Those fighting for a livable future on Planet Earth have long focused on science and technology – and, of course, politics – as tools for understanding and addressing the climate crisis. Understanding the economic and financial systems that have brought us to this crisis is equally important – especially since these systems can also help get us out of it.
Experts estimate that approximately $100 trillion is needed over the next decade to decarbonize our society. Decarbonization efforts will include building out windmills and solar farms, installing rooftop solar and EV charging infrastructure, updating energy grid infrastructure, implementing regenerative agriculture practices, and electrifying every home. All of which, by the way, will create 25 million new jobs in the U.S. alone. The biggest problem now isn’t technology – we know how to make all of this happen – it’s capital allocation. How is all of this work going to be financed?
To quote Saul Griffith: “We must invent all kinds of low-interest financing options to help consumers afford the capital investments for twenty-first-century decarbonized infrastructure.”
To understand finance, you need to understand a bit about banks. So here are four quick lessons on banking to help every climate activist build a more prosperous and sustainable future.
Lesson #1: Where you bank matters.
When we deposit money in the bank, it doesn’t stay there. That money immediately gets loaned out – that’s how banks make money. The banks charge more to lend out the money than they pay in interest to depositors. The difference is called the Net Interest Margin. We collectively have nearly $18 trillion deposited across approximately 5,000 FDIC-insured banks in the United States. But not all banks are created equal when it comes to the climate crisis.
Lesson #2: Don’t let your dollars fund the industries you are fighting.
Approximately 35% of U.S.-insured banking dollars, roughly $6.25 trillion, are currently deposited at just four banks: Chase, Citibank, Wells Fargo, and Bank of America. The largest 100 banks in the country collectively hold 80% of all bank deposits. Many of these powerful banks continue to invest in fossil fuels, deforestation, weapons, and industrial agriculture – industries that continue to dig us deeper into climate debt. A significant portion of our money is being used to directly or indirectly prop up climate chaos. The top four banks alone have invested close to a trillion dollars in fossil fuels since the Paris Agreement was signed in 2015. There is a growing movement to force these banks to stop investing in planet-destroying industries, and many climate activists are now divesting from the big banks. Pulling your money out of the dirtiest banks is an effective method to reduce your own carbon shadow.
Lesson #3: Beware of greenwashing!
Sustainability is a growing concern for billions of people worldwide, and businesses are quick to advertise their sustainability credentials to generate customer loyalty. Many banks have jumped on the green bandwagon, and there are numerous ways banks are beginning to adopt sustainability practices. You’ll want to know what your bank is doing, so don’t be afraid to ask tough questions and use common sense to get to the bottom of those sustainability claims. When it comes to sustainability for your banking provider, the most critical factor to consider is the carbon intensity of their loan portfolio – referred to as Scope 3 emissions. The sad truth is that despite many banks’ claims to be green, only a tiny fraction of U.S. bank deposits are currently invested in climate solutions, like clean, renewable energy and electrification. If we can all lean into better banking alternatives, we have a good chance of meeting the investment required to decarbonize our economy. Something to consider: most community banks and credit unions – while critically important to strengthening local economies, still have little or no investment in climate solutions.
Lesson #4: Move your money to make a (big) difference.
A few financial services providers are emerging to address the need for real climate solutions. The financial technology sector now enables new forms of banking that are more agile and can quickly redirect money into climate solutions. A highly recommended and respected new form of banking is Atmos Financial, PBC, a public benefit company built from the ground up to address the climate crisis. Atmos offers FDIC-insured checking and savings accounts and partners with banks to invest 100% of these deposits into low-cost financing for climate solutions. Atmos measures the carbon impact of your dollars and offers absolute transparency, pays cash-back on sustainable brands, has no minimum balances and no fees, and offers one of the highest savings rates in the country. They make it easy to open an account and reward customers for donating to any of the climate-positive non-profits hosted on the Atmos platform, including Presidio! Presidio Graduate School is proud to promote green banking and partner with Atmos. You can read more about Atmos and other green banking options, including Climate First Bank and Clean Energy Credit Union, at Bank for Good.
Choosing to bank with a climate-positive banking services provider is ultimately one of the easiest and most impactful actions we can take to build a just and sustainable future. Have you switched banks yet? Do you have a story to tell or questions about moving your money? Leave us a comment below.
*This article was co-authored by Anna Larson and Vanessa Warheit, Atmos Financial, PBC.