 2020 | £40.4bn |
| Amount invested by 24 large banks in new oil and gas projects since joining the Net Zero Banking Alliance in 2021 | $33bn |
| Fossil fuel investment of the UK's six largest pension funds | 4.3% or £128bn |
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What You'll Learn
Banks funding fossil fuels
Despite pledges to reach net-zero emissions, many banks continue to invest in fossil fuels. Research by ShareAction shows that some of the largest banks in the world 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 your knowledge.
Between them, 35 of the world's biggest banks have provided $2.7 trillion (£2tn) to fossil fuel companies since the Paris Agreement was signed at the end of 2015. The UK's five biggest banks – HSBC, Barclays, Lloyds, Natwest, and Standard Chartered – invested almost £40.4bn in the coal industry between 2018 and 2020. More recent research from ShareAction shows that 24 large banks have provided $33bn in funding for new oil and gas projects since joining the "Net Zero Banking Alliance" in 2021.
While cash held in current and savings accounts is unlikely to be directly linked to greenhouse gas emissions, the bank you use to manage your money may be financing schemes that harm the planet. Eight in ten HSBC and Barclays customers in the UK did not know their banks funded fossil fuels. Navigating the financial system can be tricky, and a lack of transparency from banks makes it difficult to know where your money is going.
To address this issue, Bank.Green has launched the Fossil Free Banking Alliance to help consumers move their money away from banks that finance the climate crisis. Alliance members are Fossil Free Certified and do not finance fossil fuel companies or projects. BankTrack also monitors the financing activities of private-sector commercial banks worldwide, focusing on projects, policies, and investments that can adversely affect human rights, the environment, and local communities.
If you're concerned about your bank's involvement in fossil fuel financing, you can use tools like Bank.Green to find sustainable alternatives in your area. You can also express your concerns to your bank about using your money to fund fracking, oil and gas pipelines, and other unsustainable activities. Switching to a more ethical bank is an option, and you can use resources like Current Account Switch to facilitate the process. Additionally, if you have a pension, consider switching from the default option to an Ethical Fund that does not invest in fossil fuel companies.
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Net-zero pledges
Banks play a critical role in reducing emissions across sectors by influencing corporate behaviour through their lending and investment decisions. They can offer loans and investments that factor in climate-related risks, support clean energy and low-carbon technologies, and advise clients on setting climate transition plans. Additionally, banks can help companies access capital markets and raise funds from investors who prioritize sustainability.
However, despite their net-zero pledges, some banks continue to invest heavily in fossil fuels. Research reveals that many of the world's largest banks have channelled trillions of dollars into the fossil fuel industry since the Paris Agreement. This includes funding for new oil and gas projects, as well as investments into fossil fuel giants such as Exxon Mobil, Shell, BP, and Saudi Aramco.
There is a growing movement towards fossil fuel-free banking, with initiatives like the Fossil Free Banking Alliance and tools such as Bank.Green helping consumers identify and switch to greener banking options. While banks have the power to influence the transition to renewable energy, they cannot achieve net-zero emissions alone. Incentive systems driving global business activity need to be realigned, and a universal method for estimating carbon emissions volume and cost should be implemented.
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Fossil fuel divestment
The moral motivation for fossil fuel divestment is based on the belief that profiting from damaging the planet is wrong, especially when the impacts of that damage are borne disproportionately by those who have benefited the least from fossil fuel extraction and use. Philosopher and climate justice campaigner Alex Lenferna presents three moral arguments in favour of fossil fuel divestment:
- Investing in fossil fuels contributes to substantial and unnecessary harm and injustice.
- Divesting from fossil fuels helps fulfil our moral responsibility to promote climate action.
- Investing in fossil fuels morally tarnishes those who do so by making them complicit in the injustices of the fossil fuel industry.
The Toronto Principle is another fossil fuel divestment strategy that puts into action the aims set forth in the Paris Agreement in 2015. It involves moving investments away from coal companies, companies seeking non-conventional or aggressive fossil fuel development, and possibly also companies that distort public policies or deceive the public on climate issues.
