June 2023

Did you know some banks pretend to be environmentally friendly without being committed to it? It's called greenwashing, a sneaky tactic to make you think they're eco-conscious. In this article, we'll show you how to spot greenwashing in your bank, explain what carbon offsetting means, help you uncover where your bank invests your money, and give you practical steps to make smarter, greener choices for your finances.

Greenwashing in the banking sector

While most European banks are trying to adopt sustainable banking, there is no denying that some are only talking about it and not taking action. These banks cannot be considered green; you must be aware of their misleading green image.

Two famous practices by such banks to paint a green image are greenwashing and mindless carbon offsetting.

What is Greenwashing?

Greenwashing is a process of banks painting a greener picture of their impact on the climate than what their holdings or other factors indicate. It’s a marketing or advertising tactic to deceive customers into believing their products and policies are eco-friendly.

IS MY FINANCIAL INSTITUTION INVOLVED IN GREENWASHING?

If your bank is not taking the following actions, greenwashing might be involved.

No new investments in fossil fuels.
Investing in climate solutions, especially green energy.

What is carbon offsetting?

Some banks boast that they are carbon offsetting. But what does that mean exactly?
A carbon offset is a reduction or removal of carbon dioxide or other greenhouse gas emissions to compensate for emissions made elsewhere.
Wait a minute; this sounds like a good thing; what's the problem?
While it is a good practice, one must remember that it is only one tool to mitigate emissions. It should only be used when all other means have been exhausted. Planting trees to offset emissions while investing in fossil fuels is not the trait of an eco-friendly institution.

IS MY BANK INVOLVED IN MINDLESS CARBON OFFSETTING?

Mindless carbon offsetting might be involved if your bank is not taking the following actions.

No new investments in fossil fuels.
Investment in climate solutions, especially green energy.
Verified by reputable organisations such as Gold Standard, Verra or Climate, Community & Biodiversity Standards.

How to find out about a bank's investments?

The information about banks' investments is available online. Here is an example
Do a simple Ecosia search. Type ‘EIB bank’ + ‘Impact report 2022’.

The EIB (European Investment Bank) report describes how the bank invests towards climate action.

Remember, only sustainable investments, lending and loans mean sustainable finance. Anything other than that is an attempt to smear an image of sustainability.

In our manual entry on Sustainable Financial Investments → you learn more about types of sustainable financial investment, ESG & SR investments, and certifications for investments.

What to do now?

Next steps:

Research what sector your bank is investing your money in.
Read the reports carefully to identify greenwashing. And if your bank is misleading you or supporting sectors like fossil fuels, tobacco, or any eco-hazardous project, you know what to do!

LIST OF GREEN BANKS

Plus, do check out our list of green banks below ↓.
It is an evolving list. And we'll keep updating it from time to time.

💡Bank Austria (A), Charity Bank, Ecology Building Society, Ekobanken (DK), Erste Bank (A), Triodos, The Cooperative Bank, EthikBank, Pax-Bank, GLS (G), Umweltbank (G), and banking app Tomorrow. 💡