Written by Elihu Dietz, ERS
As the connection between fossil fuels and financing becomes more widely appreciated, retail banking customers are asking more questions – specifically about how their money may be supporting companies that are contributing the most to global warming. This recent New York Times op-ed gives a nice breakdown of this movement, and momentum seems to be building. Just a week after that op-ed was published, BlackRock, the largest asset manager in the world (managing $7 trillion), announced it’s reducing its investments in thermal coal companies. In a letter to shareholders, CEO Larry Fink stated that he believes “we are on the edge of a fundamental reshaping of finance.” He also wrote that climate change “has become a defining factor in a company’s long-term prospects.”
Ultimately, it is our banks’ responsibility to stop supporting new fossil fuel projects, for both moral and fiduciary reasons. But until they do, let’s discuss what you can do to improve – and green – your finances and how you can help normalize this approach.
Switch Your Checking Accounts
You can choose a bank or credit union that lends money to companies you believe in…or at least one that has committed to not invest in fossil fuel projects. Here are a few suggestions.
- Amalgamated Bank – You can read about the bank’s values here. They offer online checking accounts with ATMs at 40,000 locations and no minimum deposit.
- Aspiration – This is a purely online bank, but you get five free withdraws per month at any ATM in the world. And you earn 1% on all deposits. You can read more about their lending practices on this blog post.
- Find a local credit union in your area – Credit unions lend locally, often to organizations in their own community. Many credit unions refund ATM fees at other banks or have networks of their own ATMs.
Green Your Investments
Greening your investments is a little more involved. (And note that I’m not a financial adviser; I’m just interested in the topic and eager to share some of what I’ve learned.) To start, there are wonderful guides for greening your investments such as Guide to Fossil Free Investing by Green Century Funds and Steps to Divest and Reinvest by Green America.
And here are some tools and resources:
- A list of some clean and alternative energy exchange traded funds (ETFs).
- OpenInvest is a robo-adviser like Betterment that allows you to choose causes that you care about and support them with your investments.
- Fossilfreefunds.org allows you to find mutual funds and ETFs that avoid fossil fuel investments.
Investing in alternatives is complicated by the fact that there aren’t universal rules yet for what constitutes good practice for environmental, social, and governance (ESG) funds.
Talk About It
Switching banks? Great! It will carry even more impact if you tell your bank why you’re leaving them. Tell them on social media or join a group like Stop the Money Pipeline, which is organizing people to not just leave their big bank but to do so publicly.
Looking for other ways to get vocal?
- If you have a financial adviser, let them know that you want a low-carbon portfolio. This is their area of expertise and they should know how to help you achieve your financial goals.
- Talk to your employer. Organize a few colleagues at work and tell your fiduciaries that you want responsible retirement funds in your portfolio. There are many useful guides out there about best practices for advocating for these changes at work. Here’s just one of those guides. This kind of action has huge impacts, well beyond what you can do alone within your own investments.
- Talk to your friends and family. Let them know that you’re thinking about this topic. Even if you don’t have all the tools yet to make the change, it’s OK. This is a long process and it’s important to find others who can offer support.
Remember that whatever actions you decide to take, this is a journey. Find others who are interested in this work to help you stay on track. Look to your current friend network, colleagues at work, parents of your kid’s friends, members of your religious community, or like-minded people on social media.
Finally, if you’re looking for more references, check out these links below.
- Money is the Oxygen on Which the Fire of Global Warming Burns, Bill McKibben, New Yorker
- 8 New Year’s Resolutions for Investing in a Better World, R. Paul Herman, HIP Investor
- Excellent Divestment Twitter Thread, Professor David Hsu