Our individual choices are insignificant compared to the investment choices made by international banks, insurance companies and pension funds. These financial institutions can have either a positive or a negative impact through the investments they make and the projects or companies they choose to insure.
Unfortunately, a 2021 report, “Banking on Climate Chaos”[1] found that in the last 5 years, the world’s 60 biggest banks have financed $3.8 trillion (that’s trillion, not billion) of fossil fuel extraction/investment activities.
To put that figure in context, $3.8 trillion is equivalent to $482 for every person in the world, whereas $3.8 billion would be just 48 cents for every person in the world. So, $3.8 trillion is a lot of money to invest in our destruction.
JP Morgan ranked worst of all, followed by Citi, while Barclays was the worst in Europe.
So we have choices to make about the financial institutions we use and how we influence them. Here’s our Big Green Ideas List for achieving climate goals through money and investing.
Important: the Big Green Ideas List and the individuals involved with it are not financial advisers. You should take advice from an independent financial adviser when making financial decisions.
Choose the right provider
Choose a bank that doesn’t finance environmentally damaging projects
Environmentally damaging industries, like coal mining and drilling for oil, need money in the form of loans and insurance cover, and most of this finance is provided by banks and big commercial reinsurers. If your money is held with one of the big, traditional banks, it’s likely that you are (at least in part) helping to support problematic industries like fossil fuels, international shipping, aviation, weapons, and intensive farming.
Some newer, challenger banks have chosen an “ethical banking” approach, which means they avoid investing in problematic industries. Instead, they invest in green technology, local communities and government assets.
At the time of writing, moneyexpert.com recommends Triodos Bank and Starling Bank for the UK, but you can check out their current recommendations here.
In the US, have a look at How To Divest, or in Australia, check out Market Forces.
If you’re moving companies, make sure your old bank knows why you left them (for best influence use social media), and let us know you’ve done it by tagging #biggreenideaslist on social media.
Choose an ethical insurer
Pension funds are the biggest investors worldwide, followed by insurers. Choose an ethical insurer to make sure your money doesn’t help support the fossil fuel industry. The Good Shopping Guide has a list of insurers ranked in order of their ethical credentials – unfortunately, it isn’t clear how up-to-date it is, but it’s better than nothing if you’re looking to change.
Check you are happy with how your pension is invested
Your own pension scheme might be smaller than you’d like, but collectively, our pension schemes add up to trillions of dollars – and that money is invested in companies worldwide in the hope of making a profit. Just like banks, most pension funds invest our money across a broad range of companies including environmentally damaging fossil fuel and fast fashion companies as well as unethical but profitable ventures like tobacco and weapons.
Check the investment strategy of your fund. If you want to, you can probably change your investment strategy, even if you are in a company scheme. Royal London has a sustainable fund range and Aviva offers sustainable funds, as does the workplace pension scheme Nest.
Speak to your employer, independent financial adviser or pension scheme to find out more and work out whether sustainable investing is the right choice for you.
Important: the Big Green Ideas List and the individuals involved with it are not financial advisers. You should take advice from an independent financial adviser when making financial decisions.
Use your influence
Lobby the board of your bank and pension scheme provider
If your bank or pension scheme hasn’t divested from fossil fuels, they should at least use their massive voting power to influence the boards of the fossil fuel companies and manufacturing companies in which they invest.
Consider your personal investments
If you hold shares in environmentally unsound or unethical companies, you might be thinking about disinvesting. Alternatively, you might want to hold shares to give you the right to attend AGMs, have voting rights, and tick the “I’m a shareholder” box on petitions. (This allows the petition owner to lobby the target company with claims like “X% of your shareholders thought you ought to do (petition action)”.)
For more ways to influence companies, politicians and people you know, see our Influence page.
Important: the Big Green Ideas List and the individuals involved with it are not financial advisers. You should take advice from an independent financial adviser when making financial decisions.
[1] Rainforest Action Network. 2021. Banking on Climate Chaos – Rainforest Action Network. [online] Available at: <https://www.ran.org/bankingonclimatechaos2021/> [Accessed 17 June 2021].
Image credits:
Bank skyscrapers – photo by Miquel Parera on Unsplash
Mining excavator – photo by Albert Hyseni on Unsplash
Conference room – photo by Col·legi de Farmacèutics de Barcelona on Unsplash