Environmental awareness has become a top priority for financial institutions, but while there is good news like Crown Agents Bank becoming one of the first UK banks to obtain ‘B Corp’ status, Which?, the consumer advisor, has labelled various high street banks in the ‘red’ warning category based on green credentials.
Greenwashing has been a big problem in the financial industry as many organisations have claimed to be ESG-focused and then poured millions if not billions into products which are harmful to the environment. In fact, research from Which? has found that the 60 largest banks in the UK contributed $669billion to the fossil fuel industry in 2022.
Banks can finance fossil fuels in a variety of ways: through project finance (lending to fossil fuel companies for specific projects), general corporate lending and capital markets activity such as underwriting.
The research done in tandem with Reclaim Finance, a non-profit research organisation, revealed the major banks labelled in the ‘red’ category are:
- JPMorgan Chase
- NatWest (includes RBS)
- Lloyds (includes Halifax and Bank of Scotland)
This was a result of revealing their fossil fuel policies to be too weak. This is in addition to statements regarding agricultural commodities such as beef, soy, timber and palm oil.
Of the banks that do finance the fossil fuel industry (rated red), there are differences in financing, policies and promises. Two of them, Lloyds and NatWest, are less involved in these sectors than their peers.
A reason for this lack of eco-action could be reflected in consumer attitudes. Of the 1,463 Which? members that were asked in January, seven in 10 (69 per cent) picked opening an account with a sustainable bank as the least important way to tackle climate change. This was from a list of options that also included flying less and recycling.
Not everyone is an offender though
Which? researchers also considered transparency levels and whether banks had credible targets to reduce exposure to environmentally damaging sectors, and checked whether they publish independently verified data. The three banks labelled Which? Eco Providers are Nationwide, The Co-operative Bank and Triodos. They have no exposure to fossil fuels in their banking activities.
Sam Richardson, deputy editor of Which? Money, said: “Consumers seeking to make more sustainable choices might want to consider switching banks if they are uncomfortable with their money being invested in the fossil fuel industry and other projects which could be damaging to the environment.
“By choosing one of Which?’s three Eco Providers, customers can feel confident that their bank has impressive green credentials and steers clear of investing money in coal, oil or gas.”
These three banks aren’t the only ones making a change. Crown Agents Bank, a specialist payments and FX organisation with a UK banking license has achieved certification as a B Corporation. The certification demonstrates that Crown Agents Bank meets the highest standards of social and environmental performance, transparency, and governance.
What the certification means
Following its certification, Crown Agents Bank and its stakeholders will look to:
- Align business and values: The certification enhances Crown Agents Bank’s reputation as a socially responsible and environmentally conscious organisation. Furthermore, it evidences the fintech bank’s genuine commitment to ethical and sustainable business practices.
- Increase trust: Crown Agents Bank’s B Corp certification enhances credibility and trustworthiness among partners and collaborators. Ensures that they’re engaging with a company that shares aligned values.
- Meet regulatory requirements: B Corp aligns Crown Agents Bank with evolving regulations that demand greater transparency and sustainability in business operations.
“As a purpose-driven organisation, achieving B Corp is a huge milestone for the business. B Corp certification is a leading indicator of trust, transparency, and accountability. This is critical for any business, but particularly for a bank working in some of the most demanding markets around the world,” said Bhairav Trivedi, CEO at Crown Agents Bank.
“Being part of a listed entity further amplifies the significance of B Corp certification, as it highlights our commitment to sustainable and responsible business practices to our shareholders, investors, and the wider public.”
“Social impact is one of Crown Agents Bank’s key driving forces. It is ingrained in everything we do,” said Charlie Bronks, head of ESG at Crown Agents Bank. “Becoming a certified B Corp is a testament to our commitment to ESG. Additionally, it shows our desire to hold ourselves to account, our ambition to do good, rather than simply pay lip service.
“However, the work doesn’t stop here. Moving forward, we’re focused on continuous improvement in all areas of our operations. Furthermore, we want to ensure that B Corp remains tightly integrated and evolves within our broader ESG strategy.”