How to find a bank that doesn't invest in fossil fuels

Kim: It can feel like a small action, but actually switching to a fossil-free bank is the highest-impact climate action in the SHIFT guide to high-impact climate action, under the investor or financial role.1

Matt: I can't understand why we're not making more effort to make positive climate choices all the time. There seems to be forces pushing against that.

Kim: Banks are still lending to coal mines and fracking, and to the companies that are expanding them. So our hard-earned money can actually be part of fuelling the climate crisis inadvertently.

Matt: I just don't remember having weather like we're having at the moment. I don't think it's rained for a long time. The ground is so dry and cracked. It's kind of where I want to move to, making as many positive choices as I can.

Kim: Hi Matt, thank you so much for joining us.

Matt: You're welcome, Kim. It's nice to meet you.

Kim: Nice to meet you. So let's dive in with the facts. What got you started thinking about your bank and the climate crisis?

Matt: I've got a very good friend who is very climate-conscious, and he raised with me one day the effect your bank can have if you make the right choices with it. I think we're all getting very concerned about the climate. We've had a recent spell of very hot weather in the UK, and I think it's a hot topic and people are finally realising what's going on in the world. I think that when you can make what seem like small decisions that can help, it's a great thing to do. So when my friend mentioned this to me, I had a look on the internet, and I've been looking at different bank accounts that are considered to be greener than the one I'm currently with.

Kim: Right. It can feel like a small action, but actually switching to a fossil-free bank is the highest-impact climate action in the SHIFT guide, under the investor or financial role, because so many of us have a bank, and because banks, unfortunately, are still investing in fossil fuels.1 To stop climate change we have to stop production and consumption of fossil fuels. We have to stop building and expanding pipelines and infrastructure, shipping fossil fuels around and extracting them from the ground. We have to leave them in the ground. But banks are still lending to coal mines and fracking and the companies that are expanding them. So our hard-earned money can actually be part of fuelling the climate crisis inadvertently.

Matt: Sure, when you say that it completely makes sense, but it's just something I hadn't considered before speaking to my friend about it. Hence why I'm looking into it and speaking to you now, in fact.

Kim: Well, you're in very good company. I think most people haven't really connected the dots. So what is it that you look for in a bank, or what services do you need? If you're thinking of switching, what would a new bank need to provide, or what is it you get from your current bank that you value?

Matt: I switched to my bank about twenty years ago, before I became climate-aware. I predominantly switched because they had excellent customer review scores. It was always quite easy to get hold of them if you needed to, and they had a good reputation in the market, so I felt I could trust them. I do most of my banking through the app, as I think a lot of people do now, so it's important that the app has great functionality. And I need to rely on them: I need to have confidence that my mortgage will get paid every month, and that when I make a transaction, it will go through without any hassle.

Kim: Absolutely. The less we can think about it, the better.

Matt: That's it.

Kim: I'm with you there for sure. So who is it that you bank with, if you don't mind sharing?

Matt: Of course. I currently bank with First Direct, which is part of the HSBC banking group, so one of the very big ones in the UK.

Kim: Right, okay. Would you like to look into their spending on fossil fuels? Do you want to know more?

Matt: I'm not sure, but no, actually, I do. Go ahead.

Kim: Okay, so a little bit of background. The Banking on Climate Chaos report has assembled the numbers. It finds that the world's sixty-five largest banks committed 906 billion US dollars to financing fossil fuels last year, an 8% increase on the year before.2 Expanding and supporting fossil fuels, which we need to be phasing out, shutting down, and making a just transition away from. Eighty-seven per cent of that global financing is concentrated in six financial centres: the US, Canada, Japan, China, the UK, and the European Union.2 You're based in the UK, is that right?

Matt: That's correct, yes.

Kim: So you're in one of those important centres. HSBC is one of the top banks financing fossil fuels. According to the Banking on Climate Chaos report, HSBC has committed 77.8 billion US dollars to fossil fuel financing since 2021, ranking twenty-first among the world's biggest bank funders of fossil fuels.2

Matt: Wow.

Kim: How does that make you feel?

Matt: Not great, really. It makes you feel like you are supporting that through your everyday banking. It's a huge number, isn't it?

