Ethical And Green Banks Helping Your Money Work For Good
Boycotting unsustainable brands, reducing consumption, and recycling waste is excellent for sustainability. And your funds in the bank can do much more. Investing with ethical and green banks provides the much-needed funds that green entrepreneurs and innovators need to make our dreams of an earth-friendly global economy possible.
This article explains the green bank concept and highlights ten banks empowering the green economy.
What is a green bank?
A green bank is a bank that is established with the mission of financing clean energy projects and other innovations that help fight climate change and support environmental preservation and/or regeneration. As mission-driven institutions, green banks focus on protecting the planet instead of just making a profit. Some other objectives include increasing sustainability in low-income communities and spurring job creation.
Usually, the government sets up a green bank as a public or quasi-public institution. They receive some government funding, but most of their money comes from private capital providers. They don't attend to customers like a regular bank, but you could set up a private investment with them. You can also get loans tailored for renewable energy fixtures for your home and business from green banks.
Funds received from a green bank are not grants; they are loans the borrowers must pay back. Because of their extensive knowledge of the process, challenges, and rewards of green projects, green banks can finance eco projects in underserved markets and geographies that traditional banks wouldn't consider.
Green banks have existed for decades. Australia and Japan have national green banks. The United Kingdom’s now-sold green bank financed the Rampion Offshore Wind Farm clean energy project. Green banks also exist in the United States at a local and state level, but we are yet to see a federal national green bank that would focus on the country as a whole.
Green banks you should consider doing business with
Below are some green banks through which you can aid the future of our world with each dollar of yours that becomes green capital.
1. The Connecticut Green Bank
The Connecticut Green Bank was the first green bank in the United States, established by The Connecticut General Assembly in 2011. This green bank has raised over $2 billion of public and private capital to help homeowners, businesses, and communities access affordable clean energy. The Connecticut Green Bank provides financing for installing solar panels, energy-saving insulation, lighting, water-efficient systems, etc.
The Connecticut Green Bank has helped stakeholders lower their electricity costs, reduce their reliance on fossil energy and reduce their carbon footprint. Individuals can benefit from flexible-term loans with interest as low as 2.99%. In addition, the Connecticut Green Bank will provide 100% financing and technical assistance for commercial infrastructure.
2. DC Green Bank
The DC Green Bank, established in 2018, is Washington DC’s local green bank. It doesn't lend to individuals but to constituencies, commercial developers, and businesses. This green bank finances green infrastructure, clean energy, and energy efficiency projects.
You can't create a savings or checking account with the DC Green Bank as they are strictly about financing and catalyzing a green economy. Public funds primarily fund the bank, but they help borrowers source private finance from other banks. If investing with the DC Green Bank interests you, connect to their investment team by filling out the ‘capital providers’ form.
3. Montgomery County Green Bank
This green bank is a non-profit corporation that partners with private investors to incubate and finance climate change and clean energy projects. They help homeowners and companies access up to 100% finance for energy efficiency upgrades. They also recommend credible contractors.
Some of the green bank’s projects include Meadowbrook Stables and Housing Unlimited’s solar panels. You can also benefit from preferential financing if you live or do business in Maryland. To invest in the Montgomery County Green Bank, you'll need to fill out their contact form identifying yourself as a funder.
4. Rhode Island Infrastructure Bank
Like all green banks, the Rhode Island Infrastructure Bank supports the clean energy transition and is helping make communities resilient to climate change. They also fix roads and bridges, remedy contaminated land, and do other environmentally friendly projects. The infrastructure bank was formerly the Clean Water Finance Agency before it underwent a mandate and name change in 2015.
So far, they have raised over $2 billion in investment and secured over 69,000 jobs. This bank offers revolving credit lines, term loans, grants, and many other programs. They follow the quasi-public corporations' accountability act, so you will find it easy to dig up information on their projects, processes, and labor practices. Email the bank to find out how to benefit or fund a project.
Rhode Island Infrastructure Bank
4. New York Green Bank
The New York Green Bank is one of the ways that the State hopes to meet its 85% carbon reduction target by 2050. The green bank focuses on deploying clean energy in New York. It is state-owned but also leverages private capital to increase clean energy investment in New York. They also provide financing for sustainable agriculture, water efficiency, and clean transportation.
The New York Green Bank's financial products include construction finance, term loans, aggregation credit facilities, and equity investments. Eligible infrastructure must imbibe low-carbon technologies and other features that help fight climate change. Before you put your money in this bank, you can check out their investment portfolio on their website. We love the transparency.
