Green Banking Products - Align Your Money with Your Values

green banking products and services
This post was last updated in 2023
 
The data insights group Meniga conducted a survey in 2021 and found nearly three-quarters (68%) of consumers are interested in green financial products. A similar study conducted by the research firm Rockbridge found that 68% of consumers “like to do business with companies that are environmentally responsible”. 
 
Clearly, there is some interest in environmentally responsible businesses, which extends to banks and the products and services they offer.  
 
If this is something that interests you but you don’t know what banking products and services to look out for, then this blog post is for you. 
 
Green banking products and services include home loans, car and personal loans, investment products, credit cards and savings accounts that either take your money to invest in environmentally responsible activities or are constructed in a way to encourage green living practices.  
 
To explore this further, in this blog post you will find an overview of the following products currently available on the market: 
Below I have provided links to Australian banks offering products in each of these six areas. It’s not an exhaustive list of products available – there are more out there. But the links provided are to the most well-known products available. 
 
Disclaimer: This is not a product review and is not to be taken as financial advice or a recommendation. The examples below have been offered as an example of what is on the market. You will need to do your own research to determine if these products are suitable for you.

1. Green mortgages

Green mortgages, in general, provide customers with loans at a lower than market interest rate if they purchase energy efficient homes or invest in retrofits to make it more energy efficient (UNEP, 2007), (NATF UNEP, 2007). Other features can include financing the cost of moving between a traditional and energy efficient house, home energy ratings and offsetting emissions annually during the loan period (Rakic & Mitic, 2013).

Source: https://www.diva-portal.org/smash/get/diva2:1372051/FULLTEXT01.pdf
 
Some specific products you may find include:
  • Discounted loans if you purchase an energy-efficient home, for example, a home with solar panels or a solar hot water system
  • Discounted loans if you purchase a property and plan to make improvements that will increase the energy efficiency of the home
  • Discounted loans if you plan to build a home that will include energy-efficient products like solar panels, solar hot water systems, insulation or rainwater tanks.
Products currently on offer along these lines include:
  • Bank Australia Clean Energy Home Loan: A discounted home loan rate if you purchase or build a home with a 7+ star NatHERS rating or green star homes certification. 
  • CommBank Green Home Loan: A lower Standard Variable Rate loan when you build or buy a home that is more sustainable, climate resilient and energy efficient. 

2. Green home equity loans

Green home equity loans provide capital to customers to purchase technology or retrofit their home in the aim of making it more sustainable (UNEP, 2007), (NATF UNEP, 2007). An example of this can be a specific loan to help fund the implementation of solar panels or wind turbines (Rakic & Mitic, 2013).

Source: https://www.diva-portal.org/smash/get/diva2:1372051/FULLTEXT01.pdf
 
Some specific products you may find include:
  • Discounted home loans if you renovate your home to be more energy efficient, for example, a home with solar panels and solar hot water system
  • Discounted home loans if you renovate your home to be more sustainable, for example, rainwater tanks or insulation 
Products currently on offer along these lines include:
green home loan

3. Green car loans/ personal loans

Green car loans are loans that have the aim of getting consumers to buy low emission electric vehicles (UNEP, 2007), (NATF UNEP, 2007). The incentive is often that the interest rate is below market rates (Rakic & Mitic, 2013).
Source: https://www.diva-portal.org/smash/get/diva2:1372051/FULLTEXT01.pdf
 
I am including personal loans in this category. According to Canstar, green personal loans could be used for purchasing: 
  • Solar panels, hot water systems, pool heaters or battery systems
  • “Green” or eco-friendly vehicles
  • Double glazing for windows or external awnings
  • Water tanks
  • Insulation
  • Grey water treatment systems
  • Energy-efficient appliances and white goods
  • Energy-efficient electric heaters or split systems, evaporative coolers or energy-efficient air conditioners
  • Home ventilation systems
Some specific products you may find include:
  • Personal or car loans that allow you to purchase electric or hybrid vehicles at a discounted rate
  • Personal loans that provide a discounted rate to fund the purchases, like those noted above  
  • Car loans that are carbon neutral as they offset the estimated carbon emissions produced by your car
Products currently on offer along these lines include:
green car loan

4. Green cards

Green cards can be both debit or credit cards that are linked to environmental activities (UNEP, 2007), (NATF UNEP, 2007). This can often either be donations to environmental organisations based on the users purchase amount like the WWF (Rakic & Mitic, 2013) or climate compensation and GHG offsetting based on what the user has purchased. Another feature can be discounts and lower borrowing rates when buying green products (UNEP, 2007), (NATF UNEP, 2007).
Source: https://www.diva-portal.org/smash/get/diva2:1372051/FULLTEXT01.pdf
 