Kim: Yeah, it's really mind-boggling. And it's so frustrating that so much money goes to digging the hole deeper, when you’re in a hole, stop digging and invest in solutions rather than continuing the pollution. There are companies HSBC has funded since 2021, including Saudi Aramco with 1.8 billion US dollars, ExxonMobil with 1.5 billion US dollars, and TransCanada Pipelines with 1.5 billion US dollars.2 So definitely not putting the money towards winding fossil fuels down and investing in clean energy.

We've talked about what you want in a bank, and the practical services you need. Let's talk a little about your values around money, because that's really important. What is it that you're saving for, or how do you use your money? How does that align with your values now?

Matt: Sure. I come from a working-class background, and I guess I'm quite similar to my parents: quite conservative with my money. I try not to be a big spender, and I try to invest for my future as much as I can while living in the moment too. But in terms of my values, especially when it comes to the climate, I'm becoming incredibly frustrated with the situation we're in. I can't understand why we're not making more effort to make positive climate choices all the time. There seem to be forces pushing against that, and that's where I want to move to, making as many positive choices as I can to get us to a better place. But I wish the larger political parties would align with that too.

Kim: No, it's right on topic. The number one climate action in the SHIFT guide is to vote, and to elect politicians who will make strong climate policies, because policies that apply to everyone can have a bigger impact than any of our individual actions taken alone. That's why we focus on linking our individual choices and impacts with collective action, and how the actions we take can be part of bigger movements that harness those superpowers. I think you're spot on. Research also supports that switching to a fossil-free bank is more effective in countries that have better regulation3.

No single climate action, whatever it is, is a silver bullet; we need a chorus of policies, actions, infrastructure and norm changes working together. But where we spend our money is part of that, and turning personal frustration into action can be really powerful.

What would you say was your climate awakening? Was there one moment that turned you on to this, or has it been an accumulation of things?

Matt: I think for me it's been more of an accumulation. I work in the aviation industry, so I'm well aware that's a big contributor to the climate crisis, and that certainly gets you thinking about the impact it's having on the environment. Then, slowly, as we've seen more news stories about severe weather, and because I travel quite a lot for work, you end up seeing the impacts of these crises in the places you go. I remember from when I was a child to now, and I just don't remember having weather like we're having at the moment. It hasn't rained for a long time, the ground is so dry and cracked, and there's no rain forecast. I see all the farms around us, all the wheat starting to dry out, and I've just not seen anything like that. And that's after one of the wettest winters we've ever had. So I think it's looking at the world around you and immediately seeing the change, and that's accumulated over time.

Kim: So you've had accumulating experience with increasing extreme weather yourself, and you see it affecting those around you, on the farms, and the people affected by it, and in your work. And you want to be responsible with your money and save for the future. Is there a particular financial goal you're working towards?

Matt: I guess it's the big one really: retirement. It's constantly weighing up investing your money in the most sensible way to ensure you'll have enough in retirement, while living for today. We'd like a camper van so we can holiday in the UK and possibly not have to fly as much, so that's the next thing on the agenda. Other than that, it's just trying to live a good life and make sure we have enough saved for the future.

Kim: It's really similar to climate action: we want to live well now, and we also want it to be possible to live well, for ourselves and others, in the future. How we invest our time, energy and choices now makes such a big difference down the line. So does that make you feel ready to think about switching your bank to a fossil-free one?

Matt: Yeah, I've already been looking. I've found there are a good few banks in the UK that are considerably better than First Direct in terms of climate impact. I've looked at Nationwide, the Co-op, and I think there's another one called Triodos. I'm weighing up between those three, and it's all quite positive. As far as I can see there's very little to differentiate them from the bank I'm currently with, which is great, because you get the green incentive with very little change. So it almost seems a no-brainer to change.

Kim: Great, so you've already done the homework. We've confirmed that your current bank, First Direct, is part of HSBC, one of the banks funding fossil fuels. So that's the homework for switching to a fossil-free bank.

There are really three steps, and you've already started the first. First, find a good bank. Second, switch to that fossil-free bank. Third, and really importantly, tell your old bank why you left. It's important that we communicate and let banks know what's important to us.

There are a couple of resources for this: the Fair Finance Guide, which covers twenty countries including Sweden, where I live, though not yet the UK, and Bank.Green, which rates and assesses sustainable banks. Have you found a good resource to help identify fossil-free banks?

