Yes. Your Hard-Earned Money Causes Climate Change. Here’s Why. And What To Do About It.
W hen you think about your personal carbon footprint, your impact on climate change, you might consider your car or other transport contributing to greenhouse gases. But have you ever considered that your money causes climate change too?
It’s actually very interesting – and it’s not something that immediately springs to mind. So let’s look at the 3 ways your money helps to cause climate change.
Your Money Causes Climate Change by Banking
Most of us keep our money in a bank. And we all know that banks finance fossil fuels. Large banks around the world have provided $2.7 trillion (£2tn) to fossil fuel companies since the Paris Agreement in 2015. And shockingly, that amount is increasing each year, even though everyone’s aware of the climate crisis.
Are your banked savings being used for fossil fuel investments? Typically no. In most countries, banks have to keep their consumer sectors separate from their investments.
Which is good.
But do you want to bank with a company that funds BigOil?
Probably not.
Luckily, you as an individual customer can influence the investment behaviour of your bank.
Banks need their consumer divisions. It’s how they build their brand. So, individuals (you and me) telling their bank that climate performance is important to you in your choice of bank, will have an impact.
Because you’ve chosen to bank with who you have, you really do have the ability to say to them that you would prefer that they didn’t fund climate change in the way that they’re doing.
You need to know your bank’s investment policies. This report shows which banks do NOT invest in Arctic oil drilling or Tar Sands oil.
If you don’t like your bank’s policies, then vote with your feet. Take your hard-earned money elsewhere – and tell them why you’re doing so.
Where to go? Well, there are an increasing number of new, small banks marketing themselves as ethical. Plus, bank alternatives such as credit unions or building societies, are also often less likely to be funding fossil fuels due to the way they invest.
Basically, you want to know 2 things about your bank – transparency about how the bank will invest your money, and whether it is a “mutual” – i.e. owned by depositors rather than shareholders.
Slowly, slowly, some banks are beginning to change – and it’s due to pressure from people and companies that care.
Your Money Causes Climate Change in Your Pension
Do you know that your pension is probably funded by investments? Astonishingly, pensions make up about HALF of all the money invested in the global investment system!
Yet less than 1% of assets in pension funds were invested in low-carbon solutions in 2018.
But most people don’t know how their pension funds are invested – and the chances are high that your pension fund is at least partly invested in fossil fuels.
Unfortunately, it’s not always easy to find out how your pension is invested – although this is changing (slowly) with some countries requiring pension funds to disclose their climate risks.
Often, you may be able to switch your personal pension into an ethical fund which avoids some fossil fuel companies.
If your employer decides on your pension scheme, it’s more difficult for you to switch. Try chatting to them about your concerns. You might be able to improve the investment ethics of a whole company!
Just be aware that the cost of an ethical fund may be slightly higher (due to the extra research needed to establish which companies are ethical).
Is it worth it?
Well – what’s the point in saving for a pension if you’re not going to have a planet to retire on?
Read on for the 3rd way your money contributes to climate change.
Your Money Causes Climate Change in Your Donations
Got some personal money to invest? Or want to donate some of your money to a charity or university?
Don’t assume your money will be spent wisely and ethically. Do your research!
To invest your money, google Impact Investments, which specifically aim to have a positive impact on the world.
When it comes to donations, remember that charitable foundations invest huge amounts of money. In the US, many of them invest in Wall Street – so you could be funding fossil fuels by donating to charity!
Luckily, many institutions around the world are divesting from fossil fuels. Make sure your donation will be ethically used.
If you donate money to a university, be careful! The university might undertake research for fossil fuel companies, or accept money from them. You can either earmark your donations for departments which are researching solutions to climate change, or donate elsewhere.
But be sure to tell them why. It may help to change the world.
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Warm regards,
P.S. Don’t forget to download your free climate change report here!
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