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Say NO to bad banking!



This first post is about banking, it is not a definitive article, more like the tip of the Iceberg. I’ve tried to summarise some key points but there is plenty more information out there if you want to dig deeper into the rabbit hole. So, in the words of Morpheus from the Matrix are you going to take the blue pill or the red pill?

This research stems from me wanting to make a change, I decided to look at my bank provider, as a result I switched banks.


Perhaps rather naively, until recently I thought that who I banked with made no difference. Like many I thought that the money I earnt just sat there till I spent it, or worse still I thought my bank wasn’t too bad. Unfortunately, our money can be invested anywhere in the world and not always in ways we would approve of.


I’ll hold my hand up and say that I banked with HSBC until December 2020, I’d had an account with them since 2011, when I first moved to North Wales. They were the only bank with a branch on the high street where I lived. I never had a bad customer service experience with them, so I never considered changing. Through my online research, which I’ll go into later, I discovered that they are one of the worst UK banks for funding fossil fuel projects. This was really shocking to me as it is at odds with my belief that we should be rapidly moving towards a zero carbon future, so when I realised this I decided to commit to switching banks and set myself the deadline of December 2020. A little scary I admit during these uncertain times, but I felt it was a necessary action to show that I didn’t approve of how my money was being invested. Regardless of how much money is in our individual accounts, I think that if we all start to make these changes collectively we can make a difference.


There is a daunting amount of information out there online and there is also the added element of working out whether it can be trusted. Below is a short overview of what I found and the sources it came from. Also, if you’re after a one stop shop for checking out your bank and some easy steps that go through your options and will help you transition, I thought Switch it seemed a good place to start.


I’ve learnt that banks globally have contributed £1.972 trillion in financing fossil fuels since the 2015 Paris Agreement. Fossil fuel financing has increased by 15% since 2016, with HSBC’s increasing by $6.7 billion. In the ‘Banking on climate change 2020’ report (https://www.ran.org/bankingonclimatechange2020) which scores banks on their future policies towards fossil fuels to prevent a 1.5˚C increase in line with the Paris Agreement, no major bank is even close to meeting this goal, despite new policy announcements. None of them score more than 82 out of 200 with Credit Agricole scoring the highest. It seems they are currently failing to take this seriously and, are currently a big part of the problem driving us toward climate disaster.


The only silver lining in this report was that there has been a decrease in financial support for coal mining and power, however, this is being undermined by an increase in finance for the gas and oil industry.


I’ve also found that more than 300 banks and investors are funding businesses that drive deforestation. One example linked to this I want to highlight is: a 2019 report naming funders of Amazon deforestation. The banks named include Barclays, HSBC, Lloyds Banking Group, Natwest and Santander.


If I was in any doubt before starting my research, I'm not now: the funding of fossil fuels has a great impact on human life. These next examples I came across on Ethical Consumer show how it is destroying communities, as well as habitats and wildlife, and there doesn't seem to be any thought to the impact it has when things like an oil spill occur from a pipeline.


The Trans Mountain Pipeline Expansion Project in Canada; Natwest, HSBC and Barclays have all helped to fund this project. This has been going ahead despite many First Nations groups not being consulted properly, and 190000 litres of oil spilt over an aquifer that supplies water to Sumas First Nations community reserve.

Investments into industrial farming,this is a big cause of greenhouse gas emissions and dodgy practices that include chlorine washing chicken. Barclays, HSBC and Santander all came up as investors.

The global extractives industry,in 2018 Facing Finance published a report that looked at the industry. It is involved in some of the worst labour, environmental and human rights violations. Barclays and HSBC were both cited as financing projects within this industry.


Below are the three worst offenders in the UK, time and again these 3 cropped up in every bad investment for the climate:


Barclays


Their total fossil fuel investment since 2016 is £86.132 billion. They are the 5th biggest funder of fossil fuels in the world. They are one of the top investors in oil mining, but have also invested in coal, fracking and tar sands.



HSBC


Their total fossil fuel investment since 2016 is £63.079 billion. They are the 13th biggest funder of fossil fuels in the world. In 2018 HSBC announced they were moving investments out of tar sand projects, but they still have a large number of investments that are harmful to the environment.