Matt: No. I basically used AI and asked which ones it would recommend, but I'd love a more detailed breakdown, maybe charts and percentage scores, something that weighed the three banks against each other based on what they offer and where they invest their money.

Kim: Perfect, I think Bank.Green is a great tool for you. They have a red-to-green, traffic-light-style system: you get a smiley face rating. The three you named, we checked ahead of time, and they're all listed there, so I think those are great options. It sounds like the next step would be to look at the features they offer and see what works for you. Do you want to try looking at it live? I haven't prepared it, but we could go through it together.

Matt: Let's do that.

Kim: Let's figure it out.

Matt: I've got my phone here. Is it worth me looking now?

Kim: Sure, why don't we do it like that. Let's put it to the test and see if it works. The website works in the UK and many other countries as well: Bank.Green.

Matt: Bank.Green.

Kim: I'll talk you through it, let's see what you find. I think one of the first questions will be your country.

Matt: Here we go. United Kingdom, a hundred and forty-seven banks listed. I know it's a lot. Is there a way to list them in order?

Kim: By score, let's see. I see you can filter, for example, by local branch. I have bank accounts both in Sweden, where I live, and in the US, where I'm originally from. I switched those about six years ago, before this site existed, I think. For me it was important to have a local branch I could go into, because I'm still a bit analogue, I use the app, but I like to talk to human beings. I see they have a tick box for local branches. How can we rate by score?

Matt: I've just searched for Nationwide, for example. I don't know if you can see it on screen, there we go, a big green tick.

Kim: Oh, you got an emoji.

Matt: Heart eyes.

Kim: I know, doesn't get better than that.

Matt: That's it, so that tells me that's quite good. If I search for the other one I was seriously looking at, the Co-op, there we go, "your bank as a leader in climate responsibility," I think it's very much the same.

Kim: Does it give you a numerical score, or just a chart? It looks to me like the arrow's in the same place.

Matt: No, not that I can see, just a chart, but the arrow is pretty much in the same place.

Kim: So those are two really strong choices. If you narrow down to those two, are there other things to consider, like what kind of loans they have? You said you want your mortgage paid on time; are you thinking of switching your mortgage to a new bank as well?

Matt: Yes, absolutely. The way I generally bank is: I have my current account, everything goes in there, all my main bills come out of there, and I do most of my monthly spending on a credit card, which I pay off at the end of the month, because I'm not sure how it works in Sweden, but we get greater consumer protection spending on a credit card, for items over a hundred pounds you get various protections. So I try to do most of my spending on the credit card, and I'm guessing I could look at the credit card as well.

Kim: You sound more responsible than me, I tried to do that and spent too much money when I had a credit card. I need to see the money in the account, and when it's going down, I need to spend less of it. The other thing that took me a long time to figure out, which is a bit embarrassing, is to allocate money to savings as soon as it comes in from my paycheck. It wasn't that long ago I finally figured out that when my paycheck comes in, a set percentage should automatically go into savings and I never see it, and then I have an account I'm spending from that I can keep better track of. So it makes sense if you can do a good job managing your money; I just found it too hard to keep track, but it sounds like you have a great system that works for you. So it's important to have a credit card at the new bank, and a mortgage. How does the interest rate compare between these two options and your current bank?

Matt: My mortgage is with a separate company, so that comes out of my current account every month. My mortgage isn't up for renewal yet, but in terms of banking, that's something worth looking at. At the moment interest rates have been very up and down. Due to the size of the loan, even a small percentage change in the interest rate could make quite a big difference to monthly payments. So I'd be happy to look at greener choices for my mortgage bank, but I'd probably be more sensitive to price when switching, because it would have a bigger financial impact for me.

Kim: I totally get it. So let's just focus on the bank for now, where your paycheck will go, where you do your ordinary savings, pay your expenses and pay off the credit card. Investments are a separate topic, but worth thinking about too. Do you have stock market investments through your bank?

Matt: I've just started. In the UK there's a tax-free wrapper called an ISA, and at the moment they're trying to strongly encourage you to take up a stocks and shares ISA rather than keeping savings in cash, to invest some of that money within this tax-free wrapper. I've literally just started doing that now. And my pension is an investment too, through one of the big pension providers I get through my work. It would be quite difficult to change, but I could certainly look into where it's invested, though that requires more knowledge than I currently have.

