Investing in a sustainable future

Your money, whether in banks or pension funds, can be used to finance schemes which are bad for the planet. It is therefore vital to find out where your money goes. Many of us do not know how our money is invested. Investigating and changing our own financial choices can have a positive impact on the climate crisis. You may not consider yourself an investor, but if you have a bank account and a pension, you are one. Banks and pensions funds often hold investments in fossil fuel companies. According to a report by a coalition of NGOs, the world’s biggest 60 banks have provided £2.8tn of financing for fossil fuel companies since the Paris agreement in 2015.

The Make My Money Campaign identified that on average switching your pension to more sustainable investments can have 21 times more impact than cutting out meat, stopping flying and switching energy providers combined. Research suggests moving a £100,000 pension pot with a traditional portfolio with oil and gas companies to a positive impact portfolio is the equivalent to taking five to six cars off the road a year.

All investments, both sustainable and not, carry risk as well as offer potential returns that should be considered as part of any financial decision. However, moving to greener investments does not need to impact on your returns, with many sustainable funds outperforming ‘traditional’ ones over 1, 5 and 10 year horizons.

If you are interested find greener ways to store your money, Bank Green provide a free tool to investigate your own bank. Bank Green collects data from several trusted sources including NGOs such as BankTrack. It has researched and spoken with banks to understand their financing of fossil fuels and commitments to change.

There are many expert financial advisors that can help ensure your pension is aligned to your values, to positively impact people and planet. The Times offers a guide to ethical pensions. You can write to your bank or pension provider and ask if you can opt out of funds investing in fossil fuels. Alternatively, switch to a new account that invests sustainably. If you do switch, ensure your bank knows that its fossil fuel financing was the main reason for your decision.

Banks that see customers moving elsewhere due to climate concerns are more likely to reduce their fossil fuel investments. Removing your pension fund from banks which contribute to the climate crisis can positively impact the planet by reducing their supply of money to invest in fossil fuels.