File picture: Pixabay
File picture: Pixabay

Now everyone can make their wallet greener

By Bloomberg Time of article published Jul 22, 2020

Share this article:

By Emily Chasan

The next frontier in sustainable finance is literally in your wallet. While we’ve seen $30 trillion in assets flow into sustainable investing, everything else, from consumer spending to credit cards and traditional banking, represents a bigger piece of the ESG pie. The issue goes beyond figuring out how green everyday purchases are: Now, it’s about what kind of future your bank deposits and credit cards are financing.

Morgan Stanley this week became the first U.S. bank to join a carbon accounting group aimed at tracking how its loans contribute to climate change. BNP Paribas’ Bank of the West, which already has strict policies on fossil fuel and tobacco financing, launched a climate-action checking account that comes with a carbon-tracking tool to find out if you’ve shopped at a sustainable store. It even has a biodegradable card.

Mastercard on Wednesday is to announce a plan to work with 60 financial institutions to issue credit cards made from recyclable, biodegradable or ocean-harvested plastic. (By the company’s calculations, 6 billion payment cards are produced each year, and collectively contribute 5.7 million tons of extra plastic to landfills each year as they are replaced.)

Regardless of the actual cards in your wallet, “this is about democratizing access to sustainable finance,” said Ben Stuart, chief marketing officer at Bank of the West. There are of course challenges to truly sustainable banking or carbon-tracking all of your purchases (your credit card can’t tell if you bought a meat or vegan burger). Still, it’s a step toward making sustainable financial choices more accessible. Until recently, impact investing and sustainable investing have generally been limited to wealthy investors that can meet large account minimums and take risky bets.

“If you think of ESG and sustainability and people’s financial lives and only think about that in terms of investing, you are addressing a very narrow slice of the country: people spend $36 billion a day as consumers and that’s a much bigger impact than the dollars that go into investing each day,” says Andrei Cherny, chief executive of Aspiration Bank. His California-based bank offers products that let customers plant trees with their purchases or buy carbon offsets.

“There are a lot of people who are thinking about sustainability and ethics when they make daily decisions about the clothes or protein they want to buy, the coffee they drink or their car,” Cherny says. “But then don’t realize their bank credit card and deposits are having a much worse impact on the planet.”

BLOOMBERG

Share this article: