Banques écologiques - WE ARE CLEAN - ENVIRONNEMENT

Eco-friendly neobanks: What on Earth is green finance?

Among the “little things” serving the eco-friendly cause, there is that of “switching banks”. Because unbeknownst to us, our investments and savings often go towards the financing of initiatives that promote global warming. But new banking establishments make it possible to make a different choice: clean investments. Here are the explanations.

What makes standard banks less than eco-friendly?

Most citizens don’t know it, but the money we put in the bank, our savings, doesn’t just sit in our accounts. In fact, the banks capitalise on it, not least by granting loans or acquiring shares. So banks finance projects with our money without us necessarily knowing which ones, and companies financed by banks are not always virtuous. Especially when they are involved in fossil-fuel energies, which emit a great deal of CO2, which promote global warming. So by financing these companies the bank lends its support to them. This means that the most eco-friendly of citizens can have a frugal lifestyle, and embrace all the most responsible habits in their daily life, whilst financing fossil-fuel energies unawares. Some algorithms, at for example, can even assess your CO2 emissions depending on which bank you are with.

What is a neobank?

Essentially, the term “neobank” refers to a bank without brick-and-mortar branches, accessible only remotely via a website, mobile app or telephone line manned by bank staff. These “modern” banks offer a current account, payment card and sometimes savings accounts and credit. They are more responsive, more accessible and easier to get in touch with. The information given out and day-to-day operations are simplified, and many of the bank charges fall away. Eco-friendly banks, young banks, have gone with this less costly modus operandi from the outset. It is more flexible and meets the needs of their customers better. Their customers are often young, principled and accustomed to using apps and documents in paperless format.

That’s why the epithet “eco-friendly neo-bank” is applied to these eco-friendly banks. Normally the word “bank” is reserved for credit establishments. So neo-banks that hold banking licences are banks without branches. Those without banking licences should be called “financial intermediaries”, because the customers’ funds are held by a bank of which they are customers.

Eco-friendly banks: how are they different to standard banks?

A “green” bank commits to putting depositors’ money to work in eco-friendly, sustainable projects that do not harm the environment. Unlike standard banks, eco-friendly banks adopt policies based on full transparency. They choose who they lend money to, and also the assets in which the money is invested. Lastly, eco-friendly banks would not be eco-friendly without applying a 360° charter on ethics and sustainability.

What are green investments and certifications?

Most eco-friendly neobanks do not offer investments, but you can make them via specialised platforms that only work with responsible companies. These investments can secure certification vouching for their being carbon neutral, or their impact on the environment, like Socially Responsible Investment (SRI) and Greenfin (formerly TEEC) certification. With these, there’s no danger of possibly financing markets or projects in sectors that you might abhor (arms, fossil-fuel energies, tobacco, etc.). Instead, you’ll be supporting, companies dedicated to energy transition, cutting CO2 emissions or ethically-sound, responsible companies that value gender equality. There are even SRI life insurance policies that offer green investments. To secure the SRI certification created by the French Ministry of Finance, financial institutions must painstaking analyse their method of selecting the investments offered, and quantify their impact. This comes down to choosing the most virtuous companies in each field of activity on the basis of social and environmental criteria.

What are the effects on the environment?

By opting for eco-friendly investments, green neobanks promote certain projects and allow responsible initiatives to emerge. But besides supporting these virtuous projects, eco-friendly banks shun companies that have a negative impact on the environment. By excluding fossil-fuel energy producers, polluting and ethically unsound activities from their financing, green banks play a major role in the societal and eco-friendly changes to come. Moreover, those 360° initiatives put in place within green neobanks make them responsible companies themselves. These initiatives range from plastic reduction (with plastic-free bank cards, for example) to support for eco-friendly associations to internal initiatives or those involving customers. These may help them calculate their carbon footprint or behave more responsibly as consumers by analysing their account statements.

Are eco-friendly banks a real solution?

Compared to the considerable environmental consequences of the four largest French banks’ investments, eco-friendly banks are much more virtuous. Moreover, money has a very powerful impact compared to a ballot paper. If no one buys a harmful product any longer, it will be discontinued. And if the consumer demands traceability information before they are prepared to buy a product, it will be provided. If we slow down investments in big polluters and fossil-fuel energies, they will have to gravitate towards other solutions. And if, in addition, some of these investments are redirected towards other virtuous systems, the benefit will be significant!

For years on end, citizens have been financing certain polluting sectors through their banks without knowing it or wanting to know, whilst fighting them in other ways. Fortunately, some organisations have a new vision of banking that allows everyone to choose what their money does! So, are you ready to switch banks?

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