To stay relevant in the long run, banks may need to get greener
- The public is taking greater interest in becoming more environmentally friendly.
- Banks are picking up on this shift and are taking steps to become greener.

With more interest from the public, green banking may be making its way into the mainstream. 39% of U.S. voters would switch banks to avoid having their deposits used to fund oil and gas, according to a poll by challenger bank Aspiration.
We’re also seeing a change in investors’ mindset when it comes to investing in fossil fuels versus renewable energy. There’s more weight being put on ESG, or Environmental, Social, and Corporate Governance – factors that help measure sustainability and the societal impact of an investment. NetEra Energy, one of the largest investors in renewable energy in the U.S. has seen its shares double in the last two years. Meanwhile, Exxon and Peabody Energy shares are down 52% and 95% respectively.
Banks are picking up on this shift. Many of them are taking steps to shed the image of fossil fuel funders. Citi and CIT are offering sustainable investment solutions. Morgan Stanley, JPMorgan Chase, and Citigroup have all said they won’t fund arctic refuge oil drilling.
“Banks are primarily going green because it is becoming widely accepted that doing so aligns their economic interests,” said Tim Buckley, a financial analyst at IEEFA.org, a nonprofit that aims to accelerate the move to a sustainable energy economy. “[There’s also] a growing acceptance of the increased financial risks of continuing to invest in fossil fuel assets.”
In terms of establishing themselves as green banking solutions, challenger banks, with their digital-first focus, may have the upper hand.
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“Fintech’s digitally native approach is already far more aligned with elements of the E in ESG, just looking at the move from paper to electronic,” said Dr. Ruth Wandhöfer, partner at fintech investment firm Gauss Ventures.
Challenger banks that offer ecologically friendly services are popping up globally. The Italian challenger bank Flowe, which launched in July, partnered with reforestation start-up ZeroCO2 to allow users to plant trees in Guatemala. Customers get notifications through the Flowe app about how their trees are doing.
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