With more and more large multinational companies revising their mission statements to pay lip service to sustainability, ‘green washing’ (where corporations try and paint themselves as being more eco-friendly than they really are) is rapidly becoming one of the most ubiquitous buzz words associated with environmental issues.
Though the main players in any number of industries are guilty of this practice, given the state of the global economy and the role they’ve played in creating the trying circumstances of the present day, it’s particularly galling when financial institutions attempt to gain credibility by playing up their questionable commitments to the environment.
By now, many people who take an interest in green topics have developed a certain level of cynicism about products trying to cash in on the rapidly growing market occupied by consumers who demand products that are ethically sound. When it comes to ‘green’ financial products this cynicism is, unfortunately, often well placed.
For example, in numerous cases ‘ethical’ and ‘green’ funds will lead to investor’s cash ending up in hands that they’d probably prefer it didn’t. (BP for example are included in some ‘ethical funds’, whilst some ‘renewable energy’ funds invest in ethanol, which many commentators cite as undermining global food security by creating a food vs. fuel dilemma.)
By the same token, many ‘green’ current account products simply help the banks in question meet the minimum requirements imposed on them, whilst leaving their account holders worse off. It seems that, unfortunately, whilst they may talk the talk, financial institutions rarely walk the walk with regards to putting their customers values over their profits.
Consider this, for example; In 2006 many of the world’s biggest financial institutions adopted a code of conduct called ‘The Equator Principles’ intended to ensure that any project receiving more than $10 million dollars in financing should not be subject to assessments, monitoring and counter actions ensure that it is not overly damaging to the environment.
This sounds like a great piece of self regulation, but it is very difficult to find evidence of these principles being much more than talk. This is partly down to a lack of transparency, but also down to a lack of action. For example, Santander state that in 2011 they didn’t deny a single loan on the basis of the Equator Principles, whilst HSBC have recorded only one loan being rejected on this basis out of the 282 they’ve had cause to scrutinise since 2008.
However, in spite of all this, you shouldn’t lose hope. There are plenty of ways you can make sure that your money truly is going towards a cause you believe in, assuming that is, that you’re willing to go and look beyond the biggest names out there and go for an institution that, rather than trying to dovetail a few green practices into their hugely profitable, long standing operations, has been set up with these aims as a central goal from the start.
Triodos, for example, are pretty much the paragon of transparency. In fact, you can even use an interactive map on their website to see exactly where your money is going, offering investors access to detailed information on the eco-projects that they fund.
The New Resource Bank, on the other hand, has a great deal of specialist expertise in supporting non-profit organisations and striving to reach a stage where their loan portfolio consisting 100% of businesses looking to promote sustainability. To this end they stopped making non mission related loans in 2009.
Of course, it always pays to scrutinise any institution that you’re going to invest in (and even a regular bank account should be thought of as an investment) but, perversely, when your goal is to help create a more sustainable world rather than a strong return, you need to be even more vigorous in researching the credentials of the product. After all, not all the glitters is green.
Steve Waller is an environmental who uses his blog, GreenSteve.com to write about a wide range of subjects, from green banking to developments in renewable technology.