Published in: Banks | Oct. 17, 2020
By: Dana George
If we win the race with climate change, it may just be banks that pull us across the finish line.
Global warming may be the most pressing issue of the 21st century. Human activity, like chopping down forests, has raised average temperatures worldwide by 1.8 degrees Fahrenheit since the 19th century. While that may not sound like much, the effects of rising temperatures have been disastrous.
For example, our warmer planet is suffering from increased groundwater evaporation. That's putting agriculture and the water supply at risk. All that water evaporated into the atmosphere and contributes to flooding, crop damage, and more. We're even seeing stronger hurricanes due to climate change. Antarctic ice is breaking apart, uncontrollable wildfires are the norm, and disease-spreading mosquitoes thrive. And despite the reams of scientific evidence regarding global warming, the subject has managed to become political.
Banks have taken action to mitigate the damage and, if possible, reverse the trend. Here are five banks that have joined the fight against climate change.
Aspiration's motto is "Do Well. Do Good." One way this online bank and investment platform does good is by fighting global warming. Its approach is simple, and its efforts attract many socially conscious customers.
One of Aspiration's programs is called "Plant Your Change." Through Plant Your Change, customers have the option of rounding their debit purchases up to the next whole dollar. Say a debit purchase is for $5.81. The amount would be rounded up to $6, and the extra $0.19 would go into a larger fund to plant trees. Aspiration commits to planting one tree each time a customer rounds up. The total amount rounded up is debited from the customer's account the following day, and a note is sent telling the customer how many trees will be planted due to their contribution. Once a customer plants a specific number of trees, Aspiration rewards them by depositing cash back into their bank account. For example, once 30 trees have been planted, the account holder receives a $5 reward.
Through a program called "Planet Protection," Aspiration promises to provide carbon offsets for every gallon of gasoline a customer purchases with their Aspiration card. All a customer needs to do is opt in and use their card at the pump.
Bank of America has taken an active role in fighting climate change by mobilizing more than $158 billion to finance low-carbon businesses worldwide. The bank also considers other issues to determine which companies to fund, including water conservation, land use, and waste.
The financial institution has also worked toward making its own operations sustainable by using 100% renewable electricity. Bank of America also rewards its employees for taking steps to help the environment.
Key Bank invests in renewable energy sources. It's also committed to becoming more energy efficient by operating in environmentally friendly facilities. The bank's goals include increasing the use of renewable energy and diverting waste from landfills. It's achieved the latter by reducing paper usage by 45.1 tons in 2018 alone.
Leaders at Amalgamated Bank call the bank's efforts to fight climate change "answering the call." In addition to aligning all of its lending with the Paris Climate Agreement, the bank has ended its financing of fossil fuel projects, helped people and businesses add solar panels, and is moving toward becoming a net-zero carbon operation.
Beneficial State Bank puts its money where its convictions are by only funding clean, renewable energy. It refuses to fund "dirty energy" businesses like coal, oil, and gas. By the end of 2019, the bank had committed $42.3 million to renewable energy projects in Idaho, California, and Washington alone. In doing so, Beneficial State Bank helped offset 432,324 metric tons of carbon. As of December 2019, the bank had over $108 million in outstanding loans to the environmental sustainability sector. Beneficial State Bank openly supported the Standing Rock Sioux Tribe as it fought against the Dakota Access Pipeline. Further, it encourages depositors to change banks, leaving behind financial institutions that fund the development of fossil fuel and oil pipelines.
It would be naïve to assume that these financial institutions are acting solely out of the goodness of their hearts. According to a Nielsen survey, 73% of Americans say they would change their consumption habits to reduce damage to the environment. Financial institutions realize that their environmental efforts attract a specific segment of the population.
Regardless, the effects of global warming are bad for businesses. An increase in floods, storms, and other climate-related events puts infrastructure at risk. That impacts the financial profits banks typically enjoy. A report published in the scientific journal Nature Climate Change suggests that the financial sector will end up absorbing the losses that climate change causes.
Still, if you hope for change, the financial sector is precisely who you want fighting on your side. Banks decide whether to fund companies producing dirty energy, and banks are where conservationists find the funds to do their work. It is the financial sector that most impresses politicians in Washington, and if a change is going to occur, it will likely be because banks are involved in calling for it.
If you're currently not frequenting an ethically responsible bank, changing institutions is a relatively easy thing to do. Your money already works for you. Why not let it work for the environment?
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