Other government-sponsored Green development finance programs
These are not green banks but programs set up by local governments to help raise and direct green capital where green banks still need to be established. The government usually funds these programs, so you may need help putting your money into them directly. But we have included them so that if you live in those regions, you can take advantage of their offering and keep them in the market.
1. Hawaii Green Energy Market Securitization
This is a program launched by the Hawaii Green Infrastructure Authority to eliminate credit barriers to solar energy PV systems. They help Hawaii, Oahu, and Maui residents access clean energy and green capital for other projects that will bring future energy savings. Renters, homeowners, commercial property owners, businesses, solar contractors, and state agencies can benefit from this program.
Hawaii Green Infrastructure Authority
2. California State Treasury
California state treasurer's office serves as California's green bank. The treasury offers tax exclusion and reduction incentives to individuals and businesses that adopt clean energy. They also issue bonds to finance climate change, clean transportation, and renewable energy projects worldwide. Since 2019, the California State Treasury has bought $1.5 billion World Bank Green Bonds to finance clean energy and transportation projects worldwide.
What are ethical banks?
These differ from the green banks we shared earlier because they are privately owned financial institutions. But like green banks, they help facilitate more investment toward clean energy and climate change projects. So while they are not outrightly called green banks, they are also green banks. When you keep your money in these green banks, you help support the funding of green projects and encourage cleaner energy production worldwide.
Ethical banks are ordinary commercial banks; you can typically open checking and savings accounts with them, offering complete banking services like all other banks but having a different ethos. Instead of solely focusing on finances, they also champion the environment and people. Not just with their investment but with their fair labor practices, an energy-efficient system of operations, and green infrastructure.
Although the government does not establish ethical banks, some only operate at state and local levels and are rarely country-wide; they can also receive funds from government agencies. However, they rely on private capital and money from bank transactions to fund their circular economy investments.
If you want to choose a bank that goes beyond paper-free statements and uses every dollar to deliver real eco-friendly benefits, check out the following banks. Note that the Federal Deposit Insurance Corporation insures the banks in the U.S.
1. City First Bank
This bank is a B Corp based in Washington, DC, although you can access their service from any U.S. State via internet banking. It is one of the banks existing to serve underfunded markets such as POC neighborhoods and other minority groups.
They drive community development and are certified by the U.S. community development financial institution fund. As they put it, their mission is to help strengthen low and moderate-income communities. If you wish to help folks and businesses in low-income neighborhoods, banking with City First Bank is a good start.
2. Spring Bank
Spring Bank is a New York City-based ethical bank. The bank is a Community Development Financial Institution and a B Corporation. Their mission is to serve underbanked consumers, businesses, and communities with affordable banking services and capital. In addition, they work with non-profits, credit unions, and other green banks to drive more investment in small businesses.
This bank is one of the green banks that have never invested in fossil fuel and have been carbon neutral since 2018. In addition, spring bank has pledged to the Bank Green and Bank For Good alliances and assures customers that they are committed to earth-friendly financing. Not only does Spring Bank have competitive interest rates, but they also put your money into clean energy and economic justice investments.
3. Amalgamated Bank
If you are passionate about worker’s rights, you’ll love the Amalgamated Bank. Clothing union workers created this bank in 1923, and 40% still belongs to union workers in America today. The Amalgamated Bank has always used its funds and influence to champion social justice. Its B Corp certification testifies to its sound business ethics; in 2021, the Human Rights Campaign Corporate Equality Index named the bank “one of the best places to work.”
The Amalgamated Bank is one of the green banks that live up to their eco-friendly world vision by running on renewable energy. Although the carbon neutral bank does not lend to the fossil fuel industry, it dedicates 32% of its capital towards financing climate change solutions. In addition, they support and are a part of various organizations pledged to a more sustainable environment.
4. Mascoma bank
Mascoma bank is about 120 years old and has served the Mascoma community in New Hampshire. They have invested in the people for generations and have formed a deep connection with the district. Mascoma is a mutually owned bank that puts the needs of the people above profits. They are also big on philanthropy. Each calendar year, they donate over $1 million to local non-profits.
In 2013, Mascoma Bank created the Mascoma Community Development entity to encourage economically and socially impactful businesses in underserved communities. They offer tax credits and finance so that a market that would otherwise be ignored can enjoy sustainable development.
