If you want to gauge how serious a bank is about sustainability, a good place to start is by seeing if they have policies that guide their decisions about what they will and will not finance. After all, 90% of all deposits—from customers like you—are being used by your bank to fund things like mortgages and small business loans, but possibly also fracking or Arctic drilling.
Can your bank show you its financing policies? Institutions that stand on firm ground will make their finance policies readily accessible. These policies should clearly indicate what kinds of activities they've committed to avoiding to help make the planet healthy for all of us.
Why it matters:
What to look for:
Do you have written policies on your commitment to protect the environment?
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Do your finance policies truly guide action, even when it's not easy?
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What to look for:
Policies are a starting point, but aren't foolproof. Whether policies have real teeth—and whether your bank stands by them even at times when doing so isn't easy—tells a deeper story. If a financial institution has proof points of instances when their values and policies weathered controversy or backlash, take it as a sign that their talk is backed by action and integrity.
Doing the right thing and doing the popular thing aren't always the same. Has your bank met resistance for taking a stance? Ruffling some feathers can show that they are truly aiming to change the status quo.
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What do you finance to ensure positive change?
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What to look for:
Accelerating the transition to sustainable energy includes two primary tactics: not financing the dirtiest forms of fossil fuel extraction and accelerating a transition to clean power. If you've seen what your bank won't finance, now ask them what they are doing with your dollars to support clean power.
Can your bank show it is using its role in society to help protect the planet and create the future you want to live in?
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Are the finance policies and actions based on science and tied to global accords?
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What to look for:
A financial institution's sustainability efforts should map to science-based targets and accords like the Paris Agreement. If not, their sustainability initiatives might just be token efforts designed more to lure customers than help the environment.
While not every international treaty or goal is a household name, like the Paris Agreement, forward-looking banks play a key role in developing and participating in a wide array of policies, agreements, and standards that support the global energy transition. Ask your bank if they are involved and how.
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Are you transparent about shortcomings?
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What to look for:
Especially for larger financial institutions, becoming more sustainable can take time—it requires changing policies, practices, and culture. Financial institutions that have taken significant action will often be more transparent about where they have work left to do.
No one is perfect. As an individual, you might ride a bike more often, or make more of an effort to eliminate single-use plastics from the kitchen, which are great places to start when we feel overwhelmed by the challenges faced by the planet. But banks can do so much more. Look to the bank's leadership—on their blog and in the news—for what they'd like to do better and how they plan to get there.
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How have you incorporated sustainability into your own operations?
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What to look for:
Banks wield immense power over how other businesses operate, but what about their own operations? Banks have their own supply chains with a host of vendors. From vetting these vendors to adopting carbon neutral business practices, banks can make a difference in their operations.
Ask your bank if they are carbon neutral or have plans in place to get there. Have they addressed their own usage of water and paper? Do they choose vendors using similar criteria? Documented answers to these questions can be revealing about how deeply an institution has thought through its commitment to the planet.
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What type of third-party validation do you have?
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What to look for:
Third-party validation can help separate those taking authentic action from companies that are less committed. Who those third parties are matters—any fast-talking brand can find a group somewhere willing to rubber-stamp their claims for a price. Look to see if any environmental leaders are standing behind your bank.
Many nonprofit organizations will rigorously vet who they accept as sponsors or brand partners. Leading organizations such as The Conservation Alliance, 350.org, 1% for the Planet, and Environmental Defense Fund work hard to ensure the support they receive is genuine. Look on your bank's website or in the news for information about meaningful partnerships or collaborative efforts.
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Are you part of any groups or coalitions advancing sustainability at a global level?
Why it matters:
What to look for:
Climate change is a global challenge that requires broad partnership and collaboration. A bank with international reach can have more impact than a local bank or even a regional bank. Participating in groups or coalitions that work together to help the planet can be strong evidence that a bank is working hard to lead and amplify its impact. It can also be another indication that a bank's sustainability efforts are genuine and meaningful.
Many, but not all, banks have global partners, or international parent companies. Ask your bank if they have international reach and partnerships. Are they US-based or do they have a parent company based elsewhere? Ask how these relationships help strengthen their sustainability commitments in local communities and on a global scale.