Sustainable finance starts with banking

Estimated reading time: 12 min

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In this Q&A you'll learn

• What's the problem with banking
• How banks are using your money to fund climate change
• What is activist investing and should you pull your money IN or OUT of fossil fuels to make a difference?
• What it means to divest from fossil fuels and what you can do today
• Other resources to learn more about sustainable finance

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Here's more about Albert Carter, founder of Bank.Green: 
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I grew up in Alabama, where the Mobile river empties into the bay and then sweeps out to the Gulf Coast of Mexico. In the calm warm waters of that Gulf, in 2010, BP and Halliburton's negligence led a deep water oil rig to explode, spilling 4.9 million barrels of oil.

I had already left for college at the time, but my mom was still living there. She used to translate, interpret, and do other social work for the Vietnamese fishing and shrimping community in the Bayou along the Gulf. She's a Vietnamese refugee herself. So I got to hear about the oil spill. All. The. Time.

I got to hear about her adopted community - the former shrimpers, fish cleaners, and shellers who accepted jobs as oil cleanup workers once there were no more shrimp or fish to be had.

I got to hear about their new health issues - lung and throat irritation, blood in their urine, rectal bleeding, vomiting episodes that lasted for hours, seizures, and miscarriages. I got to hear about how BP wouldn't give them protective gear, because it would look bad on TV. And I got to hear about BP staff going door-to-door, offering these sick, exhausted, and impoverished people $10,000 for the inconvenience... in exchange for them waiving the right to sue.

I was in college while this happened. And unlike my mother and unlike many of these people, whose life and dreams were interrupted and deferred by a war, violence, cultural and language barriers, and now, an environmental catastrophe, I was living an extremely fortunate and stable life.

I've since felt an obligation to pass some of that on.

I work for the environment because I have a chip on my shoulder against big oil, sure. But I'm also trying to fulfill an obligation to my elders; to pass on some of the good fortune that I grew up with, and that they were so violently robbed of.

By having obligation to act, I eventually began to understand that I had an obligation to act as effectively as I could. As a well educated and technically trained person (I'm a programmer in my day job.), I gravitated towards environmental finance - a technical field that's often overlooked by traditional campaigners, where a lone activist would some data engineering and analysis skills can have an outside impact.

And that's why I'm talking to you now. I've read the reports, looked at the data, and crunched some numbers – out that one of the most powerful environmental changes you can make isn't in spending money from your bank account. It is your bank account.

The climate crisis is funded using the money in your bank account.

Today, bank loans made with your money fund the climate crisis in the same way loans funded Cortéz's genocide in Mexico, and the in the same say way they funded the slave trade. Sixty-five percent of fossil fuel infrastructure is funded by bank loans. This is a gasoline-filled-fire-hose of your money fueling the climate crisis.

My goal is to help you turn off the tap.

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Let's get started!

1. ‍Tell us about Bank.Green and why you decided to tackle sustainable wealth management.
   
   Wealth management is a term I'm not sure would apply to our project. Sure, we want people to  stop funding terrible things, but the amounts of money we're talking about aren't exactly wealth. For example, if you had $1,000 in a bank account at Citi in 2016, Citibank would have turned around and lent out roughly $150 of your money to coal, oil, and gas companies since then. $150 might not qualify as "wealth," but it's certainly more of my money going to fossil fuels than I would have ever agreed to.
   
   Much of the discussion about sustainable finance has to do with "stocks," "equity," "sustainable investing," and "engagement," but when I looked at the numbers, only 10% of fossil fuel finance was coming from any of those things. Fully 65% of fossil fuel finance was bank loans. And those are coming from normal people's bank accounts!
   
   In short, I realized that as a non-wealthy person, I can't meaningfully engage with investment portfolio managers or company executives, but I can talk to my bank. And it turns out that that's what the action needs to be, anyway.
   
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2. Many people see a trade-off between sustainability and quality, price, or customer service. Do you think this is true? What are some misconceptions and truths about green banking?
   
   At the start of college, I opened an account with Bank of America. They had an ATM in the student center, and I figured that since they were big, I could use their network in most places. BOA closed my account 4 times on mistaken fraud charges. Their ATM network didn't go across America, so I had to pay fees whenever I visited my parents. Whenever I called customer service, some person in a call center on the other side of the world with with a terribly fake southern accent would pick up, tell me that his or her name was "John" "Bill" or "Jane", and then fail to solve my problem. I didn't mind the person was on the other side of the world, but it bothered me that they couldn't fix anything. The fact that the first thing they did was lying about their name only rubbed salt into the wound.
   
   Since 2016, Bank of America has also financed $196 billion of fossil fuel infrastructure. It's the 3rd largest contributor to fossil fuels worldwide.
   
   I eventually switched to a university credit union, which was an amazing decision. Whenever I call, someone in Massachusetts picks up the phone in under 2 minutes. They tell me their real name, they solve my issue, and that's it. No hidden fees. No fossil fuel funding. And I have free unlimited ATM's in every state in the country.
   
   Most of these fossil banks are as terrible to their customers as they are to the planet we live on. You should do yourself a favor and break up with them by pledging to switch banks. The alternatives are nicer for the planet, and nicer for you too.
   
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3. How is Bank.Green unique?
   
