In this content I am presenting my personal opinion as an active private investor. This content is not intended to provide investment, financial, accounting, legal, tax or other professional advice and should not be relied upon or regarded as a substitute for such advice.

How you can save the planet with your money ?

Let’s be honest; we all know about the giant elephant in the room. Everyone is feeling the temperatures starting to fluctuate, and we all read the news about melting icebergs, forest fires, and other disasters caused by climate change. Luckily, there are a few practical things you can do to impact the planet with your money while also making a profit! Read more about 3 practical steps how you can help reverse climate change with your personal finance.

How you can save the planet with your money

Step 1: Request fossil fuel divestment

For this first step, you don’t need to go very far! Let’s start with your savings. Unfortunately, not spending money doesn’t guarantee a lesser negative impact on the planet. The money stored in your savings isn’t actually materially there; instead, it is being loaned and invested by your bank. But no one tells you what exactly is being done with your money. Well, I am here to let you know that the international banking system pushes tons of money into climate-change-inducing industries each day. According to a recent watchdog report the world’s 60 largest banks have financed fossil fuels in the amount of 3.8 trillion USD in the 5 years since the Paris Agreement.

This includes lending, and underwriting of debt and equity issuances by those financial institutions to allow the fossil fuel industry to extract oil, gas and coal. Leaders of the pack are JP Morgan Chase (317 billion USD), CITI (237 billion USD) and Wells Fargo (223 billion USD).

Now what you can do is try to find out whether your bank is investing in climate-damage industries and just how much if they are. Once you know that your bank finances fossil fuels, then you should let them know before you switch banks. Don’t just close your account; inform them of why you made your decision. You can use templates available online or write your own letter asking the bank to provide information on all its investments and commit to divesting from climate-damaging industries. Once you have all this filled out, send it to your local bank!

Step 2: Work with a climate-friendly bank

If you have made the leap to change banks, you are already doing great! Now you must choose a new one that is climate-friendly and doesn’t invest in damaging the climate. There are many smaller banks that are ethical and fund climate change solutions.

If you are a EU citizen Triodos Bank from the Netherlands and GLS Bank from Germany seem like good options. The Dutch financial institution is committed to giving back and has invested over 6 billion £ in projects that aid people and the planet all across Europe. Its German peer and is according to own communication the world’s first ecologic bank. As a customer of GLS you can personally choose the sectors where your money is invested – for example in renewable energy generation.

In the US the ecologic banking sector is still in its infancy. One of a few possibilities is Aspiration bank. They invest sustainably, make cards using recycled ocean plastic, offer cashback when you purchase from ethical brands, and even have the option to plant a tree with every purchase.

Step 3: Invest with climate impact

Last but not least you can invest in good causes! To make a positive impact, you have to be willing to contribute some of what you have to save the planet. But, not every ESG fund (environmental, social, and governance) actually contributes to fighting climate change, so your job is to do research before investing! Choose companies that make all their profits with products that truly contribute to combating climate change instead of throwing it at the first flashy ESG you encounter. And you can even achieve attractive yields with climate friendly stocks. For example, solar energy stocks outperformed the average global stock market by factor 3.5 over the last 5 years as shown in Figure 1 below.

Transparent save the planet

Figure 1: Development of value of MSCI ACWI Index compared to Invesco Solar ETF (source: Bloomberg (2021))

Let’s use our finance to prevent climate change

Point is that in order to undo the damage humanity has done to the planet, we must be willing to take a stand! Saving, spending, and investing with a positive climate impact will pave the way to reducing carbon emissions. Consider these three steps and together we will open the door to a better future and a cooler planet.

References

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