Translating finance to personal carbon footprint is tricky

This analysis comes with a few important caveats. The first is that fossil fuel finance is not directly analogous to carbon emissions, since some banks lend more to especially carbon-intensive sectors like tar sands. The second is that banks’ lending is not limited to what they can raise through deposits; they also raise funds through capital markets and other avenues. So, the loss of climate-conscious retail customers won’t necessarily impede a bank’s ability to lend to fossil fuel companies. A deposited dollar may also be used more than once by the bank over time. Finally, switching banks doesn’t tackle the root problem, demand for fossil fuels, in the same way driving less or eating less meat might. The focus on financing also ignores the work that many banks do to lobby against climate policy, which could be an even bigger impediment to economy-wide decarbonization.

Still, finance-focused climate advocates say, if more retail customers ditch high-carbon banks, it will send a political signal and pressure on banks to exit the sector.

“No single person can shift the banking system on their own,” said Lydia Hascott, who manages a program to train bankers on climate action at the UK nonprofit Finance Innovation Lab. “But the wave of people across society caring about this could be huge. If banks understand there is this desire out there in the public and among their customers, this adds to the range of pressures banks are feeling from other stakeholders too—which together can create a tipping point.”

📬 Sign up for the Daily Brief

Our free, fast, and fun briefing on the global economy, delivered every weekday morning.