How to Go Green in Banking and Choose the Best Bank For You
This post was last updated in 2023
When taking steps to live a more sustainable and eco-conscious lifestyle, we often overlook one crucial aspect: our financial institutions.
When taking steps to live a more sustainable and eco-conscious lifestyle, we often overlook one crucial aspect: our financial institutions.
Choosing a green bank can make a significant difference in promoting sustainable practices and mitigating climate change. Financial institutions use our money and assets to lend to others. By ensuring the bank you choose has the same values as you do, you can ensure your money is not used to harm our environment.
So in this blog post, I wanted to cover two important questions:
Under “How do you find the best green bank for you” I outline this five step process:
- Step 1: Identify banks that do not support the fossil fuel industry using Market Forces
- Step 2: Determine a short list based on price using comparison tools
- Step 3: Consider other certifications and information available
- Step 4: Conduct a final check of the shortlisted banks
- Step 5: Make your final choice and make the switch
If you want to know more, keep reading.
How do you go green in banking?
The best way to go green in banking is to bank with an organisation committed to reducing its environmental impact. These banks will offer products to help you adopt sustainable living practices and you can be ensured that the money you deposit or invest with them will not be used to harm the environment.
The most common suggestions you will find about going green in banking include:
- Go paperless – opting out of paper statements and receiving digital statements instead
- Bank online – so there is no need to travel to a branch
- Use online transfers – stop using cheques and rely on online payment transfers instead
Essentially, shift to online services wherever possible.
These suggestions make sense but I imagine many of us have already made these changes. The majority of people do utilise digital services and there are very few people that use cheques these days.
So your choice of which financial institution you choose to bank with, is what you need to focus on if you want to go green in banking.
How do you find the best green bank for you?
There are 5 steps to follow to find a green bank in Australia and make the switch:
- Step 1: Identify banks that do not support the fossil fuel industry using Market Forces
- Step 2: Determine a short list based on price using comparison tools
- Step 3: Consider other certifications and information available
- Step 4: Conduct a final check of the shortlisted banks
- Step 5: Make your final choice and make the switch
There is a wealth of information out there and different tools that can help you in your search but what is lacking is a process to help us shift through all that information.
These are the steps I followed to deal with the mass of information out there and make an informed choice. And it will help to guide YOU towards a choice that is suited to your own banking needs.
Step 1: Identify banks that do not support the fossil fuel industry using Market Forces
To identify banks that do not support the fossil fuel industry you need to refer to the Market Forces website.
Market Forces is affiliated with Friends of the Earth Australia and operate as a member of the BankTrack international network, which is an international think-tank that focuses on banks and their financing activities.
Market Forces have looked at 115 Australian banks, credit unions and building societies and gathered information on their fossil fuel investment portfolios. They have a handy table that lists all the banks that have invested in fossil fuels and those with no record of investing in fossil fuels since 2016.
Their table also notes how much money each bank invests in fossil fuel companies. What’s more, if a bank invests in fossil fuels, there is an option to send a message to these banks asking them to stop or put them on notice.
Here is a link to the table: https://www.marketforces.org.au/info/compare-bank-table
So first step is to check out this table.
If the bank you are currently with is listed under the “Banks funding fossil fuels and their subsidiaries” section and there is an option to put them on notice or tell them to stop, select one of these options and follow it through – Market Forces makes it easy for you to send a message to your bank, with a prepared response that you can submit. And the banks do receive these emails – I know from the responses I received from a couple of messages I sent out.
Of course, it’s not going to change the world but it is something banks are receiving and no doubt tracking. It’s so easy to do so there is no excuse!
Next, check out the “Banks with no record of funding fossil fuels since 2016” section. This is the table you will need to refer to as you move along the other steps.
What I did was copy the list of companies in this section into an Excel spreadsheet. This makes things easier as you go along the steps below.
If you are interested in having access to this spreadsheet, you are more than welcome to it. Just enter your details below:
If you are interested in having access to this spreadsheet, you are more than welcome to it. Just enter your details below:
Step 2: Determine a short list based on price using comparison tools
There are a surprising number of institutions that do not fund fossil fuel companies and their projects. Based on data gathered in 2020, Market Forces lists 63 institutions that do not fund fossil fuel projects.
That’s awesome news! But it does make it hard to narrow down which bank you should switch to.
There are a couple of things you could look at to narrow down the list and you should follow the path that suits you. But I find looking at the interest rate from the start helps.
There are two ways you could go about this – you could go to the website of each of the banks listed and note down the interest rate offered on their website. Or you can use a comparison tool to narrow down the list.
If you are looking to save time, I would recommend using a comparison tool!
There are two websites I refer to to get pricing information for home loans:
There are other comparison websites out there but they don’t list as many green banks as Canstar and Compare the Market.
This is something you do need to be aware of – by using a comparison tool, you may not be getting the full picture. There could be other cheaper eco-friendly banks out there that are not covered by the comparison websites.
This could also be true for Canstar and Compare the Market.
But I found Canstar and Compare the Market comprehensive enough and the idea of looking up each bank and checking their interest rates is less than appealing! So comparison websites are the way to go.