RBS/Natwest


Their total fossil fuel investment since 2016 is £8.828 billion. They are the 33rd biggest funder of fossil fuels in the world. They have been identified as making progress, they have significantly reduced investments into the coal and oil industries.


I know this all sounds quite depressing, but on the plus side my research showed me that there are some worthwhile alternatives out there to consider. There are institutions where your money will not just ‘do no harm’ but actually have a positive impact on the world.



Ethical Banking Alternatives:


Triodos


They are Ethical Consumer’s (https://www.ethicalconsumer.org/money-finance/shopping-guide/current-accounts) best buy for current accounts, they lead the ethical bank pack by a country mile. Their mission is to make money work for positive social, environmental and cultural change. Triodos puts it’s profits back into local communities, it has invested more than £6 billion in projects that benefit people and the planet across Europe.

They are transparent about where money is invested.

There is a £3 monthly fee for their current account to avoid hidden charges or extortionate overdraft costs, this is to help support the more vulnerable customers instead of making them pay more.

They currently don’t offer a credit card or have any high street branches.



CO-OP


They are guided by a customer-led ethical policy. Their commitments include: promoting human rights and equality, promoting economic and social development in Britain, promoting the environment, supporting international development and protecting animal welfare. It remains one of Ethical Consumer’s top choices for better bank accounts. It has a solid ethical policy that it proves adherence to in a thorough annual report. It also doesn’t tip the needle on fossil fuel investment. Its hedge fund owners dirty the water a little, with holdings in areas including airlines and crude oil transportation, despite this it still remains a good choice among the more mainstream providers. It is the only high street bank that has prohibited support for fossil fuels.

There are no fees for their current accounts unless you have an arranged overdraft and use it or go overdrawn.

There are varying credit card options including a money transfer credit card.


Nationwide


They look to help their customers reduce their environmental impact with loans for energy efficient improvements to homes. Working with Switched to look at only green energy providers. They don’t have the ethical or green credentials that Triodos boasts, but it is one of the UK’s most established building societies. It is accountable to its members, has a fairly clean record in terms of corruption and doesn’t register on the fossil fuel investment mega-scale. You could do a whole lot worse.

At least 1% of pre-tax profits goes to local causes and communities.

They have three current account options, two of which are free unless you have an arranged overdraft and use it or go overdrawn.

There is a member credit card option with two 0% offers for the first 18 or 15 months. Also easy to use abroad with no charges for purchases on the card.


As part of my research into deciding which provider to switch to I thought I would find out if there were any local people or businesses that these companies supported.


I really liked Triodos’ openness on where, how and to whom money is invested. Triodos have invested into small businesses like Trigonos in Nantlle, a not for profit business committed to sustainable and ethical practices. They run training programmes, workshops and retreats, provide food for the local community from the land and work experience for young people.



The mix of online research I did and also speaking to people has really helped me in making my own personal decision. In an ideal world I would have chosen Triodos, I hope to do so in the future but I’m taking small steps. In the end I chose Nationwide with the potential to buy a house in the near future.


I hope this information helps you to some extent, we have the right as customers to hold our banks accountable and to leave them if they are doing things we are not comfortable with, or not making steps in the right direction to combat the climate crisis. As customers we have the power to say that this is not ok and to take action now. It is easier than ever to switch your account and it usually takes around 7 days for this transition to happen. The current account switch guarantee takes care of everything and will transfer all your direct debits, standing orders etc. to your new account. https://www.currentaccountswitch.co.uk/Pages/Home.aspx

If you do commit to switching, make sure to write a letter to your bank telling them why, here is a link for a letter template, https://www.ethicalconsumer.org/money-finance/template-letter-after-you-have-switched-bank-accounts.


Resources Used:

https://www.ran.org/bankingonclimatechange2020/

https://www.ethicalconsumer.org/money-finance/banks-climate-change-environmental-crisis

https://www.greenpeace.org.uk/news/barclays-banks-climate-change-fossil-fuels/

https://www.new-money.co.uk/nm-blog/top-5-ethical-bank-accounts-for-2020/

https://ethical.net/climate-crisis/fossil-fuel-divestment-101-a-complete-guide-to-divesting-your-money-uk/


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