You may have heard of greenwashing; the practice of companies saying they’re environmentally friendly to sell their product, but behind the scenes are actually making zero sustainable efforts.
Financial greenwashing is the money version of that- when banks, investment brokerages, mutual funds, or fintech products pose as sustainable while actually being environmentally harmful.
You absolutely can align your spending, investing, and banking with your environmental values, but you do need to watch out for greenwashing. (Our free guide will walk you through how to figure out your financial and lifestyle values!)
Here’s how to spot financial greenwashing and how to avoid companies that suck when it comes to your money.
Examples of Financial Greenwashing
Oh let me count the ways that companies use financial greenwashing!
Let’s take Chase Bank. After the Paris Climate Agreement Chase says they “set 2030 carbon intensity targets for key sectors of our financing portfolio and are tracking progress using our Carbon CompassSM Methodology.”
But since the Paris agreement Chase has invested more than $316 billion into fossil fuels. And Chase is literally $70.68 BILLION ahead of the next closest fossil fuel investor, Wells Fargo.
Having their carbon compass website is an example of financial greenwashing. They tell customers that they’re concerned about climate change, but in reality are one of the biggest creators of climate change.
Want a pre-screened list of ethical mutual funds? We include 15 in our ethical investing course that are fossil fuel and prison labor free!
How to Fact Check if Something is Financial Greenwashing
But how do you know financial greenwashing when you see it? Here are a few ways to fact check.
1- Consider the source material. The English major in me will never die! ALWAYS look for the source material for a claim or a sweeping statement. For example, a bank statement that says they donate a percentage of their profits. Look into when they make the donations and who they are donating to.
Often these donations don’t get made, don’t get made in the amount they say they will donate, or are to an organization the bank owns for tax purposes. Aspiration Bank is guilty of these kinds of claims, claiming credit for having already planted 25 million trees when in fact they simply have PLANS to plant that many trees.
2– Look for certifications. There are a lot of sustainable certifications available to the financial industry. If a brokerage or a bank has been certified by a third party in it’s sustainability efforts, it’s more likely to be legitimate.
3-Don’t trust broad statements. Any financial institution can say “we’re eco-friendly!” That’s vague as hell! Ask for details on their initiatives and how they have been incorporated into day to day business. A once a year $5,000 donation to an eco-friendly nonprofit is not the same as divesting from fossil fuels for a multi billion dollar financial institution.
Build an Investing Portfolio You Feel Great About
There are a few simple steps to building an ethical financial life for yourself.
–Find an ethical bank to keep your money in
–Open an investment account with any brokerage (there are no ethical brokerages in my opinion; it’s all about what you’re actually investing IN.)
-Research potential index and mutual funds to see if they match your lifestyle values.
-Employ an ethical investing strategy over the years to build your wealth
You can skip the research and avoid the financial greenwashing by enrolling in our ethical investing course! We’ve done all the work for you by sourcing:
-ethical mutual funds
-and ethical real estate options
so you don’t have to spend your time trying to figure it all out. We explain ethical investing strategies as well, so you can keep your money at the companies you choose for the long run.
Dig this? The party doesn’t have to stop! Follow us on Facebook, Instagram, and Twitter for money tips, jokes, and inspiration, and join our email newsletter here.