Is Your Bank Out of Alignment With Your Values? Maybe it’s Time to Break Up.

Banks, whether large and multinational or small and regional, all make money the same way: By charging interest and fees. Banks pool their customers’ deposits, issue loans, and buy U.S. Treasury bonds that pay interest. In fact, banks are allowed to invest up to 90 percent of their customers’ deposits. They also charge overdraft fees, credit card interest, and fees for certain types of accounts and financial services.

But millions of people are unaware that banks can also invest some of their deposits in corporate stocks and bonds offered by fossil fuel companies to help fund the cost of producing dirty energy. 

It’s true. Most, if not all of the world’s large banks are helping to fund coal mining and oil and gas drilling by the biggest polluters. According to Reuters, the top banks financed these companies to the tune of $742 billion in 2021 alone, helping to fuel an already rapidly warming climate. Sustainability and energy-finance scholars in the United Kingdom and Ireland calculate that 90% of new capital for fossil-fuel companies derives from bank loans and bond issuances.

Yet, Wall Street banks know that to stop climate change they must divest entirely from these companies. Instead, they use clever marketing to appear environmentally friendly. But don’t be misled by “greenwashing”. Read your bank’s financial statements. If you see fossil fuel investments, you know you can — and should — do better.

If you could choose differently, why wouldn’t you want your hard-earned savings to be invested in initiatives that you personally value, and in the future you want for yourself and your family?

Thankfully, there are many big-bank alternatives that actively invest in solving our topmost environmental challenges, especially climate change, and funding social initiatives. 

Finding environmentally- and socially-responsible banks is easy! Visit Ask Sustainable, Stop the Money Pipeline, Bank for Good, Bank.Green, and Green America, and search their databases of green banks, member-owned credit unions, and community banks that align with social- and climate-friendly values.

First, decide if you want a local institution with branches, or virtual banking with mobile apps. Next, choose the type of accounts you need (savings, checking, credit cards, money markets, CDs, youth accounts, etc.). Finally, look at what these institutions are doing to stop climate change and its societal impacts, and the organizations they invest in to support marginalized people. Don’t forget to review the terms, fees (if any), and interest rates. 

Find the green bank or credit union that best matches your needs, and then…

Even though you’ve been together a long time, they’re no longer serving you; in fact, you have nothing in common anymore. So, it’s OK to let them go and move on to cleaner, greener pastures… er, banking. Follow our playbook for a drama-free breakup:

1. You’ve chosen your new credit union or bank and opened the accounts you need. Remember — credit unions are NCUA-insured and banks are FDIC-insured up to $250,000 per person, per bank, and per account type.
2. Make a list of your auto-deposits and auto-withdrawals. Wire transfer some money from your old checking account to your new checking account, leaving enough behind to cover pending transactions and auto-withdrawals to avoid overdrafts. Do this either online or in person at a branch. You will need your account and routing numbers handy.
3. Give employers your new bank’s direct-deposit information, and then change your online bill pay accounts and other auto-withdrawals to your new account. It might take a few days for changes to go through, so don’t wait to do this step.
4. Once step 3 is complete, finish transferring over the rest of your money.
5. Close your old account(s) and send a break-up letter to let your old bank know why you can no longer bank with them.

Once you’ve completed the five steps above, you can relax knowing that your savings is more than just safely tucked away in a sustainable bank —it’s being used to make people and the earth thrive! Imagine how good it will feel to switch to eco-friendly banking that aligns with the future you want to create in your neighborhood… and the world.