Your Bank Account Could Be the Biggest Part of Your Carbon Footprint
“If you put your money into a bank account, it doesn’t just sit there. It helps the bank lend money out to someone else.” Depending on who that someone is, “Your bank account could be the biggest part of your carbon footprint,” says Cathy Becker, Responsible Finance Campaign Director at Green America.
These basic realities led off the first of two events focused on Greening Finances as part of the Yolo Earth Day Pledge; the first occurred on November 15 with speaker Cathy Becker. “Greening finances” was one of the six pledge categories. If this is the first time you’ve seen this term, you are not alone. While this topic receives less attention than minimizing food waste and avoiding plastics, it is no less important.
Watch the video: Green Finances Banking and Credit Cards with Cathy Becker on YouTube
Mega banks lend fossil fuel companies funds for development and expansion
Banks make money by charging their borrowers more interest on average than they give to depositors. Next, they invest that money in the stock market and other financial tools to increase their assets even more. But what sort of investments is your bank making? The reality is that most of the largest “mega” banks invest billions of dollars into fossil fuel development projects.
Early on in the presentation, Cathy directed attendees to a report called “Banking on Climate Chaos,” created by several nonprofits including the Rainforest Action Network, which tracks how much the 60 largest global banks have invested in fossil fuels development since the 2015 Paris Agreement. The top four worst offenders are JP Morgan Chase, Citi, Wells Fargo, and Bank of America.
“All 60 of them together is $5.5 trillion,” she said. “These top four are about 25% of that total.”
The Banking on Climate Chaos website also offers easily searchable datasets and dynamic graphics related to oil and gas expansion plans, oil and gas policies, and decarbonization targets – by bank or by company. See resources at the bottom for quick links.
Banking with mega-banks? Could be your biggest portion of emissions
But how does this connect to you and your accounts? It’s a bit hard to grasp the impact of your individual savings account(s) at one of these banks. Luckily, Third Act has created a bank emissions calculator (still in beta but working well) where you can choose your bank, input your savings, and see the resulting emissions. For instance, a balance as low as $1,000 in savings at Bank of America, the fourth largest investor in fossil fuels, translates to 200,000 mtCO2e per year. For larger deposits, the effect is even more dramatic. Switching banks could cut that impact by about 60% according to the site.
“That means your bank account could represent a big part or maybe the biggest part of your carbon footprint,” Cathy said, “and you don’t even know it!”
It also means that changing to a fossil fuel free institution has a great impact.
Move your money
First off, consider switching to a credit union. Credit unions are not-for-profit, so any extra money that would have been profit at a bank is converted into benefits for members, including lower credit card and loan interest rates and lower fees. “Credit unions were founded on the philosophy of people helping people. We put people over profits and are committed to the prosperity of the communities we serve,” says Vice President of Marketing & Operations Kelley Jacobsen with Yolo Federal Credit Union.
Credit unions are also more likely to give loans to local residents and small businesses and to invest in the surrounding community. As part of their charter, credit unions cannot invest in the stock market, while banks can and do. Credit unions are allowed to invest in public instruments like federal bonds only.
Credit unions in Yolo County include Yolo Federal Credit Union, Travis Credit Union, University Credit Union located at UC Davis Memorial Union, Golden1 Credit Union, USE Credit Union, and SAFE Credit Union.
Leave your fossil fuel bank step-by-step
For those who are interested in transferring to a fossil fuel free institution, Green America has a ten-step process. The steps include
- find a new bank or credit union
- open a new account while keeping the old one active
- make a list of your extant automatic deposits and withdrawals
- move the deposits and withdrawals to the new account
- download or screenshot the past three years of bank statements
- transfer the final funds from the old account to the new one
- close the old account
- tell the old bank why you are moving on (bonus points!), and
- encourage organizations you are a part of to move banks, too (even more bonus points!)
This process is not as simple as clicking a single button. Luckily, there are organizations ready to help. For assistance at any step along the process, Cathy recommends the This is What We Did website, an organization affiliated with Third Act and Green Faith. “They have people that you can actually call, so if you’re moving your money yourself and you don’t know what to do, they will talk you through it and give you support.” If you know four or more people who would commit to moving their money with you, THIS! offers a 4-week cohort program. At the end of four weeks, you will be prepared to move your money.
Letting your bank know what’s important to you
When an event attendee asked how someone should go about informing a megabank about why they are leaving, Cathy suggested mentioning the report “Banking with Climate Chaos.” “Tell them, ‘[Your investments do] not align with my values.’ “
And if you let [the bank manager of a branch] know, this is why I’m moving my money, and I’m [spreading the word about it], well, that carries some weight. It carries more weight than the money itself.” If you move your money, it’s a tiny amount of money, but you have an outsized voice because of their brand.
Also, try this sample letter to your bank from Green America: https://www.greenamerica.org/sample-break-letter-send-your-mega-bank
Credit card brands might mask fossil fuel-connected issuers
Beyond savings accounts, different credit card issuers can be more or less climate friendly. Any credit card issued by a problematic bank is going to be a problematic credit card because the issuer receives revenue from your purchases, the annual fee (if there is one), and any interest.
