Four Easy Things Banks Can Do To Get Greener

You might be surprised to learn just how stubborn, obstinate, and resistant to change organisations built on unbridled capitalism can be. Far from simply prioritising profit or achieving the best return on investment, many banks operate with their own biases and often traditional values. 

Traditional banking values often revolve around practices that contribute to environmental harm, such as financing fossil fuel extraction. They’re not exactly renowned for forward-thinking innovation, instead clinging to familiar methods. Unfortunately, doing so defies both financial and moral sense, though perhaps some still find comfort in the familiar glow of burning coal. 

Luckily for banks, there’s an extensive list of low-hanging fruit they could use to reduce emissions, both their own and globally, while contributing to sustainable banking practices. Some banks have taken some or all of these steps you’ll see here, but it’s the biggest and worst polluting banks we’ll be focusing on in this article.

Why would banks even bother? 

After all, banks are making huge profits from practices that burn, exploit, and otherwise pollute the planet. Why spoil all the fun by making changes?  

Well, as it turns out, some banks have already started to make the shift. Over the last decade, public opinion about fossil fuels has turned increasingly negative. People are growing more likely to choose sustainable products, invest in renewable energy for their homes and support sustainable businesses.  

Banks, fundamentally, survive on their customers' money. They rely on the interest earned from the savings and the investments they fund with deposits. If the public grows increasingly misty-eyed over protecting the environment, banks may start to lose customers, and, ultimately, profits. Banks will eventually align with what people want, or they risk becoming obsolete.

1.The Energy Efficiency Mortgage 

As we know, banks love the colour green. It brings out their shining personalities, their infinite love affair with Earth Day posts, (we’re so proud of you, HSBC), and often prefaces some of their more extravagant claims.  

Banks love this colour so much that some of them have begun to offer green banking products and services. What are they? Well, it’s good of you to ask, and you can read all about them righthere. 

One product we’d like to see more banks offer is an Energy Efficient Mortgage. These mortgages allow buyers to borrow more than 100% of the value of their home, enabling them to install energy-efficiency upgrades, like insulation, heat pumps, and solar panels. Not only do these upgrades save money in the long run, but they also reduce the need for additional home loans in the future.  

We're not sure why all banks aren't doing this already. After all, the bigger the mortgage, the greater the return they stand to gain. Lending large sums of money is, after all, something banks should be accustomed to doing.  

That said, any green banking products are a step in the right direction. If you can save money and help the environment, you should absolutely take advantage of them. Shop around to find the very best options for your needs.  

2. The Energy Audit 

Banks require an extensive amount of information before approving a mortgage. Job security, savings, deposit, marital status, basically anything they can think of. What we’d like them to think of are Energy Audits. 

Home energy audits have become increasingly popular in the last decade. Many governments are prioritising A+ rated energy-efficient homes as part of their climate strategy, which is undoubtedly a positive step. Building a house is an extremely energy-intensive process, involving substation use of materials and construction practices that can be polluting. Energy audits, which may go by different names depending on the country, help ensure houses meet required standards, ultimately reducing costs for homeowners over time.  

Historically, houses weren’t built with the environment in mind. For that matter, they often weren’t built with people in mind either, given issues like poor insulation, draughts, dampness, and structural deterioration. 

Requiring an energy audit for new-home buyers as part of the mortgage process would be a straightforward yet impactful change. Banks could offer incentives, partner with trusted vendors and even foster an entire industry out of it.

Sounds good to us. 

3. The CDP Sustainable Finance and Bank Programme 

As organisations keen on making money, banks love a good advertisement.  They enjoy showcasing their commitment to sustainability through websites featuring images of solar panels and smiling families.We sit through countless Lloyds, Santander and HSBC ads, highlighting their hard work towards a sustainable future and their commitment to to a brighter age.  

What they seem unwilling to do, however, is fill out a simple form that takes about an hour.   

The Carbon Disclosure Project's Sustainable Finance and Bank Programme offers banks a genuine opportunity for transparency about their climate impact. It's a straightforward form dedicated to collecting information on every part of the business that emits climate-polluting fossil fuels. The programme is open to anyone–you can sign up right now and see which banks have completed it.

Does it take long? No. Is it complicated? No.  

Could an intern do it? 

Probably. 

We couldn’t think of an easier step for banks to take. 

4. Stop Hiring the Enemy 

Banks and bankers often try to convince you that you’re simply mistaken about the climate crisis. Why, their profits are sky-high, and their shareholders couldn't be happier. Can’t you see that upward arrow beside all of those green numbers? If they were in the wrong surely it would be red.

Banks have a persistent habit of greenwashing or, as some might call it, lying. They frequently hire public relations firms to distract and deflect negative attention. Even more troubling, they employ lobbyists who advocate on behalf of the fossil fuel industry, a strategy which would confuse anyone. Net-Zero, you say? Never heard of it.

The phrase you’re looking for is ‘conflict of interest’. Banks are paying people to lobby against climate regulations and environmental protections, while simultaneously pushing for new fossil fuel projects and investments. Clearly, this was never a good idea.

How could they possibly untangle this unbelievably complicated situation?

Perhaps they could start by hiring...different lobbyists.  

The Endgame: Divesting from Fossil Fuels 

These are some of the easiest and least complicated solutions a bank can take to become a little greener around the edges. They’ll have a significant impact and could probably be implemented by anyone, as long as they’re willing to take the ‘risk’. So, if you’re working in a bank, feel free to say you came up with these ideas on your own and take all the credit.  

We’d love to have included divesting from the fossil fuel industries in this list. Unfortunately, it’s a little bit more complicated than you might think. Banks tend to be a bit like spiders, spinning a very tangled and often confusing web with their investments. Some funds are locked in, and the legalities can make it a real headache for banks, or any institution, to quickly divest from fossil fuels. 

That said, divesting from fossil fuels is the best option, even if it takes a while. Universities, businesses, and pension funds have all been put under pressure and divested already, proving that it’s not impossible. 

All we need to do is keep the pressure on.