Green Your Finances
By Dylan Ehlers with research and contributions by Leslie Crenna
The shift to a zero-carbon emission world is going to be expensive, with an estimated $9.2 trillion needed each year to make a net-zero transition possible by 2050. Will your money be used to support this transition … or will it be used to work against it?
By banking with credit unions and other ethical banks, shopping with green credit cards, investing in socially responsible stocks and mutual funds, advocating for fossil free pension portfolios, and making charitable donations to organizations committed to tackling environmental issues, you can align your money with your values and make a positive impact in the world.
Combating the climate crisis will be a massive undertaking, but one that we must all take on together.
Banking | Credit Cards | Investing | Mutual Funds | Retirement Plans | Donations | Slow Money | What about Crypto| Podcasts | Pledge to Green Your Finances | Sources and resources
JPMorgan Chase bank is the world’s largest funder of the fossil fuel industry. In the five years after the Paris Agreement was adopted in late 2015, JPMorgan Chase bank provided nearly $382 billion to fossil fuel corporations, more than any other bank in the world. Gazprom — majority-owned by the Russian government — is one of the largest oil and gas companies in the world, and Chase Bank is its largest funder.
Other big banks do slightly better than Chase. Between 2016 and 2021, Citi lent out $285 billion to fossil fuel companies, Wells Fargo was up to $272 billion, and Bank of America funded fossil fuel endeavors to the tune of $232 billion.
There are alternatives. “Ethical” banks offer specific social and environmental benefits. Beneficial State Bank is a non-profit bank among only eight Certified BCorp banks nationally according to Michele Button, Vice President and Team Lead for Client and Treasury Management at Beneficial. Beneficial State Bank is owned by former presidential candidate Tom Steyer and spouse Kat Taylor.
Michele told Cool Davis that “deposits are the best way to make an impact.” She demonstrated a cool calculator that shows how your Beneficial deposits are lent out in three categories: people (about 65%), planet (about 12%), and prosperity for all (21%). Also, Beneficial never lends to private prison, fossil fuel, payday lenders, natural gas, or coal endeavors.
The Bank for Good website lists 15 banks in California with a fossil free commitment, among other ethical designations, including Beneficial Bank. Service territories vary, and some of these are online only. The Mighty Deposits website shows 180 institutions in California, including Beneficial, Metropolitan Bank, Community Bank of the Bay in Oakland, and Mission National Bank in San Francisco.
The BankTrack website lists institutions but also covers news, including information on the Net Zero Banking Alliance, Principles for Responsible Banking, and encouraging banks to withdraw their business from Russia and the war on Ukraine. Their Find a Better Bank tool lists about 30 institutions in the US. Some of these institutions also offer credit cards.
Another great opportunity is through Slow Money and their new Beetcoin program that turns donations into 0% loans, by majority vote of members, to local, organic farms and small food enterprises.
Not-for-profit credit unions offer similar or better services as banks. For more details, check out this article by UC Davis writing intern Hillary Hoang.
Look to see if your institution of choice belongs to a membership organization, such as the Global Alliance for Banking on Values (GABV), which provides links to member institutions and hosts a “unique space of collaboration for leaders and practitioners in values-based banking to learn from each other, deliver targeted initiatives, and advocate effectively for social and sustainable banking practices worldwide.” Member banks near Davis include Beneficial State Bank (co-headquartered in Oakland, CA, and Portland, OR) and Amalgamated Bank (however, the SF branch of this New York-based bank appears to be temporarily closed).
Shopping with credit cards
Shopping is part of most people’s daily lives, and many of us use credit cards to make our purchases. More than 80% of American adults own at least one credit card, and we use them to spend large sums of money–over $3.5 trillion in 2021 alone. Green and ethical credit cards offer an easy approach that allows the average person to make a consistent contribution to a cause they choose. For every purchase made using this type of credit card, a small percentage is donated to a selected cause.
