Banking, Pensions and the Climate Crisis.
By Holly Coyle
What’s the problem?
Would you actively choose to invest money in oil, gas and other high carbon industries? Unfortunately, many of us are unknowingly doing just that. Since the Paris Agreement, which is a legally binding treaty on Climate Change, UK banks have invested more than £3.8trillion into the fossil fuel industry. Despite the fact that fossil fuels are the leading cause of climate breakdown, these investments are a choice they continue to make because they still have enough custom to get away with it.
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Don’t banks invest in others things too?
High carbon investments include both direct investments to the fossil fuel industries, as well as various indirect industries, usually with an equally devastating effect on the climate and ecology of our planet. Examples of these indirect industries include those of Arms, Tobacco, and Animal Agriculture – an ethically void trio even before their climatic impact is considered! Many banks will be investing large amounts of money into clean investments such as renewable energy, but these investments often pale in comparison. Glorifying adverts aka “Greewnwashing”, encourage us to focus on these slithers of progress, meanwhile the complexity of their investment portfolios hinder us from seeing the dirty truth.
Is this problem bigger than the banks themselves?
Banking and pensions are BIG business. In 2021, they totalled 8.3% of the UK’s economic output, or £173.6Bn, plus an additional £1.6Tn in domestic assets. And yet over the next six years, the FTSE Five alone (Lloyds, Barclays, HSBC, Natwest and Standard Charter), are set to receive £150Bn of interest, paid from the Bank of England. These organisations have an extraordinary amount of power, privilege and impunity, allowing them to chase monetary profits at the cost of our planetary health. In the midst of both a climate and a cost-of-living crisis, this big-banking system is scandal of global proportions.
Switching banks seems hugely beneficial, why aren’t more people doing it?
With 74% of UK adults claiming to be “very or somewhat” worried about the climate crisis, it’s reasonable to imagine that most people would not be choosing to put their money towards these types of investments. This means that if we don’t want to be financing the breakdown of the climate, we need to be precise and purposeful about who we entrust with our money. Boycotting banks who make dirty investments to satisfy their greed, is a great step towards fossil fuel divestment; it actively redirects money towards healthier investments and if you voice the climate crisis as your reason for leaving, you can help convey the message that these devastating investments will no longer be tolerated. Switching banks is simple too; your new bank will transfer everything for you within seven days of requesting to switch – the entire process is automatic; no manual changeover is required! When ready to switch, Ethical Consumer magazine rank Triodos, Co-Op (including Smile) and Nationwide as their top three ‘Best Banks’ for current account holders, though their products and services do vary, so check to see which works best for you.
Are there other things I can switch that will make a difference?
Switching pensions is another high-impact change to consider. Data from research and campaign platform ‘Make My Money Matter’, indicates that switching to a clean investment provider could save up to 21 x as much as following a vegetarian diet, switching to renewable energy at home, and choosing not to fly COMBINED. As many of us now have work place pensions, changing pension providers may not be as easy as switching banks, which makes it even more important to utilise petition templates such as makemymoneymatter.co.uk/21x/, which is slowly nudging change in a positive new direction. However, if you are able to switch to a cleaner pension provider, Ethical Consumer ranks Nest Ethical Fund and Nest as their two ‘best’ providers, and recommends Pension Bee as a readily accessible option too.
But will I get my money’s worth in the future?
Savings and pensions are intended to help provide for us in emergencies and old age so it’s understandable that we want a return on our investment, but what is the point of investing in the future if those investments are causing the breakdown of our planets life support systems? Many people may wonder “if my money isn’t being invested into high yield industries like gas, oil and animal agriculture, then how can I expect to have a return on my investment to support me when I need it?” But choosing banks and pension providers who invest directly into our communities – our hospitals, nursing homes, transport systems for example – provides the bulk of the tangible support that we each need, rather than just the monetary support that inevitably ends up being unequally distributed anyway. This is a process of redefining wealth; not classifying it as something individual but coming to appreciate wealth as something shared, for the common good. If we want to animate new solutions, we need a new perspective on what’s possible.
How is this relevant to Lewisham?
Here in Lewisham, the council recognise that they are “well-placed to influence others… through procurement of goods and services. To influence others in a credible way we need to demonstrate our commitment to reducing our own carbon footprint. The aspiration for our own operations should match our ambition for the borough as a whole to be carbon neutral.” In alignment with this statement, the council’s Pension Investment Committee commissioned an independent report, with intentions to transition to low carbon equivalents by early to mid-2020. Until last week, there had been no readily available evidence to indicate this change has been made but movement finally seems to be underway, and Climate Action Lewisham will continue to monitor how this situation progresses. There is however, plain sighted evidence indicating their less-than-ideal bank of choice: Barclays. Ranking 7th in the world for high-carbon investments, choosing to invest with Barclays is at direct odds with the council’s objective to lead by example. Climate Action Lewisham would love to see our council switch to a cleaner alternative and trailblaze for London, and intend to launch a campaign for this reality as soon we have the capacity to take on another project.
So what to do now?
If you can switch your bank account to a cleaner alternative, then this is a brilliant action to take to reduce your carbon impact. Share this article with family, friends and colleagues to encourage wider uptake of this action. Follow positivemoney.org/, extinctionrebellion.uk/act-now/resources/money-rebellion/ and fossilfreelondon.org/ for more info, actions and campaigns, and put your voice forward with the banking and pension template letters from makemymoneymatter.co.uk/. Without a habitable planet to live on, returns on investment are impossible which is why investing in community and clean industries, is the ultimate investment for our future.
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This is information, not financial advice. The content and materials featured or linked to are for your information and education only and are not intended to address your particular personal requirements.
