Understanding Climate-Friendly Checking Accounts

Finding climate-friendly checking accounts might take some time and research, but it can help you feel better about where you’re storing your money. When you put money into your checking or savings account, the bank doesn’t set the money aside for you to withdraw later. Instead, it lends money out to individuals and businesses to earn interest. Climate-friendly banks consider the environmental impact of those loans.

What Is a Climate-Friendly Checking Account?

A climate-friendly checking account is an account at a bank or credit union that won’t use your money to finance fossil fuel-related projects. You might be interested in a checking account at one of these financial institutions if you’re interested in ethical finance in general. Perhaps you look for ways to spend money sustainably and look for environmentally conscious investing options. A climate-friendly checking account could help you use your short-term savings to fight climate change.

What Makes a Checking Account Climate-Friendly?

There’s no single definition for climate-friendly banking, but it generally refers to how banks use the money that you deposit. A bank might be considered climate-friendly if it:

• Has a triple bottom line: The bank isn’t solely focused on making a profit—the traditional bottom line. Instead, it measures success based on its impact on social and environmental efforts, along with its profits.
• Doesn’t participate in fossil fuel projects: The bank doesn’t lend money to, invest in or underwrite fossil fuel-related companies or projects.
• Invests in climate-neutral and -positive organizations and projects: Some banks may also specifically look for carbon-neutral or -positive borrowers, meaning the organization or project leads to a net-zero or net-reduction in greenhouse gasses.

You’ll also want to watch out for greenwashing—the practice of highlighting eco-friendly actions without acknowledging the otherwise adverse effects of the organization’s actions. For example, a bank might advertise how it plants trees, encourages customers to receive electronic deposits and has LEED-certified buildings. These might all be helpful activities, but they don’t say much about how the bank will use your money.

How to Find a Climate-Friendly Checking Account

Here are three basic steps you can take to find a climate-friendly checking account:

Avoid the Big Banks

The biggest banks may offer convenience, but they often aren’t good options if you’re looking to divest from fossil fuels. The Rainforest Action Network’s 2023 Banking on Climate Chaos report highlights what it calls the “dirty dozen” banks based on how much they’ve financed fossil fuels globally since 2016. You can explore the report’s detailed graphics and charts to get more insight on how much money and the types of projects various banks supported.

Look for These Certifications

Two certifications for banks and credit unions are directly related to how the organizations use the money you deposit:

• Global Alliance for Banking on Values (GABV): As the name suggests, the GABV is made up of financial institutions from around the world that are committed to a triple bottom line. There are 13 members in the U.S.
• Fossil Free Certification: Bank.green’s Fossil Free certification is awarded to financial institutions that have pledged not to lend, underwrite or invest in projects or companies that will extract or produce fossil fuels, or that support fossil fuel infrastructure.

Banks and credit unions that are certified B-Corporations (B-Corps) or Community Development Financial Institutions (CDFIs) may also be good contenders if you’re looking for a socially responsible bank. But neither of these are directly related to the climate.

Use These Search Tools

You can also use several search tools to filter for climate-friendly checking accounts with all the above criteria in mind:

• Bank.green maintains a list of financial institutions, including the Fossil Free Certified banks, that it considers to be green banks.
• Mighty Deposits can show you banks and credit unions that don’t finance fossil fuels, or a more general list of banks that it considers to be sustainable.

These can help you identify a few options, but you still want to review the bank accounts’ fees, requirements, interest rates and features. You may also want to look for an option with a nearby branch if you want to meet with a banker in person.

Other Ways to Make Your Finances Climate Friendly

In addition to keeping your savings at a climate-friendly bank, you can look for long-term investments and immediate projects that may have a beneficial impact on the environment:

Learn about ESG and Impact Investing

This strategy invests in companies based on their environmental impact (the E in ESG) or the impact that their products and services will have on the environment.

Offset Your Carbon Footprint

There are many ways to buy carbon offsets to make your household carbon-neutral or -positive. For example, organizations like Wren and CarbonRemoved can help you estimate your annual footprint and start a monthly subscription to fund offsets.

Invest in Eco-Friendly Upgrades

Local, state and federal tax credits might help you save money on large purchases, such as an electric vehicle or solar panels. Smaller purchases and lifestyle changes can also help lower your carbon footprint and energy bill.

Support Advocacy Organizations

Although individual actions can be important, governments and large corporations also need to make changes to stop climate change. You might be able to help by volunteering or financially supporting advocacy groups that push for more climate-friendly regulations.

Open Your Bank Account

There are many climate-friendly checking accounts available, including options that don’t have minimum opening deposit requirements or monthly fees. Some may also offer business checking accounts and other banking products, such as loans and credit cards. Once you find a bank that will be a good fit, it’s often simple to open an account online.

At O1ne Mortgage, we understand the importance of making environmentally conscious financial decisions. If you’re looking for a mortgage service that aligns with your values, give us a call at 213-732-3074. Our team is here to help you find the best options for your needs.