Cathy explained the difference between credit card branding and the issuer – the brand name is on the front and the issuer is on the back, often in fine print. Two of a very small number of banks that issue fossil free credit cards include First National Bank of Omaha (FNBO) and Beneficial State Bank, the latter headquartered in Oakland and Portland.
In some instances, you can get a card directly from these issuers or you may need to go with a “branded” card issued by them. The Amtrack “branded” customer rewards credit card, issued by FNBO, gives you points toward train travel nationwide: serious double win! One Beneficial Bank credit card is tailored specifically for customers who are trying to build or re-build credit.
According to Cathy, Green America previously worked with TCM Bank for their branded credit cards but has decided to leave them for Beneficial because, while fossil fuel free, TCM refuses to share that message openly with customers. Unfortunately, FNBO cash back bonus credit cards are limited in geographical scope to a handful of Midwest states.
Insurance companies have a long way to go
Finally, the conversation switched to insurance companies. Individuals might acquire auto insurance, homeowner’s insurance, renter’s insurance, disability, long-term care, and life insurance. Premiums are invested and only a portion is made available when claims arise.
Cathy brought up State Farm, a big insurance company, with a huge advertising budget, that has started to refuse to insure individuals in climate vulnerable states. “State Farm is heavily invested in fossil fuels,” she said. “They’re not insuring people [in vulnerable states], and yet they’re still funding and insuring these oil and gas projects.” CERES (Coalition for Environmentally Responsible Economies), headquartered in Boston, has found that State Farm invests millions in fossil fuels.
According to Wikipedia, as of May 27, 2023, State Farm has ceased accepting new applicants for business and personal casualty insurance in California. State Farm states that this decision was made due to “historic increases in construction costs outpacing inflation, rapidly growing catastrophe exposure, and a challenging reinsurance market. California has had over 15,000 wildfires from 2021-2023. … More than 2.7 million people live in “very high fire hazard severity zones.”
Since 2019, Insure our Future has published a downloadable report and now has an online scorecard of the top global insurance companies for underwriting and investment with subcategories for coal, oil and gas, and tar sands. The report highlights progress and loopholes, calls out leaders and laggards, and identifies challenges and opportunities for the year ahead. State Farm is not listed on the website scorecard.
Global insurance companies scorecard; top scoring American company for investments is AIG at #17 ranking 1.61 out of 10 possible. Captured December 27, 2023, https://global.insure-our-future.com/scorecard/.
For underwriting, the highest ranked US insurers overall include AIG at #17 and Chubb at #18 out of 28 total, with The Hartford, Travelers, Liberty Mutual, Berkshire Hathaway, W.R. Berkley, and Starr scoring near the bottom. For underwriting, the highest ranked company at #4 is Allianz, a German company. No companies are ranked in the top 30% of the scoring system for underwriting. For investment, SCOR Re, a French company, scores a perfect 10, the only ranking in the top 30%. AIG, The Hartford, and Travelers score 2.4 out of 10 for investment; the remaining American companies score even lower, with Starr at the bottom with a score of 0 (zero). Peruse for site for insurance companies who have adopted oil and gas exit policies starting in 2020; Chubb shows up in 2023. More details are likely found in the full report.
Green America is currently working with Green Faith Alliance to create an intuitive guide to insurance companies. It should be out in spring or summer, so check back in!
Switching insurance companies
If you are looking to change insurance companies now, know that most local insurance companies are too small to invest in fossil fuel development projects, so going local and going small is safest. “My husband and I just switched,” Cathy said. “We switched to a local insurance called Grange, and we saved $900, so a lot of times it’s cheaper to go local and the policy and everything else is the same in terms of the amounts it covers.”
If you do decide to change insurance companies, Bernadette, an event attendee, had important advice. Because insurance companies can cancel a new policy for 60 days after issuing it, you will need to keep the old policy for two months just in case something happens.
Next step is identifying some local companies for folks to look into. Please send recommendations to firstname.lastname@example.org.
Get busy with your money
Overall, the first Greening Finance event was deeply informative. Cool Davis looks forward to welcoming back Rekha Vaitla, sustainable investment officer at CalSTRS, for the second Greening Finances event in January. She will be discussing investing with an environmental lens.
Cathy wrapped up with these thoughts: “The heart of this, I mean, the heart of the entire climate crisis is a spiritual, ethical, and moral issue. The way our society is structured places money and profit above all other considerations. Our health our environment, the other species we share this planet with, our democracy and society, and our children’s future is all being placed in jeopardy by the continuation of billions of dollars going to the fossil fuel industry, it’s still the most profitable industry in human history. And the key to changing that is changing the flow of money, so that’s what this is about.”
- Green Finances Banking and Credit Cards with Cathy Becker video on YouTube
- Cathy’s updated presentation
- Follow up letter from Cathy answering some questions more fully
- Yolo Earth Day Pledge Greening Finances support doc
Green credit cards
- https://www.amtrak.com/guestrewards/apply.html (FNBO)
Reports and websites
Banking on Climate Chaos website and report download
Green America website
This Is What We Did website
Insure Our Future report and scorecard
NEW Banking on Biodiversity report
Wikipedia: State Farm https://en.wikipedia.org/wiki/State_Farm
More great stuff
Cool Davis article on local credit unions
Green Your Finances, Cool Davis article