For all of our ongoing efforts to reduce emissions, use better materials and
adopt other climate-friendlier practices, one of the biggest barriers to moving
the needle still revolves around money.
A new Bank of the West
report released today
highlights some of the resulting disconnects with consumers: Although 79 percent
of respondents are “passionate” about climate change, only 22 percent actually
know if their bank is financing fossil
fuels.
“Increasingly, we’re seeing that ESG is the most important factor in choosing a
bank,” Melissa Fifield, Bank of the West’s head of corporate social
responsibility & sustainability, told Sustainable Brands™.
The San Francisco-based institution appears to have transparent and
stringent environmental financing
policies
compared to many of its peers in the US; so the report is as much of an
opportunity for the bank to walk its talk as it is to shine a light on big
finance’s role in the climate conversation.
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“We stand out from our competition in the specific financing policies we have in
place, and how that appeals to Gen Z consumers,” Fifield says.
As investment advisor Vanguard found out last
fall,
financial transparency matters more than ever; and moving in the wrong direction
can have business impacts well beyond the bottom line.
Not surprisingly, younger generations know and care more
The report found the highest awareness of bank-related climate funding landed
with millennials (24-39) and Gen Z (18-23) consumers. Of course, those age
groups care more as a whole about how their purchases can make a difference; but
translating that to banking is a much more difficult task.
The report illustrates that obstacle, finding that 66 percent of respondents
would stay with their bank, even after learning it had “no restrictions on
financing certain commercial businesses, areas or sectors” (regardless of
perceived impact). However, 61 percent of Gen Z respondents said they would
change their bank if they knew their current institution was financing fracking,
for example.
While more and more banks have begun to mobilize around climate change and have
made individual net-zero
pledges,
their continued investment in polluting sources of
energy
flies in the face of those pledges — and external pressure is mounting for them
to put their money where their mouths are. December saw a promising move to
phase out coal
financing
from British banking giant HSBC; but the grandaddy of all investors,
BlackRock, continues to hedge its bets on forgoing financing for fossil
fuel
companies.
Fossil fuel-producing businesses are still big money for banks — to the tune of
trillions of
dollars
— and it’s something that consumers often feel powerless to change in the grand
scheme of the climate conversation.
In response to this, consumer awareness
campaigns
from activist organizations such as Bank.Green have emerged to make it
easier for individual investors and banking customers to discover where their
banks’ money is going — and, if necessary, to move their money into
institutions whose practices align with their
values.
Sustainable finance is good for business — internally and externally
While it’s not surprising that a bank-funded report would highlight data
supporting the reputational benefits of climate-friendly financing, what was
surprising was the positioning of how internal stakeholders could help advance
those conversations.
“When it comes to the response of business leaders, mid-level executives are an
untapped resource,’ Fifield says.
By and large, the report found more than half of director- and manager-level
employees didn’t know if their company’s bank was financing efforts such as
Arctic drilling, coal power plants or deforestation. It also found that these
middle managers are more likely to ask for changes in their company’s financing
plans as opposed to those at the top (VP or higher).
Granted, those types of structural changes are easier said than done; but it
does show that these mid-level, typically younger, employees are ushering in a
new era of transparency demand, and it would serve both companies and banks to
embrace and execute around that.
Limited insight into its own future strategy
When asked about how these findings could affect the Bank of the West’s future —
and its sale to Bank of
Montreal,
expected to close at the end of the year — Fifield said she couldn’t comment
openly about the latter, but did note that they are focused on what they’re
doing today.
She explained that the bank is two years ahead of schedule in meeting a $1
billion finance
commitment
to clean and renewable energy. CMO Ben Stuart added that the Bank's 1% for the Planet
checking
account
has “tens of thousands of account holders” and is largely responsible for Bank of the
West’s total certified giving as a 1% for the Planet member of just over $4.5
million. Fifield noted that about a quarter of new-to-bank checking customers
are opening that account.
As this latest report shows, as consumer awareness of their banks’ activities
grows, demand for efforts like these are sure to grow with it.
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Geoff is a freelance journalist and copywriter focused on making the world a better place through compelling copy. He covers everything from apparel to travel while helping brands worldwide craft their messaging. In addition to Sustainable Brands, he's currently a contributor at Penta, AskMen.com, Field Mag and many others. You can check out more of his work at geoffnudelman.com.
Published Mar 9, 2022 12pm EST / 9am PST / 5pm GMT / 6pm CET