Michele Button reported that holders of certain Beneficial State Bank credit cards can “donate their points to the charity of their choice and choose from a long list.” Beneficial offers three credit card types; one for those establishing or repairing credit, another for those who tend to carry a balance, and a third that earns rewards for selected causes. Beneficial credit cards are serviced by FIS Global, headquartered in Jacksonville, FL.
Green America offers a credit card in partnership with TCM Bank, N.A. which is owned by ICBA Bancard, a subsidiary of the Independent Community Bankers of America. Every purchase on the card supports Green America’s action campaigns and you still earn reward points. Visit TakeChargeofYourCard.org to learn about this and other cards that benefit environmentally and socially conscious organizations.
While most of the largest banks offering some sort of “eco-friendly” credit card, many are also some of the largest investors in fossil fuel industries, contributing over $3.8 trillion in the last 5 years. According to Forbes reporter Chauncey Crail, “Just be aware that some cards you might hope would be backed by green ideals because of the associated co-brand are, in fact, backed by banks with significant investment in fossil fuel markets.”
“Investing” generally means stocks, which is a crucial way to green your finances. The returns of socially responsible investing are diverse, from the monetary gains commonly associated with investment, to the social and mental benefits of making a positive impact in the world.
Buying a company’s stock contributes funds to that company, allowing it to grow, and in turn, increasing the value of that given stock. Buying stocks directly from companies that are committed to tackling the environmental issues facing us can help support that work while giving you a financial return at the same time.
The idea of financial “greening,” or putting your money where your environmental values lie, has grown in popularity in recent years. This increase in popularity, plus new proposed SEC disclosure rules (see below), has coincided with the development of environmental, social, and governance (ESG) criteria used to rate a company’s commitment when it comes to such issues.
These criteria, while often helpful, can also be misleading, as there is no regulatory body controlling ESG ratings. ESG claims could actually be a form of misinformation called “greenwashing” to entice would-be green customers with the perception that their company has sustainable practices when in reality it takes part in environmentally damaging practices. Recently, Deutsche Bank was raided by regulators when an employee reported that false ESG information was being reported by the company. When looking to invest or spend, it is necessary to look into the facts and details of companies so that your money really can make the difference you want it to.
Green America offers information, campaigns, and an extensive PDF guide to socially responsible investing (SRI) with a few pages covering banking and credit cards as well. The guide provides background on returns, divestment movements, community investment strategies, tips for different age brackets, shareholder activism success stories, plus lots of other resources and ideas. Green America also has a search tool for certified Green Business Network financial planners and advisors. Note: Cool Davis and Green America are not investment advisors, nor do they provide financial planning, legal, or tax advice. Check out all their resources here: https://www.greenamerica.org/finance.
The Forum for Sustainable and Responsible Investment lists sustainable investment mutual funds and ETFs offered by US SIF’s institutional member firms. This public tool is meant for individual investors to compare cost, financial performance, screens and voting records of competing funds. All listed funds are open to new investors, including Bloomberg, Calvert, Domini, Green Century, Neuberger, Parnassus, Pax, Praxis, and TIAA-CREF. https://charts.ussif.org/mfpc/
Interfaith Center on Corporate Responsibility (ICCR) brings together socially responsible investors across many faiths (Catholic, Episcopalian, Jewish, Mennonite, and more), and members leverage a combined $100 billion investment portfolio to sponsor shareholder resolutions on climate change, the use of sweatshops, human rights, and other crucial issues. To check whether your denomination is a part of ICCR, visit its website.
Download a FREE copy of Green America’s Plan for a Better Future: How to Add Socially & Environmentally Responsible Investment Options to an Employer’s Retirement Plan. https://www.greenamerica.org/add-socially-responsible-investments-your-workplaces-retirement-plan
A web search for “best green stocks” yields a maze of ads, third party articles, and plenty of greenwashing. Look for trusted sources. Beware sponsored results and dig deep into ESG ratings. Sectors to explore that might match with your values include renewable energy and car makers with successful or emerging electric models.
