What is your bank doing about climate change? – Who? New
Some 95% of people don’t know what their bank is doing to reduce its carbon footprint, new Which? search found.
Despite this, 47% said it was important for their bank to have a policy to reduce its carbon footprint, compared to 23% who said it was not important, according to a 1,056 Which? members from October 2020.
The disparity could stem from the way banks communicate their environmental policies.
Our research found that it can be difficult to know what a bank is dealing with in the face of climate change, making it difficult for clients to make environmentally friendly banking decisions.
Here, we take a look at where you can learn more about your bank’s environmental policy and why it’s important.
Why bank climate plans matter
We don’t know of any bank that openly disregards the environment. But their approaches differ hugely, from some that are carbon neutral to others that still lend or invest in the fossil fuel industry.
Even if you don’t have any investments yourself, banks usually invest some of the money you keep in checking and savings accounts, or lend it to businesses.
But our October survey of Which? Members suggest that most customers don’t know what banks are doing with their money:
It may not seem as tangible as switching to an electric car or cutting back on meat consumption, but choosing a bank with better climate policy can lower your carbon footprint and put pressure on the industry to change.
Unfortunately, when Ethical Consumer magazine recently reviewed the climate change strategies of 36 UK banks, only two – Ecology Building Society and Triodos Bank – received their highest marks.
So what should you be looking for?
According to Rob Harrison, Founder and Editor-in-Chief of Ethical Consumer: “A good plan to fight climate change must show clients how a bank is going to play its role in reducing global emissions quickly enough to meet the international climate targets of the Paris Agreement.
“This means that banks must measure the carbon impacts of all the companies to which they lend and work with them to obtain [these emissions] down.’
How to find your bank’s climate change plan
We asked 28 banks where customers can learn more about their climate change projects. We also asked them how they could know where their money was being invested.
Of the 14 banks that responded, 11 directed us to pages on their websites.
Only Triodos has offered a detailed breakdown online of where customers’ money is invested. Nationally, the Co-operative Bank and Starling have made it clear that customers’ money is not being invested in fossil fuels. Santander included many links to its policies on industries it would not invest in.
However, most of the websites of other banks have simply acknowledged that their investments have an environmental impact, without going into detail.
Rather, the focus was on what the bank was doing to make its working practices more sustainable. In some cases, banks have given clients advice on how to reduce their own environmental impact.
You can view the web pages yourself at the links below:
Consult the annual reports
Eight banks said customers should consult their annual reports.
NatWest Group, for example, lists the percentage of its loans that go to oil and gas, mining and other industries.
Metro Bank said it does not lend to carbon-intensive industries and that it “has no intention of doing so.”
Yet these useful sections were to be found on pages 41 and 39 of the banks’ respective annual reports, which are hundreds of pages long. It is therefore understandable that some customers have difficulty finding or interpreting this information.
Obviously, if you want to know what your bank is doing about climate change, you may need to dig for some answers. And even when you do, you might not find all the details you need.
All the banks we have heard of have expressed their ambitions to become more sustainable. But if the details of their efforts are not readily available, it is difficult for customers to draw comparisons and make choices that benefit the environment.
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