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Green finance or greenwashing?

Finance professional John Curran will be Talking Money at Audlem’s Climate and Nature Event on Saturday, 18 September 2021 between 10 am and 4 pm at the Buttermarket. One of the most effective climate actions you can do is to invest your money wisely. In this article John asks how transparent or ‘green’ are UK financial institutions and the products they brand as ‘green’ or ‘sustainable’?

Nicholas Megaw, Retail Banking Consultant at the Financial Times says, “the UK’s largest lenders have failed to impress campaigners”. Simon Youel, head of policy and advocacy at Positive Money, agrees that “UK banks have talked the talk on climate, but their actions have fallen short.” Nigel Higgins, Barclays Chairman, is reported as saying “We have been slower than we should have been to address the climate challenge and nobody can be pleased with the progress we’ve made since this topic first moved centre stage.”

If the banks and industry experts are querying the financial institutions’ green credentials, shouldn’t we, too, be more sceptical of what we see advertised as a ‘green’ financial product?

The UK Banking Sector has a significant role to play in achieving the UK’s Carbon Reduction targets. The cash in your bank account, pension, and personal investments may not seem to be a direct cause of greenhouse gas emissions, but the financial institutions you invest with, and give your business to, could be having a big impact on the environment. For example, the Rainforest Action Network report that 35 of the world’s largest banks have invested $2.7 trillion in fossil fuel companies since the 2015 Paris Agreement. Consequently, bank investment in industries linked to climate change and environmental damage has come in for criticism and the financial sector has become the object of widespread public distrust.

But there are ‘Green’ products available and environmental strategies applied by UK financial institutions. Environmental Social Governance (ESG), Corporate Social Responsibility (CSR), and Sustainable Accounting date from the mid 1960’s when investors started discussing ‘socially responsible investing’.

This led to ‘Sustainable’ or ‘ethical investment funds’, ‘green mortgages’, changes to Pension Boards and how the Directors make their fund manager choices, and ultimately led to organisations such as the United Nations announcing a set of ‘Principles for Responsible Investment’.

There are several other organisations trying to press ahead with open, honest, green banking. The Green Investment Bank, the All-Party Parliamentary Group on Fair Business Banking, and Bankers for Net Zero. Soon we will be able to add the Green Infrastructure Bank to that list after UK Chancellor Rishi Sunak announced its establishment in his 2021 Budget.

But big questions are: How do we know that the company selling us the ‘green’ product is not the company investing in the most polluting of investments such as fossil fuel companies rather than renewable technologies? Is an internet bank with no properties and no branches a less environmentally negative financial institution to invest with? Is a ‘green’ mortgage really green or is the consumer effectively giving profit to a bank with the highest carbon footprint? What is a bank’s carbon footprint anyway and is it independently calculated?

‘Greenwashing’ is common whether it be mortgages or bottled water. It means conveying a false impression or providing misleading information about how a company's products are more environmentally sound. Fund Manager Marcus Björksten told the Financial Times, “Greenwashing is a real problem” and many funds are not as sustainable as they would like to appear. Björksten mentions that several popular ESG funds invest in the world’s largest carbon emitters and that “nowadays, every second fund is claiming it is in some way sustainable.”

As consumers become more environmentally conscious, they too will affect investment and retail banking by choosing firms who have a clear and well-communicated policy on the environment. With customer loyalty scores of between 29% and 55% only, for the big 8 UK banks, customers can be lost easily and more emphasis and research on retention through ‘green’ banking should be carried out.

I am John Curran, the UK’s ‘Green Broker’. After spending many years in senior roles at some of the UK’s largest Banks and Building Societies and running my own mortgage & protection business (Currancy Mortgage Brokers) based in Holmes Chapel for the last 8 years, I became disillusioned with the lack of progress on environmental sustainability within the financial services sector. As such, I am currently studying my Masters in Environmental Sustainability & Green Technologies at Keele University with a particular focus not just on financial institutions but also focussing on Green Government Grants and retrofit options for current UK homeowners. I’d love to have a chat about this passion of mine with anyone interested at Audlem's Climate and Nature Event. I am offering £100 discount on my company’s normal mortgage broking fee for anyone I speak to on the day, and will pass that discount onto your friends and family if they mention the Talking Money event in Audlem when they call Currancy Mortgage Brokers. Contact or 07980 242315.

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