A report from JUST Capital in 2022 listed some of the best large companies for the environment, based on climate commitments and lower operational emissions, including: VMWare, Microsoft, Intuit, Apple, Moody’s, Mastercard, PayPal, Etsy, HP Inc., and PVH Corp. One example, Microsoft Corporation (NASDAQ: MSFT) claims to be carbon neutral globally since 2012, and aims to be carbon negative, water positive, and zero waste by 2030.
Larger investment brokerage firms like Charles Schwab, Fidelity, E*TRADE, Merrill (a division of Bank of America), and TD Ameritrade provide guidance on their sites for socially responsible or ESG investing. Remember, ESG ratings are not regulated and may not be trustworthy. Avoid notoriously bad actors like Goldman Sachs.
To identify smaller companies to support, a good place to start is with Bcorps. The non-profit BLabs reports 6,010 Certified B Corporations in 89 countries with over half a million workers all sharing the vision of a world where “business is a force for good, and plays a leading role in positively impacting and transforming the global economy into a more inclusive, equitable, and regenerative system.”
A quick search shows 460 of those nearly 6000 Bcorps located in California, including Torani with a score of 87 (founded in San Francisco’s North Beach in 1925), Amy’s Kitchen (ready-to-eat foods and soups), Athleta (athletic apparel), and the Too Good To Go app (check it out!). Fourteen of those found in California report 1000 employees or more, and several of those are rated Best for the World by BLabs, including New Seasons Market, Patagonia, Sama, and Revolution Foods. Visit BLabs website to continue the search. (https://www.bcorporation.net/en-us).
Another way to find ethical businesses is at the 1% for the Planet site, an organization that aims to inspire businesses and individuals to support environmental solutions through annual business memberships and engagement opportunities. The 1% for the Planet certification is given to businesses that donate 1% of annual sales to environmental causes. Search under Community and Business Members then Visit Our Directory then Businesses to peruse the 5,457 businesses that participate. Some might be publicly traded and offer stock purchases. https://onepercentfortheplanet.org/
In March 2022, the U.S. Securities and Exchange Commission (SEC) unveiled plans to enhance and standardize climate-related disclosures, as part of a growing awareness of ESG. The new rules would require companies to disclose material risks as well as information about its direct and indirect greenhouse gas (GHG) emissions. Many expect that 2023 will see the rules finalized and an implementation process started.
While these rules do not mandate emissions reductions, a Ceres analysis in October 2022 showed that institutional investors strongly support them.
Another way to put your money where your values are is by investing in mutual funds. These funds can be a more diverse alternative to stocks, where professionals pool and manage money from many investors. Different funds may have various associated costs and risks. Because investments are usually spread across various companies and industries, there is a lower risk of losing money if one company fails. Green-focused mutual funds invest exclusively in companies committed to tackling environmental issues, from clean energy to community-based efforts. When researching green mutual funds, be sure to read the prospectus and fund criteria to ensure that the fund’s values align with your own. Beware of greenwashing and dig deeper every time!
US News and World Report recommended the following in March 2021: Vanguard FTSE Social Index Fund, Trillium ESG Global Equity Fund, Shelton Green Alpha Fund, Vert Global Sustainable Real Estate Fund, Thornburg Better World International Fund, the Calvert Emerging Markets Equity Fund, and the TIAA-CREF Green Bond Fund. Dig deep into the stock portfolios of these funds before selecting them.
Get more details at: https://money.usnews.com/investing/funds/slideshows/green-mutual-funds-to-buy-now
Most of the time, you do not have much of a choice in retirement plans offered through employers. However, some, like UC Davis offer a choice between a pension and an individual IRA, which gives you more choice and control over your pension investments. Check with your financial advisor to determine which one is best for you.