Despite pledges to reach net-zero emissions, many banks continue to invest in fossil fuels. Between them, 35 of the world's biggest banks have provided $2.7 trillion to fossil fuel companies since the Paris Agreement was signed in 2015. The Fossil Free Banking Alliance was created to promote and help consumers identify green banking services and encourage banks to defund fossil fuels.
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Green banking alternatives
Despite pledges to reach net-zero emissions, many banks continue to invest in fossil fuels. In fact, research by ShareAction shows that some of the largest banks in the world 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 your knowledge.
If you are concerned about your bank's investment in fossil fuels, there are green alternatives you can consider. Bank.Green, for example, is a non-profit organization that educates the public about the environmental destruction funded by the banking industry. Its website provides a tool for researching banks that do not support fossil fuels. Bank.Green also recently announced its Fossil Free Banking Alliance to help empower climate-conscious consumers to move their money away from banks that finance the climate crisis.
Other green banking alternatives include:
- Amalgamated Bank: Fossil Free certified and B Corp certified, Amalgamated Bank has pledged not to invest in fossil fuels projects.
- Clean Energy Credit Union: Certified fossil-free, Clean Energy Credit Union has pledged not to invest in fossil fuel projects for its members.
- Greenpenny: Greenpenny's mission is to use deposits to fund renewable energy and carbon-reducing projects only.
- National Cooperative Bank: National Cooperative Bank is an old eco-friendly bank that focuses on supporting local, low-income communities and investing in clean energy projects.
- Self-Help Federal Credit Union: Self-Help Federal Credit Union offers economic opportunities for people of color, women, rural residents, and low-wealth families while funding community engagement.
- Atmos Financial: Atmos Financial is an online fintech platform that has pledged not to invest in projects harmful to the environment, such as fossil fuel projects.
These banks and credit unions offer various products and services, including personal banking, retirement accounts, loans, business savings accounts, and more. They are committed to improving communities through environmental initiatives and helping customers attain sustainable energy options.
By choosing a green banking alternative, you can ensure that your money is not contributing to the climate crisis and is instead being used to promote eco-friendly initiatives and a more sustainable future.
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Tools to identify fossil fuel funding
There are several tools available to identify whether a bank is funding fossil fuel projects. Firstly, Bank.Green's Fossil Free certification identifies financial institutions that have pledged not to lend, underwrite or invest in fossil fuel projects. Bank.Green also provides a list of financial institutions that it considers to be green banks, including those with Fossil Free certification. Mighty Deposits is another resource that identifies banks and credit unions that do not finance fossil fuels.
For those in the UK, Bank.Green's free tool allows users to enter their country and bank to receive a report on their bank's fossil fuel record. This tool also provides resources for finding greener alternatives.
In addition to these resources, there are several organisations that publish annual reports on bank funding of fossil fuels. Rainforest Action Network, for example, works with several other organisations to record which banks are providing funding to a variety of fossil fuel industries, including oil extraction from tar sands, the arctic, fracked oil and gas, and coal mining. The Banking on Climate Chaos (BOCC) report also credits each bank making financial contributions to fossil fuel deals, covering the world's top 60 banks' lending and underwriting to over 4,200 fossil fuel companies. Fossil Free Funds provides ratings of mutual funds and ETFs on issues including fossil fuel financing, using data from the BOCC report.
It is worth noting that some banks may engage in greenwashing, highlighting eco-friendly actions without acknowledging the adverse effects of their other actions. Therefore, it is important to utilise a variety of these tools and reports to thoroughly research a bank's record of fossil fuel funding.
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Frequently asked questions
You can use Bank.Green's free tool to check the record of your bank.
Fossil fuel investments carry real financial risks and the greater the investment in fossil fuels, the slower the transition to renewable energy.
Some of the world's biggest banks, including HSBC, Barclays, Santander, Natwest, Lloyds, BNP Paribas and Deutsche Bank, have invested in fossil fuel companies.
You can use Bank.Green to search for sustainably-minded banks in your area. Some of these banks are listed as "Fossil Free Certified", meaning they have pledged not to finance new fossil fuel companies or projects.
If you have a pension, you can switch from the default option to an Ethical Fund, which does not invest your money in fossil fuel companies. You can also write to your bank to express your concerns about your money being used to fund fossil fuel projects.
