Can switching banks reduce your carbon footprint? -Quartz

Most major banks in the United States and Europe have set long-term goals to eliminate greenhouse gas emissions from their loan portfolios. Yet most remain reluctant to sever ties with fossil fuel companies. That’s because they’re such a big part of banking business, and because many bank executives believe they have a financial and moral interest in helping high-emitting companies transition to more clean. The fossil fuel industry accounts for 10% of banking activity in G20 countries.

Since the adoption of the Paris Agreement in 2015, the world’s 60 largest fossil fuel bankers have lent $4.6 trillion to oil and gas companies, according to a March 30 report by the Rainforest Action Network and other environmental groups. The main beneficiaries are companies like ExxonMobil and Saudi Aramco whose plans to expand drilling operations are beyond what the International Energy Agency says may be compatible with the Paris agreement.

What does this mean for the average retail banking customer? If she keeps her savings or retirement account at one of these banks, part of her deposit is intended to end up in the records of fossil fuel companies and support the production of anti-climate emissions. Switching to a less fossil-intensive bank, i.e. a bank in which a smaller share of total funding is devoted to fossil fuels, could be a way to limit its contribution to this process.

In the tool below, you can compare the fossil fuel intensity of the banks surveyed by RAN, including a breakdown of the sub-sectors they finance.

Translating finance into a personal carbon footprint is tricky

This analysis comes with some important caveats. The first is that fossil fuel financing is not directly analogous to carbon emissions, since some banks lend more to particularly carbon-intensive sectors like the oil sands. The second is that banks’ lending is not limited to what they can raise through deposits; they also raise funds through capital markets and other avenues. So the loss of climate-conscious retail customers will not necessarily hamper a bank’s ability to lend to fossil fuel companies. A deposited dollar can also be used more than once by the bank over time. Finally, switching banks does not solve the fundamental problem, the demand for fossil fuels, in the same way that driving less or eating less meat might. The focus on financing also ignores the work that many banks are doing to lobby against climate policywhich could be an even greater obstacle to decarbonizing the entire economy.

Yet finance-focused climate advocates say that if more retail customers abandon high-carbon banks, it will send a political signal and pressure on banks to exit the sector.

“No single person can change the banking system alone,” said Lydia Hascott, who runs a UK climate action banker training program at non-profit Finance Innovation Lab. “But the wave of people across society who care about this could be huge. If banks understand that there is this desire in the public and among their customers, this adds to the range of pressures that banks also feel from other stakeholders, which together can create a point tipping.

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