Some specific products you may find in this space include:
  • Credit cards that are not made from plastic
  • Credit cards that contribute to an environmental group of your choice or one of their partner organisations with similar values, with each dollar that you spend
  • Ability to put your reward points towards an environmental action group
Products currently on offer along these lines include:
  • First Option Bank recycled credit cards: Their cards are Australian made from 82% recycled plastic and every time you spend, you contribute 0.25% directly to funding biodiversity programs run by their program partners, at no extra cost to yourself.
  • Gateway Eco Debit Card: Gateway’s Visa Eco Debit Card is made from plant-based material (100% PLA, a bio-based and degradable polymer made from annually renewable resources) and contains no PVC. 
  • Velocity Reward & Green Cross Australia: If your credit card allows you to earn Velocity reward points, these points can be used to donate to Green Cross Australia 

5. Green investments

Green investments is an umbrella term for all investments made based on green criteria. For private investors, this can either be in specific funds or indexes and for institutional investors, it can also be in green bonds (UNEP, 2007), (NATF UNEP, 2007).
Source: https://www.diva-portal.org/smash/get/diva2:1372051/FULLTEXT01.pdf
 
Some specific products you may find include:

Note: I personally would not rely on the Dow Jones Sustainability Australia Index and the MSCI Australia ESG Index as some would recommend. Based on the companies included in these indexes, they are not what I would classify as “green”. 

 
Products currently on offer along these lines include:
  • Ethical EFTs in Australia: I won’t list all ethical EFTs available on the ASX but will point you to this blog post that provides a review of ethical EFTs available in Australia: Best ethical EFTs in Australia 
  • Australian Ethical Super: They have an in-house ethics research team whose rigorous ethical assessment ensures each investment contributes to a better future for people, the planet and animals
green investments
 
As you can tell, much of the assessment of investment funds is along ethical lines. As explained in What is Green Banking and What Should I Look Out For?, ethical does not mean the same as being “green, but the two overlap quite a bit. As a minimum, ethical funds exclude investment in fossil fuel companies and that is very much in line with any green goals. 
 
You can also directly invest your money into companies that have a strong environmental focus. However, it does take a bit of research to identify these companies and ensure they meet the investment goals you want to achieve. 
 
I found it interesting that only 4% of consumers hold investments in green industries such as green mutual funds, according to a survey conducted by research company Rockbridge. However, another 13% express a high degree of interest in these kinds of investments. A fifth of consumers who have such investments hold them because of a green commitment.
 

6. Green deposit/savings accounts

Green deposits/savings account are accounts where individuals and business can deposit money that is earmarked to be invested in energy efficient and pro-environment projects like solar energy schemes. The maturity of these accounts is usually between one and two years and they pay out a slightly higher interest rate than normal deposit accounts (Rakic & Mitic, 2013), (Barclays Bank, 2017).

Source: https://www.diva-portal.org/smash/get/diva2:1372051/FULLTEXT01.pdf
 
Some specific products you may find include:
  • Savings and term deposit accounts certified by the Climate Bonds Initiative
  • Savings and term deposit accounts with banks that do not invest in fossil fuel companies 
  • Term deposit accounts that ensure, for every dollar deposited, money is put towards renewable energy projects
 Products currently on offer along these lines include:
 
 
Along with the actual products on offer, one key service that all banks should be able to offer is digital services. This includes sending digital statements instead of paper statements or offering digital statements on demand (as digital products are associated with their own environmental cost). Banks can also offer a higher interest rate on savings accounts or lower rates on loans if digital options are taken
 
In America, 58% of consumers have either shifted some of their financial statements from paper to online or expressed a high degree of interest in doing so, according to the consumer survey conducted by Rockbridge. Given how easy and convenient it is to make the switch, I find this number dismally low. 
 
 

So that’s a round-up of the options out there for green banking products and services. 
 
There are plenty of options and you will find these are not costly products – these green products are not so different from traditional products and services offered by banks and sometimes they can even save you money. 
 
Well worth checking out. 
 
xxx Tahsin
After more information? You may be interested in....

7 of the Best Australian Banks – For You and the Environment – there are 7 banks worth looking into if you care about the environment and key information on these is outlined here 

How to Go Green in Banking and Choose the Best Bank For You – for a step-by-step process to help you choose the best green bank for you

What is Green Banking and What to Look Out For – for a definition of green, sustainable, ethical and eco-friendly banking, giving you clues into what to look out for

Green Banking – Essential Characteristics To Look Out For – outlining the characteristics of and features of green banking to look out for plus what it means to be a net zero bank

Why Green Banking Matters: Creating a Sustainable Future – if you are wondering if it is worth looking into green banking, you will find some honest answers here 

Which Banks Do – and Don’t – Invest in Fossil Fuels – for a summary of which Australian banks do and don’t invest in fossil fuels and those that do invest in renewable energy 

Greenwashing? The Big Four Banks and Climate Change – for information on CBA, NAB, Westpac and ANZ outlining their current position and past actions relating to climate change

Green Banks in Australia – Options Worth Considering – for information on the big four banks in Australia, four green banks in Australia and further details on Teachers Mutual

Going Green – Environmentally Friendly Banks in Australia – for further information on Bank Australia as well as CBA and Westpac, looking at their environmental policies 

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