Green Finance Briefing: Consumers want more sustainable banking
- Studies show that consumers are increasingly looking to align their values with their wallets – and younger generations are taking the charge in sustainable investing.
- We also look at the climate tech space with an ecosystem map, and have a great suggestion for your next movie night – a new documentary on greenwashing.
Dealing with the effects of climate change is a collective issue, and pressure is mounting for all corners of the economy to step up to the challenge and decarbonize. But while we may have a long road to actual sustainable solutions, increasing consumer awareness is key to pushing this agenda forward.
In fact, most US adults are taking steps in their daily lives to combat climate change and believe that companies should take an active role in this as well, a new study from Compose[d] found.
Consumers also know that the financial system is not isolated from the climate change agenda – 70% of survey participants believed that banks, specifically, have an impact on climate change.
The largest banks and financial institutions in the US – the likes of JPMorgan Chase, Citi, Wells Fargo, and Bank of America – are the biggest financiers of the global fossil fuel industry, a fact that is viewed negatively by climate-conscious consumers.
Still, the majority of respondents were unaware of their bank’s activity around investment in fossil fuel or renewable energy projects, and yet they felt that banks have a responsibility to be transparent in their investment activity disclosures.
Nevertheless, it looks like alignment with personal values is quite important – it was the second-most prized service by bank customers, right after higher interest rates on savings accounts.
The environmental filter is increasingly present in people's financial lives. Consumers don't want to be part of the problem, and they're voting with their wallets.
The study found that 81% of consumers want the ability to opt out of investments that contribute to climate change, in industries such as deforestation, tobacco production, arctic drilling, fracking, coal-fired power plants and tar sands extraction.
At the opposite end of the spectrum, purpose-driven investments are a popular approach. The vast majority of consumers want their investments to have a positive impact on the planet.
And Millennials are leading the way – they're the most active in the ESG space, with one in three Millennials holding ESG investments.
But even though folks want to engage in sustainable investments and prefer banking at value-aligned institutions, only 14% of adults prioritize investment portfolios when selecting a bank.
However, 71% of Gen Z and Millennials would consider switching to a bank that prioritizes responsible investments.
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Video of the week
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