Almost all of us save our hard earned pennies in a bank account.  We know the bank will then use our money to finance a host of other projects and companies. So what has this to do with the environment?

Bank HQ: How green inside? German bank HQ. Photo: Eva Mokhlis

Let’s consider your £100 saved in the mythical Coalbank versus your £100 saved in the equally fictitious Greenbank.

Coalbank uses your money to invest in fossil fuels, oil pipelines, tar sand extraction and other ‘high carbon’ activities.  Greenbank invests your money in renewable energy and insulation.  For an environmentally minded person the choice of bank is clear.

But let’s get back to the real world.  How do you make these kinds of decisions, what options exist, and can you be sure environmental options will look after your cash?

Many banks are taking action to reduce their office energy use and introduce paperless billing but where a bank can make the largest difference to the environment and society is in what types of activity, low-carbon or high-carbon, it finances.

One way to measure the green finance credentials of a bank is by its ‘external’ or investment carbon footprint.  In a 2007 report by Platform and FoE Scotland the footprint of fossil fuel projects financed by RBS was calculated to be greater than the whole of Scotland.

So what UK bank is the climate friendly choice?  No study has been done for all the UK banks so it is currently impossible to produce a league table or crown a winner.  What we can do is look at a bank’s investment policies. 

Two banks stand out: the Cooperative Bank and its internet wing Smile have a clear commitment to avoid investment in fossil fuels; while Triodos only invest in projects with positive social or environmental aims.  Both banks are cooperatives, this means they have no shareholders to pay dividends to and all the profits made can go directly to you.

Friends of the Earth Netherlands have concluded that switching €10,000 from the worst performing Dutch bank to the most climate friendly avoids financed carbon emissions comparable to half a year’s car driving.

Even if you don’t have thousands of pounds switching your bank might be the most climate friendly decision you can make this year.