Conscious Money Part 1: Banking

A client of mine asked me a great question recently: how can I bank and invest consciously? Her priorities are to specifically divest from the fossil fuel and war-related industries, which many of the major banks unfortunately invest heavily in. She is a part of a growing number of consumers, including myself, looking to do something similar: bank and invest with high impact, and to ensure their dollars aren’t being invested in industries antithetical to causes such as racial justice, environmental justice, gender equality, sustainable labor practices, LGBTQ issues, and the list goes on. I divide this content into three parts: 1) banking, 2) investing, and 3) credit cards. First up: banking.

There are three helpful bank designations that will help my client and others like her do good with their money:

Certified B Corporations are “businesses that meet the highest standards of verified social and environmental performance, public transparency, and legal accountability to balance profit and purpose.” By extension, B Corporation banks align their investment goals with a triple bottom line: profit, people, and planet. Some examples that are specific to the West Coast, where we’re based:

• Amalgamated Bank – invests mostly in social justice-oriented companies
• Aspiration Bank – invests mostly in climate forward companies
• Beneficial State Bank – invests in social justice-oriented and climate forward companies

One thing to consider is the availability of physical branches and ATM locations, if that’s an important feature for you. Luckily, online banking is becoming more and more ubiquitous and so are widely offered ATM networks. All three banks listed above utilize the AllPoint, START, or MoneyPass ATM networks, which are widely available in major cities.

2. Global Alliance for Banking on Values (GABV)

The Global Alliance for Banking on Values is an independent network of banks using finance to deliver sustainable economic, social and environmental development. Their collective goal is to change the banking system so that it is more transparent, supports economic, social and environmental sustainability, and is composed of a diverse range of banking institutions serving the real economy. Check out their list of member banks to see if it makes sense for you to make the socially conscious jump.

For a wider list, The Good Trade lists other green B Corp banks, and Mighty Deposits lists B Corp banks, GABV banks, and fossil-free banks.

3. Community Development Financial Institutions (CDFI)

CDFIs are community-based whose primary missions are to “promote economic development by providing financial products and services to people and communities undeserved by traditional financial institutions, particularly in low-income communities.” Not only can a bank or credit union be designated as a CDFI, but so can non-profit lending programs and venture capital funds. There are 950 CDFIs (and counting) since the program started in 1994, with the passing of the Riegle Community Development and Regulatory Improvement Act. The act was aimed at increasing access to credit, investment capital, and financial services to distressed urban and rural communities.

The CDFI Coalition website is a great resource to start your search if this is the designation you’d like to support. It even has a history of the CDFI Fund – the methodology dates back to the 1800s in New York with immigrant guilds and to the 1930s with Black communities forming their own credit unions! They’ve done some great work and continue to do so.

Fossil Fuel Finance Report 2020

What I found super helpful is thishighly detailed report written by Oil Change International, Sierra Club, Indigenous Environmental Network, Reclaim Finance, BankTrack, and Rainforest Action Network: Banking on Climate Change, Fossil Fuel Finance Report 2020. It calls out which financial institutions are the highest investors in fossil fuels from the U.S., Canada, Europe, China, and Japan. Chase, Wells Fargo, and Bank of America are among the top investors. If your financial institution is on that list and you care about the environment, put your money where your mouth is and transition to a B Corp bank, a GABV bank, or a CDFI!

If you want to make the big switch and bank with a more conscious financial institution, subscribe to my mailing list for a free download with a step-by-step guide. I outline the process to be as straightforward as possible. It likely won’t be painless, especially if you’ve been a longtime customer at your bank, but the pain will be worth it knowing your dollars are being aligned with your values!