When you put money in the bank, it seems like it’s just sitting there, ready for you to withdraw. In reality, your institution is making a profit from your money by lending it out elsewhere, including to fossil fuel companies that contribute to climate change, as well as emissions-heavy industries like manufacturing.
Unintentional Contribution to Disasters
So, just by leaving money in a bank account, you are unintentionally contributing to worsening disasters around the world. According to a new analysis, for every $1,000 that the average American holds in savings accounts, they indirectly create emissions equivalent to flying from New York to Seattle. “We haven’t really looked at how banks use the money we keep in our checking accounts every day, and where that money is really traded,” says Jonathan Foley, executive director of the Drawdown project, which published the analysis. “But when we take an internal look, we see there’s a lot of fossil fuel.”
Reducing Emissions Through Climate-Conscious Banks
The study found that by switching to a bank that cares about the climate, you can reduce these emissions by up to 75 percent. In fact, if you move $8,000—the average balance for American customers—the reduction in indirect emissions would be double the direct emissions you would avoid if you switched to a plant-based diet.
Banks and Fossil Fuel Companies
Just as you can borrow money from the bank, fossil fuel companies and businesses that support this industry can also borrow money. “Even if they are not building new pipelines, fossil fuel companies need financing for their regular operations—whether it’s maintaining the gas station network they own, maintaining existing pipelines, or paying their employees,” says Paddy McCully, senior analyst at Reclaim Finance, a nonprofit focused on climate action.
Big Banks and Fossil Fuel Investment
The need for these loans from fossil fuel companies varies from year to year, depending on the volatility of fuel prices. This is where you come in as a consumer. “The money that an individual puts in their bank account allows the bank to lend funds to fossil fuel companies,” says Richard Brooks, climate finance director at Stand.earth, an environmental and climate justice advocacy group. “If you look at the top 10 banks in North America, each lends between $20 billion and $40 billion to fossil fuel companies every year.”
Small Banks and Fossil Fuel Investment
At the very least, small banks are less likely to provide funds to the fossil fuel industry. Credit unions operate on a smaller, more local scale, so they are less likely to fund new oil pipelines, for example. “Big fossil fuel companies go to big banks for their financing,” says Brooks. “They are looking for loans in the hundreds of millions, and sometimes billions, and the credit union won’t be able to provide that.”
Banks and Climate Action
Foley says that banks represent a powerful and unique leverage point when it comes to climate action. Compared to switching to a plant-based diet to avoid the widespread carbon emissions associated with livestock farming, moving your money is easy. “If a large number of people inform their financial institutions that they really don’t want to participate in fossil fuel investment, it slowly drains the available capital for fossil fuels,” says Foley.
Banks and Fossil Fuel Investment
Although the new report did not analyze the lending habits of thousands of banks in the United States, Foley says that there are an increasing number of banks that intentionally do not invest in fossil fuels. If you’re unsure about your bank’s investments, you can always ask. “I think when people hear that we need to move capital from fossil fuels to climate solutions, they might think that only Warren Buffett can do that,” says Foley. “That’s not quite true. We can all do a little bit of that.”
Source:
Wired.com
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