Seven in 10 people in the US now recognize that climate change is happening, and six in 10 believe that it is human-caused. But despite increasing concern surrounding climate change, it is difficult to align our own individual everyday decisions and actions to create positive impact—or avoid negative impact—on the environment. One area where many environmentally minded consumers don’t consider the impact of their behavior is personal banking.
In the United States, many of us have heard about sustainable investing, or choosing to buy stock in companies that are committed to positive social and environmental impact. But the money in deposit accounts—checking, savings, money market accounts, and certificates of deposit—also affects the world outside the bank vault. Banks leverage these deposits to make loans to various corporations, including fossil fuel companies. In fact, North American banks are the biggest lenders and underwriters of fossil fuel projects. Research suggests that merely continuing to use existing fossil fuel infrastructure until the end of its life imperils the Paris Agreement goal of limiting warming to 1.5ºC. Financing new fossil fuel exploration and infrastructure virtually ensures we will exceed that limit.
The opportunity is large: 93% of US households have a checking or savings account, while only 52% own stock. Focusing efforts only on sustainable investing not only excludes many people from the conversation, it creates a missed opportunity for environmentally minded consumers who want to use their daily decisions to support the environment. By switching our bank accounts to accounts that don’t finance fossil fuel projects, not only can we directly reduce the amount of funds available to the fossil fuel sector, but we can also increase funds for community and clean energy investment.
The Climate and Environment Team at ideas42 has partnered with two sustainable financial institutions to understand and encourage consumer demand for deposit accounts that fund socially and ecologically sustainable investments. Our first partner, Self-Help Federal Credit Union, has a long legacy of providing financial services to underserved communities and is committed to fossil-free, mission-aligned lending practices. Our second partner, Aspiration, is a fintech provider of sustainable checking and savings accounts, as well as two sustainable investment funds. Alongside these partners, we’ve been learning about what behavioral barriers prevent consumers concerned about climate change from opening sustainable deposit accounts and designing interventions to address these barriers.
We will publish a report documenting our findings and sharing behavioral insights for the benefit of all sustainable finance providers and stakeholders—and people who want to use their choices to help the environment.
In the meantime, read more about the organizations mobilizing private capital toward climate change mitigation and adaptation.