This week, I change my German checking account to a green bank. My goal was for this single change to allow me to save 1 ton of carbon emissions. And I’m really excited to tell you how it went:
Green banks in Germany
In Germany, there are three main green banks:
- the UmweltBank—or environmental bank—which has an environmental guarantee – every euro invested goes into environmentally positive projects. So you could call it a climate bank: much of their investment is in things like renewable energy and organic farming.
- GLS Bank, the first social-ecological bank in the world, invests money in social housing, education, and sustainable business as well as environmental projects.
- and Triodos Bank, a European bank dedicated to sustainability, which operates in the UK, Netherlands, Belgium, Spain, Germany, and France. Triodos follows a similar model to GLS Bank.
UmweltBank calculated that for every €1,000 you invest in an account with them, you save 262 kilograms of carbon dioxide. In other words, if you have a savings account with €4,000 in it, you save 1 ton of carbon dioxide in a year. This is great stuff for chronic savers like me. What’s also great about this is how easy it is: once you get your money into a green bank, you’re cutting carbon automatically.
How can this be? Let’s look at one example. According to their newsletter, GLS Bank invested €58 million in 48 renewable energy projects in the last quarter of 2018. JP Morgan Chase invested over 400 times that amount, $25 billion, in fossil fuels during that time (or so I guesstimated using figures from this report).
So I decided to open a checking account with GLS. I filled out the application and just have to mail it in! I figure I’ll be able to start using my account in a week or two.
What does this mean?
The fun part – for my inner math nerd – was calculating the savings. My dinky savings account with UmweltBank? I’ve saved 45 TONS of carbon dioxide since opening it. And my new checking account? It looks like I will likely save an additional ton of carbon dioxide this year from making the change.
Now, the tricky part here is not just switching to a green bank, which don’t exist everywhere. The real savings also come from where you take your money out of. BankTrack, a nonprofit group that researches the climate impacts of banking, has listed the dirty dozen in its 2019 report card. These are the banks that have put the most money into fossil fuels since the Paris Agreement. These are JP Morgan Chase, Wells Fargo, Citi, Bank of America, the Royal Bank of Canada, Barclays, MUFG, TD, Mizuko, Scotia Bank, Morgan Stanley, and Goldman Sachs. In addition, Deutsche Bank has been increasing its stake in fossil fuels. If you have money in any of these banks, I recommend taking it out TODAY. If—no, when you do so, please drop me a line and I can help you calculate your carbon savings and share your action in a later episode.
The worst banks are mostly based in the U.S., with some in the UK, Canada, Japan and China. Which brings me to my last point: German banks tend to be better about this than banks in the U.S. I looked into the German bank I switched my money out of, and it wasn’t actually that bad. It has a fairly strong sustainability mission and invests in renewables. But come on, folks, okay is no longer good enough.
In doing the research for this week, I started thinking of banks as belonging to three groups. Bad banks actively fund things that run against my values: fossil fuels, weapons manufacture, corrupt practices. Every dollar in one of these banks makes the world a worse place. Then there are the neutral banks. They may have divested from fossil fuels, but don’t have positive criteria to invest in the environment. These banks invest heavily in tech companies and consumer goods. So there your money is not hurting anyone, but it isn’t helping, either. Finally, the good banks are the gold standard. They not only prohibit investments in ethically suspect sectors like fossil fuels, but have positive criteria that cause them to seek out projects that help people and the planet. My money has been invested in a mix of neutral and good banks, so my task is getting more of it to work: out of neutral projects and into areas that actively cut carbon.
I learned two things this week. First, where you park your money makes a huge impact on your climate footprint. And all it takes is a bit of research upfront and a one-time change to make your money work for the climate, not against it. The second thing I learned is how much better German banks are than U.S. banks. But I’m getting ahead of myself – that’s something I want to talk more about next week, when I look deeper at the options in the U.S.
If you’re interested in learning more about what your money is doing for the planet, I recommend checking out the research by Bank Track and the Fair Finance Guide. You can also go to your bank’s website and check out their sustainability or CSR reports for their guiding principles and what they’re financing.