FREE shipping $55+

Bundle & Save Up To 30% Buy Now

LAST CHANCE

ORDER NOW FOR HOLIDAY DELIVERY

4 MIN READ

9-2-2024

Ethical Banking: Financial Institutions Leading the Way in Sustainability

Alex Schulze , CEO/Co-Founder

Ethical Banking: Financial Institutions Leading the Way in Sustainability

Pressing climate issues that continue to worsen have shaped policy, consumer preferences, and even corporate action. As the private sector shifts toward more sustainable practices, banks have emerged as a force for change. Financial institutions have adopted a proactive approach towards addressing climate change and are leading the way through innovation and investment.

Embracing Sustainability Together
The shift toward more sustainable practices includes membership in the UN’s Net-Zero Banking Alliance. Today, over 130 banks have joined the alliance. Together, these banks account for over 43% of banking assets globally. On top of the UN alliance, there are also financial institutions that have decided to prioritize investments that do less harm to the environment. The Global Alliance for Banking on Values has over 70 members in nearly 50 countries that are prioritizing serving people and the planet.

Sustainable Investments
Green Banking refers to banks that prioritize shifting their operations toward the betterment of the environment. Globally there are about 27 operating Green Banks scattered across 12 countries. In order to share ideas and coordinate across these climate-friendly banks, the Natural Resources Defense Council started the Green Bank Network in 2015. This movement has become a popular one that has driven the investment behavior in some larger financial institutions. BlackRock, for example, is expanding its climate infrastructure team, positioning the institution as a leader in the movement toward sustainable investments.

Innovations in Financial Products
On top of the Green Bank movement, banks have also launched many innovative products to support sustainable investments. Private and public financial institutions are increasingly offering sustainable investment funds, green bonds, and loans tailored for eco-friendly projects. These products attract environmentally conscious investors while also providing capital for initiatives that contribute positively to global sustainability goals.

Reducing Plastic Usage
It is alarming that about 6 billion plastic cards are produced for consumers every single year. Thankfully, consumer preferences among young people have shifted the plastic card landscape. In order to combat the use of plastic and to keep up with consumer preferences, banks have rolled out more sustainable credit cards, from biodegradable credit cards, to compostable ones. Big financial institutions worldwide have started to make this shift away from plastic–in 2023, for example, Bank of America introduced credit and debit cards made from recycled plastics. All new cards from that year onward will be made of at least 80% recycled plastics. Similarly, Mastercard is working with 148 financial institutions in 46 countries to make cards from more climate-friendly materials such as recycled ocean plastics and bioplastics made from sugar or corn.

Less Paper
For years now, many banks have offered clients incentives to opt into paperless statements. This shift has served as a way to move away from printing and mailing paper to consumers.

Fewer Emissions
From 2017 to 2023, the percentage of people primarily using mobile banking in the United States increased from 15.1% to 48%. To respond to this shift in preferences, banks have scaled down operation by shifting to online services, reducing overall emissions from physical assets such as buildings. There are now banking companies that operate completely online.

Though financial institutions are often seen as pillars of monetary stability and forces of economic power, they have also become actors of change. As financial institutions recognize their role in driving positive development, they respond by leading the way in sustainability practices. By doing so, these institutions are paving the way toward a more sustainable future globally.