Kim: I'm not a financial expert either, but I try to follow the advice of experts and align my money with climate solutions as much as I can. Those are also high-impact climate actions: divesting your pension, and any investments you have, and making sure neither is supporting fossil fuels. But that's part of the bigger picture.

If we focus on the bank, you've identified two good options. Maybe spend a bit of time comparing and making sure you're comfortable with the services, and then the next step would be to switch. When I did this, I did it all manually, transferring the money from my old account, and it wasn't as bad as I thought, though a little annoying.

But it looks like in the UK there's an amazing service called the Current Account Switch Service. My producer has used it and said it worked like a charm, and took a week. It's a free service provided by the banking industry, and if you choose a new bank, it will move over all your direct debits and bills automatically. Is that something you're familiar with?

Matt: Yes, I've definitely heard of it, but never used it. I've spoken to other people who have, and they say it works very well, and I think there's some kind of guarantee. I'll be keeping an eye on things at month end after the switch, just to make sure everything goes to plan.

Kim: Perfect. And what about telling your old bank why you left? I wrote a letter in the US, I had Bank of America, one of the world's largest funders of fossil fuels2. I was sad when I found that out, because my family has a history with Bank of America: they gave my grandparents a loan during the Depression that allowed them to buy a farm and start a business that supported my family for generations. But unfortunately they're still major fossil fuel investors, so I wrote them a letter, which I've linked from my newsletter, and we'll put it in the show notes.5 There are also campaigns with templates you can use to let your bank know that customers don't want them investing in fossil fuels6.add ref Is that something you'd consider, whether a letter, an email, or a note on social media?

Matt: One hundred per cent. I'm almost hoping they'll have a drop-down menu asking why I want to leave. I don't know whether that's a thing, but I'm more than happy to send them an email or contact customer services and let them know why I've left, because it's one of the small things we can do to try to have an impact.

Kim: Absolutely, and studies show it does have an impact. For example, when banks stopped funding coal mines, those coal mines actually shut down instead of finding new funding, measurably reducing emissions. That was a Harvard Business School study.3 It's part of not just these direct impacts, but shifting the culture away from funding and supporting the fossil fuels causing the climate crisis. The more we do that, the more banks, institutions and politicians get the message that there's movement and energy behind this, and it becomes less feasible to continue those investments, with more uncertainty, which banks and financial institutions don't like. So it really does add up and make a difference.

Matt: I'm finding it incredibly frustrating about the political climate we're all in. I think it's all very connected: the financial institutions are linked with the big oil companies, linked with the political climate at the moment, and there's a lot of lobbying and cash handling going on behind the scenes. So the more we can do to send that message to the political parties of the day,t try and make that change the better I feel. If this is one small thing I can do, I'm more than happy and willing to do it.

Kim: That is awesome, it really brings me a lot of energy knowing that you're out there, and people like you are out there who want to help. I see that again and again in my work. It can be really tough and depressing reading the news.You hear about these it’s called carbon lock-in, three reasons why we still have a fossil-fuel-dependent world: infrastructure, policies, and norms and culture that reinforce those7. We have more extraction, pipelines and infrastructure; we have policies, subsidies and financing that support it; and we have a culture that expects and celebrates it. Any change we make to unlock one of those three underlying drivers can start pushing for the transformation to a fossil-free world that we need.

So I really appreciate it. It sounds like you're ready to make a switch, and I'd love to hear back from you on how it goes. Do you feel you have what you need to put your money in a fossil-free bank?

Matt: Yes, absolutely, thank you, Kim. I'm going to go away now and do my research. I think I'm most likely going to go with Nationwide or the Co-op, I'll have another look, and I'm ready to make the switch this week, so I'll let you know when I do. And if you could send me the template letter you sent to your bank, that would be fantastic, and I'll do the same with First Direct.

Kim: Absolutely, I'll share the letter with you and make sure to put it in the show notes. And you just get an emoji with heart eyes, because you're choosing a fossil-free bank. That's so wonderful. Thank you so much, Matt.

Matt: You're very welcome, Kim. It's been very nice to meet you.