If you are a CalPRS or CalSTS pensioner, your retirement funds are invested in fossil fuel companies to the tune of $42 billion. Activists including groups like Fossil Free CA have been promoting divestment for several years. Read more about the new bill has been introduced in the most recent legislative session in this Cool Davis article.
Check out this more recent article in the Davis Enterprise from CalMatters writer Grace Gedye.
Donating is one of the most popular ways to show support for a cause you believe in, with an estimated $484.85 billion in charitable donations given across the U.S. in 2021 alone. Of these donations, about $7.5 billion were put towards solving the climate crisis.
While this is a seemingly large number, it represents only a small fraction of what experts estimate is needed to address the causes and impacts of climate change. A side benefit of making donations is the possibility that they can provide tax deductions for the donator.
Along with one-time or regularly occurring donations, another way to give to environmental causes is through estate planning. Setting up an estate plan directs where your money and possessions will go after you die, whether that be to certain people or even to organizations. Leaving a small fraction of money to groups dedicated to fighting climate change and protecting the environment can make a big difference, as Americans are expected to pass on $36 trillion over the next 30 years. Creating a will is a great way to start your estate plan, but the full process can be quite extensive. This makes it all the more important to start your plan early and, if needed, to seek help from a financial expert to ensure you are confident that your money and assets are allocated according to your wishes.
Cool Davis graciously accepts donations both one time and recurring (https://www.cooldavis.org/donate-now/)! You can also choose among our non-profit Coalition partners (https://www.cooldavis.org/community-partners/) and, if you give to the Yolo Community Foundation, you can let them do the sharing across Yolo County.
Another great opportunity is through Slow Money and their new Beetcoin program that turns donations into 0% loans, by majority vote of members, to local, organic farms and small food enterprises. Slow Money Northern California hosts events locally and recently wrapped up FarmFest 2023 at Full Belly Farm in the Capay Valley.
The Green Investor podcast powered by Investopedia
Getting Warmer with Kal Penn: Zeroing in on the boldest climate solutions (https://www.bloomberg.com/originals/series/getting-warmer-kal-penn?re_source=ad_apt&re_source_camp=gwwkp)
The Impact Investor https://theimpactinvestor.com
What about crypto?
“Bitcoin uses an enormous and growing amount of energy. It’s annual power consumption went from around 7 terawatt hours in 2017, similar to Albania, to over a hundred terawatt hours by 2022 [precisely 138 terawatts], nearly as much as the Netherlands.” From “Cleaning Up Crypto,” Getting Warmer Episode 2 (with Kal Penn) https://www.bloomberg.com/news/videos/2023-03-01/cleaning-up-crypto-getting-warmer-episode-2
Taking on the biggest issue
Climate change is an huge issue that can feel overwhelming at times. There is no denying it will take a lot of effort and money to address, however, there is a plethora of ways that you can do your part. By changing habits such as driving and eating locally (see our Yolo Earth Day Pledge for specific ideas), but also through financial greening, you can be a force for change in the world.
Action such as investing, donating, and shopping are simple, yet powerful ways to take on the biggest issue in the world.
Sources and Resources
net-zero transition https://www.mckinsey.com/capabilities/sustainability/our-insights/the-economic-transformation-what-would-change-in-the-net-zero-transition
Global Alliance for Banking on Values (GABV)
Beneficial State Bank impact report: https://www.beneficialstatebank.com/about-us/our-impact.
Sustainable Investing Basics https://www.ussif.org/sribasics
Bloomberg 2021 Impact Report https://www.bloomberg.com/impact?tactic-page=496696
Green Investment Banks paper https://www.oecd.org/environment/green-investment-banks.htm/
Green Century Capital Management, Inc. (Green Century) is the investment advisor to the Green Century Funds (the Funds). https://www.greencentury.com/
Environmental, Social, and Governance (ESG)
|Deutsche Bank ESG scandal youtube link|
“Environmental, Social, Governance scores and the Missing pillar—Why does missing information matter?” https://doi.org/10.1002/csr.2326