5. Climate First Bank
Climate First Bank has a dedicated loan product if you want to upgrade your home with solar energy. Another product finances any other clean energy and energy efficiency project. They also offer special loans as incentives for switching to cars that run entirely or partially on electricity. Their solar loans have an Annual Percentage Rate of about 4% and a 7 to 25 years repayment period.
Interestingly, they have different accounts dedicated to other social and environmental causes. So, for example, you can open a pride or regeneration account and so on to support issues you are passionate about.
Climate First bank leaves us in no doubt about their dedication to supporting eco-friendly development. The carbon-neutral community bank is a B Corp, a member of 1% for the planet, and the U.S. Green Building Council, amongst many other eco partnerships. The bank is based in Florida but has mobile banking services that anyone anywhere in the U.S. can access.
6. Beneficial State Bank
This bank does not lend to the petroleum industry, private prison enterprises, payday loan companies, and weapon manufacturers. Instead, they use over 75% of their loans as green capital for clean energy, affordable housing, social justice, etc. You can try the deposit calculator to see how they spread funds across sustainable industries.
Beneficial State Bank is fossil-free certified, a B Corp, and a global alliance member for banking on values. They have branches in Oregon, California, and Washington, DC. But more importantly, they offer online banking services so that you can bank with them from anywhere in the U.S.
Other non-bank financial institutions
The market for eco-development is large and evolving. Everyone can and should get involved. If you live in an area where non-bank apps are the norm for sending, receiving, spending, and saving, we have included a few of them that have an eco-mission.
1. Aspiration
Aspiration is a cash management app that lets you save, receive and transfer money. The popular online banking app available throughout the United States. The firm is a B Corporation and a member of 1% for the planet. They donate 10% of the monthly banking fees to charities.
With every swipe of your recycled plastic card, Aspiration plants one tree, so if you are a heavy spender, you could produce a forest in one year. Furthermore, they do not loan money to the fossil fuel market and promise that every $1,000 saved with them saves up CO2 equivalent to 6,000 miles of driving.
2. Ando
This fintech app invests only in green initiatives like regenerative farming and clean energy.
Ando is fossil-free certified B Corp and is also certified by the Better Business Bureau. In addition, the bank is transparent with its investments and provides detailed metrics for customers to measure personal impact.
They plant trees with every Ando card swipe; when you have planted 100,000 trees with your card, they will grow one hundred thousand more. Ando cards contain just 20% plastic.
Why should you invest in green banks?
The money in your savings and checking accounts doesn't just sit in a vault until you are ready to use it. Instead, the banks invest your money in various ventures for a return. With green banks, these investments avoid companies engaged in climate-destroying activities like fossil fuels extraction, single-use plastic production, etc.
According to the fossil fuel finance report of 20211, in the five years after the Paris agreement, four big U.S. Banks- Bank of America, Wells Fargo, Citi, and JPMorgan Chase- had invested about $975 billion in the fossil fuel industry. Maximizing profit in the shortest time possible is their mandate, so they prefer to fund large-scale projects in the busiest sectors, which are often not environmentally friendly.
Another reason to divert your investments to ethical and green banks is that they often serve people marginalized by big banks. As the banking industry sees them, the people or markets have less access to adequate financing that considers the existing inequality in society.
They miss out on the benefits of financing that customers from more secure backgrounds enjoy. And according to the EPA, these marginalized communities are more affected by climate change as they don't have the right and resilient infrastructure.
Many banks need to be more transparent about the industries they invest in. If the recipients of your money matter to you, it is better to support them outrightly with green banks. Also, your chances of getting a loan to make your home or small business more energy efficient are higher with green banks.
This article does not replace financial advice; please consult your financial advisers for more information and to understand the risks of any investment.
For more info, check out the Coalition for Green Capital here, a non-profit advocating for Green Bank Finance at the state and local level, all helping private dollars go the extra mile for people and the planet.
Conclusion
Ethical and green banks are essential because they support both large and small-scale clean energy projects. In addition, green banks leverage public and private funds to finance these projects. So your transactions with green banks are helping provide more clean energy, reduce electricity costs, and make our world greener.
| 1 | Fossil fuel finance report 2021. Banking on Climate Chaos Organization. |
Jen’s a passionate environmentalist and sustainability expert. With a science degree from Babcock University Jen loves applying her research skills to craft editorial that connects with our global changemaker and readership audiences centered around topics including zero waste, sustainability, climate change, and biodiversity.
Elsewhere Jen’s interests include the role that future technology and data have in helping us solve some of the planet’s biggest challenges.
