The concept of “voting with your wallet” goes far beyond conscious consumerism — voting with your dollars can also mean being mindful of where our money is being invested and stored, and one of the best ways to do this is to switch to a sustainable bank or financial firm.
You may be wondering, though, what is sustainable banking and what kind of impact do sustainable banks and other financial institutions have? Does sustainable banking cost more? Is it difficult to make the switch to a more green and socially responsible option?
I am proud to partner with the socially and environmentally responsible financial firm, Aspiration, to dive into all of these questions and more. To start…
What’s Wrong with the Banking Industry?
When we’re talking about the megabanks? There’s a long list. But let’s dive into the highlights, or rather, lowlights.
1. Fossil Fuel Funding. Most banks are supporting the expansion of fossil fuels by funneling billions of dollars into fracking, pipeline, and coal mine expansion projects around the world.
According to a report by the Indigenous Environmental Network, “35 global banks have expanded the fossil fuel sector with more than $2.7 trillion in the four years since the 2015 Paris Climate Agreement.” And JPMorgan is responsible for about 10% of that total, funneling nearly $270 billion in fossil fuel projects. [1] (Check out this chart for a full look at how much your bank is investing in fossil fuels.)
2. Violation of Indigenous Land Rights. Many of these fossil fuel projects are not only dramatically exacerbating climate change and ecological destruction but involve illegal land grabs and violations of Indigenous land rights.
For instance, there were many banks, like JPMorgan Chase and Bank of America, behind the Dakota Access Pipeline (which has since been ordered to shut down, pending environmental review) — a project that violated Standing Rock Sioux Tribe’s treaty rights.
And, banks are funding tens of billions of dollars to Enbridge, a natural gas distribution company behind the proposed Line 3 Oil Pipeline Replacement that violates Ojibwe treaty rights. [1, 2]
3. Lobbying. In addition to directly funding projects that don’t align with your values, your bank may also by lobbying the government to pass legislation — or not pass certain legislation — that’s in opposition to your values. In the US, commercial banks spend tens of millions of dollars lobbying politicians every year. [3]
What is Sustainable Banking and How is it Different?
A sustainable bank or other financial firm has environmental and social responsibility ingrained into their operations. Here are some common examples of ways sustainable financial institutions differentiate themselves…
1. A truly sustainable bank or financial firm will not fund any fossil fuel projects. Aspiration, for example, never uses customer deposits to fund fossil fuel projects like pipelines and oil rigs.
2. And an actually sustainable bank or financial firm also will not lobby politicians to pass policies (or vote against policies) that are against your social and environmental values, as Aspiration has committed to do.
3. Sustainable banks and financial firms usually have significant donation initiatives and commit themselves to give back to their communities and other organizations doing important work.
Aspiration is a 1% for the Planet member, meaning they donate 1% of all revenue to environmental nonprofits. The company also donates 10% of everything their customers choose to pay them in fees.
4. Responsible financial firms and banks also often ensure fair fees and avoid sneaky tactics. Because these responsibly-minded financial institutions are not just in the business to maximize profits at all costs, they want to be fair to their customers. Again, Aspiration checks this box with their Pay What is Fair fee sliding scale. More on this below in “Does Sustainable Banking Cost More?”
5. One final point is that socially and environmentally-minded banks and other financial firms frequently have other miscellaneous environmental initiatives as well.
One large initiative from Aspiration is their Plant Your Change program. Participants will have their purchases rounded up to the next dollar and for each purchase rounded up, Aspiration will plant a tree. Aspiration is currently partnering with Arbor Day Foundation and Eden Reforestation Projects for their tree-planting projects.
Aspiration also has recently launched a program where anyone can link their debit card, even if they’re not Aspiration customers, and their purchases will be rounded up with the change going to these tree-planting initiatives!
You can learn more and sign-up for the program here.
Does Sustainable Banking Cost More?
The answer to this question depends on the bank you’re using but in many cases, sustainable banks and other financial firms may charge less in fees and actually save you money.
Aspiration, for instance, does not require any fees. The company has a “Pay What is Fair” program where you can choose how much to pay in fees each month, even if that’s $0.
10% of whatever fee you decide to pay the company will be donated to nonprofit organizations. You can select which cause you’d like to donate to Poverty, Water, Education, Environment, Health, or Human Rights.
Is it Difficult to Leave Your Bank?
On the environmental and social responsibility front, I was all in with Aspiration. My only hesitation was the ease of switching — I knew I would leave my bank eventually, but I procrastinated it thinking it would be cumbersome and time-consuming.
Thankfully, the process with Aspiration was actually pretty simple and the process can be done 100% online.
1. First, I created an account with Aspiration by entering the necessary personal information and creating a login.
2. Next, I initiated a funds transfer from Aspiration. I had to log in to my previous (or current at the time) bank account and verify my identity to securely transfer the money to my new Aspiration account. You can decide what initial deposit amount you’d like to start with and choose to set up monthly transfer payments from your other bank account if you’d like.
3. (Optional) Download the Aspiration app to get access to their mobile banking.
4. The final step is likely going to involve the most work and time but can be done at whatever pace you’re able to do. Once the transfer of funds from your previous bank to Aspiration is complete, find the various places that were connected to your previous bank account and then switch that information to your new bank account with Aspiration.
So, the reasons for making the switch to a more sustainable financial firm like Aspiration are clear. You’ll be divesting your dollars from fossil fuels, supporting a more responsible banking industry, and even supporting reforestation should you choose to sign-up for Aspiration’s Plant Your Change program.
Learn more and/or get started with Aspiration here.
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Sources:
- [1]: Banking on Climate Change: Fossil Fuel Report Cards 2018 – 2020, Indigenous Environmental Network
- [2]: Who’s Banking Enbridge?, Rainforest Action Network
- [3]: Commercial Banks: Lobbying, 2020 OpenSecrets.org
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