   ‍Many environmental financial campaigns are only accessible to the rich or well connected. Others are just plain hard to understand.
   
   Our campaign is taking public information and turning it into actionable items for normal people.
   
   The information we're presenting typically isn't new, but we are one of the few groups that's working hard on the accessibility, communication, and action problems inherent in financial activism. On our site you can check out whether your bank is using your money to to fund fossil fuels. If they are, you can pledge to switch.
   
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4. There are so many companies that claim to provide sustainable investing solutions. Where is your focus? What are your goals with Bank.Green, short and long-term?
   
   At Bank.Green, we're focused on banking. We don't give investing advice, and we're not particularly interested in your stock portfolio or retirement accounts, though there are some people who do good work in that field.
   
   ‍In the short term, we're working on getting more ratings of banks. As part of that, we're working on a bank-switch pledge and a certification program for banks that don't loan money to or buy bonds from fossil fuels.
   
   In the longer term, we'd like to help normal people understand the role that their bank accounts take in shaping the world around them. Are you morally opposed to fossil fuels, animal abuse, genocides, or slave labor? If so, you should really stop funding those things with your bank account. Pledging to switch banks would be a good first step.
   
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5. What is activist investing and what's your take on it? Isn't there a conflict of interest between investing in a company and wanting to make a structural, positive change?
   
   As with many things, context is important here.
   
   Activist investing works best when people buy shares (aka stocks/equity) in a company. Those stocks represent their partial ownership of the company, which lets them vote on major issues, like polluting less.
   
   Most shareholders hold their shares through mutual and index funds. This means that most non-wealthy people are not able to vote or act as "activist investors." Furthermore, it nearly impossible to win votes without the backing of large institutional investors like Vanguard and Black Rock. Unfortunately, institutional investors typically coordinate with company management to block change.
   
   ‍While there has been recent positive progress in the area of activist investment, this sometimes leads public energy companies to sell their assets to private companies that are immune to all but the wealthiest activist investors. In other words, successful activist campaigns in the energy industry can result in coal, oil, and gas to still being extracted and burnt, just by different companies.
   
   Activist investment in the debt market (aka lending/bonds) just doesn't work. Bond and debt holders don't have voting rights and rarely even get to talk to company management. You'd be better off tilting at windmills, or oil derricks, as it were.
   
   In terms of the environment, activist shareholder/equity/stock investment can be good, but works best if you're rich and becomes extremely nuanced when directly targeting energy companies. Activist lender/bondholder investment is a lost cause.
   
   tl;dr: If you're a normal person interested in leveraging your money to create change, instead of activist investing, I think that you should be looking at divesting from the debt market. To do that, you can move your money to a bank that won't lend it to fossil fuels. You don't have to be rich to do this, you only have to do it once, and it'll probably make your life better, anyway. You can start by pledging to switch banks.
   
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6. Other than Bank Green, what are some of your favorite tools and resources for fighting climate change and creating justice? How do you see your role in the community besides building a website?
   
   Ok. This is going to be obscure, but if you're someone who knows a little bit about finance, and cares a lot about the environment, the Carbonware blog is really really good. There, John Mulliken, former CTO of Wayfair does some very entertaining and in-depth analysis of what's going on in environmental finance. Here's one of his pieces drawing parallels between the current state of the carbon market to the 2008 housing bubble.
   
   Banktrack has compiled excellent research on some of the most controversial projects banks finance. And Urgewald has some great tactics and people, an excellent theory of change, and a number of victories in the insurance industry.
   
   As for Bank.Green, I see our role as educating people about the role that their money plays in the climate crisis, and giving them actions they can take so that their money does good for the world.
   
   That means blog posts and a snazzy website, but it also means things like sticker campaigns, call-ins, sit ins, and more. You can contact us to get involved.
   
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7. What is one thing you wish more people understood about the movement for a more sustainable future?
   
   No person is perfect, and so no movement, which is made of people, can be perfect. People in a movement make mistakes, but it's awfully harsh to blame a whole movement for them. Especially when the clock is ticking on a sustainable future, or really, a livable future at all.
   
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8. What can we do to inspire more people to get involved with sustainable finance and environmental activism?
   
   Talk about money. Talk about the environment. And talk about money's role in the environment. Not talking about it doesn't make it go away. It doesn't serve you. It doesn't serve the earth. And it doesn't serve the people you care about. When you avoid talking about money, the only people it helps are the rich.
   
   If you'd like to learn enough to have an interesting conversation about money, colonization, and the climate, this piece on Hernán Cortés and the climate crisis is a good place to start.
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9. Any advice for people who are new to the fight against climate change or aren't sure what their place is
   
   Everyone has to start somewhere, and that includes you. The fight for a livable climate huge, distributed, and incredibly chaotic. It's impossible for anyone to know what will make the most difference, and more than impossible for those new to the movement.
   
   The climate crisis inspires fear and concern. If you're too concerned much about not having enough impact or too concerned about potentially doing activism wrong, you'll just end up as a concerned bystander to the social movement swirling around you. Unfortunately, you might not create any change at all.
   
   Instead, I'd encourage you to jump in, wherever you are, however you can. Sign a petition and follow up on the petition's next action items. Attend a local meeting. Join a protest. Keep showing up and see where it takes you.
   
   The climate is concerning, but climate activism is often fun, too. And you'll never know until you start.

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