Follow these steps to use these websites:
- Select the relevant product type you are after (e.g. home loans or savings accounts)
- Put the details they ask for into their search tool
- Sort by the Comparison Rate for home loans or the base interest rate for savings accounts
- Go through their search results, keeping an eye out for the banks that appear on the Market Forces list.
- Pick the top five (or more, your choice!) and note down their rates.
Here is a snapshot of the top 3 results using Canstar, searching for home loan rates (search conducted in August 2022):
No matter how many times I have looked this up, I have never seen any of the major banks appear on the first page of the search results.
It goes to show – it’s more economical to go with green banks!
Keep in mind, the starting point for all this is the list of fossil-fuel free banks from the Market Forces website, which is a list that was created in 2020.
I was concerned that there may have been some new players in the market since 2020. I did a quick review of the list of banks on the comparison websites and did not notice any new players of note.
However, I did notice some of the larger eco-friendly institutions have some new subsidiaries that are worth considering. They are mostly online versions of the main institution, marketed to attract a particular audience. For example, Teachers Mutual has created Hiver, a digital bank created for essential workers.
This is something to keep an eye out for as you go through the comparison tool. You may want to Google some of the banks that appear on the search results, to see if they are connected to a bank on the Market Forces list.
If all of this sounds like too much work, you can look at a list I put together in 2022.
It essentially covers steps 1 and 2 for you – listing all the institutions on the Market Forces website and:
It essentially covers steps 1 and 2 for you – listing all the institutions on the Market Forces website and:
- The top 5 – 10 banks that have the lowest home loan rate plus
- The top 5 – 10 banks that have the highest savings interest rate
I summarised this in an Excel spreadsheet that you can access by entering your details below:
Step 3: Consider other certifications and third-party reviews
There are a couple of sources of information you can rely on to help you narrow down your list – or at the very least use to inform your final decision.
Here are some sources of information you could rely on:
| Name | Description |
|---|---|
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Finder (a product comparison website) awards this to retail banks based on their environmental impact and the impact of their investments. |
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|
B Corp certification is a third-party certification process that assesses companies' social sustainability and environmental performance standards and accountability standards. |
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GABV is an independent association of 'values-based banks' with a shared mission to use finance to deliver environmental, social, and corporate governance (ESG) positive outcomes. |
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Ethisphere is a for-profit company that defines and measures corporate ethical standards and recognizes companies that excel and promote best practices in corporate ethics. Ethical practices also take into account environmental impacts, so this can be a good resource to refer to. |
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RIAA certification is provided to investment products that have been assessed and verified as responsible or ethical. |
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A bank that is assessed by third parties and found to tick a lot of the boxes when it comes to its environmental, social and ethical performance are banks worth paying attention to.
Does it sound like too much to go through each of these third party assessment sites?
Well, of course I have gone through these myself. The spreadsheet I mentioned before also notes which institutions have received awards or have been assessed by these third-party organisations. Here’s the access one last time if you want to grab that list. No strings attached I promise – just thought I would make it available to others:
Does it sound like too much to go through each of these third party assessment sites?
Well, of course I have gone through these myself. The spreadsheet I mentioned before also notes which institutions have received awards or have been assessed by these third-party organisations. Here’s the access one last time if you want to grab that list. No strings attached I promise – just thought I would make it available to others:
Step 4: Conduct a final check of the shortlisted banks
Next you need to go through each of the banks in your shortlist, go to their website, check what products they have on offer and make sure the products suit your needs.
If all checks out, then give them a call to see what they can do for you.
Here are some questions to ask them when you give them a call:
- Are there any restrictions on membership/ joining the bank?
- What interest rate can you offer?
- What is the cost of switching?
The first question is important when you are looking at smaller financial institutions – some of them are open to certain sections of the population, typically based on occupation, so it pays to ask upfront. This information is not always clear on their websites.
And don’t be afraid to ask for a discounted interest rate for home loans or a bonus rate for savings and deposit accounts, as they can often offer you better than the advertised rate.
Step 5: Make your final choice and make the switch
From the previous steps, you should have the information you need to make your final choice and make the switch.
When it comes to general savings accounts, it’s a matter of going through the application process (which is generally quite easy) and transferring the money from your old bank account to the new one. Don’t forget to take steps to close your old bank account – people failing to do that is one the biggest sources of unclaimed money out there!
- When it comes to home loans it’s a bit more involved. Here are some steps you will need to go through:
- You will need to go through an application process with the new bank (including getting a valuation done, which the bank will organise for you)
- Discharge papers are needed from your current bank and you need to change the mortgagee details on your house insurance, before the settlement date.
- You need to make sure those discharge papers are completed in full before settlement.
- Then you need to make sure both sides agree on a settlement date.
- Then make sure you check in close to settlement date to ensure settlement is on track
and that’s it. Except to add, you may need to reset any direct debits and your income deposits, if that is how you are going to use your home loan and related transaction accounts.
So it’s a bit of work! But if you are getting a lower rate it is well worth it. And your money is no longer used to finance fossil fuel projects and that is just everything
If you have any questions about any of this let me know.
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
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
Green Banking Products – Align Your Money with Your Values – for a summary of all the different green branking products out there, with links to banks that offer these
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
