Banks use your deposits to loan money to fossil-fuel, emissions-heavy firms

When you drop money in the bank, it looks like it’s just sitting there, ready for you to withdraw. In reality, your institution makes money on your money by lending it elsewhere, including to the fossil fuel companies driving climate change, as well as emissions-heavy industries like manufacturing.

So just by leaving money in a bank account, you’re unwittingly contributing to worsening catastrophes around the world. According to a new analysis, for every $1,000 dollars the average American keeps in savings, each year they indirectly create emissions equivalent to flying from New York to Seattle. “We don’t really take a look at how the banks are using the money we keep in our checking account on a daily basis, where that money is really circulating,” says Jonathan Foley, executive director of Project Drawdown, which published the analysis. “But when we look under the hood, we see that there’s a lot of fossil fuels.”

By switching to a climate-conscious bank, you could reduce those emissions by about 75 percent, the study found. In fact, if you moved $8,000 dollars—the median balance for US customers—the reduction in your indirect emissions would be twice that of the direct emissions you’d avoid if you switched to a vegetarian diet.

Put another way: You as an individual have a carbon footprint—by driving a car, eating meat, running a gas furnace instead of a heat pump—but your money also has a carbon footprint. Banking, then, is an underappreciated yet powerful avenue for climate action on a mass scale. “Not just voting every four years, or not just skipping the hamburger, but also where my money sits, that’s really important,” says Foley.

Just as you can borrow money from a bank, so too do fossil fuel companies and the companies that support that industry—think of building pipelines and other infrastructure. “Even if it’s not building new pipelines, for a fossil fuel company to be doing just its regular operations—whether that’s maintaining the network of gas stations that it owns, or maintaining existing pipelines, or paying its employees—it’s going to need funding for that,” says Paddy McCully, senior analyst at Reclaim Finance, an NGO focused on climate action.

A fossil fuel company’s need for those loans varies from year to year, given the fluctuating prices of those fuels. That’s where you, the consumer, comes in. “The money that an individual puts into their bank account makes it possible for the bank to then lend money to fossil fuel companies,” says Richard Brooks, climate finance director at, an environmental and climate justice advocacy group. “If you look at the top 10 banks in North America, each of them lends out between $20 billion and $40 billion to fossil fuel companies every year.”

The new report finds that on average, 11 of the largest US banks lend 19.4 percent of their portfolios to carbon-intensive industries. (The American Bankers Association did not immediately respond to a request to comment for this story.) To be very clear: Oil, gas, and coal companies wouldn’t be able to keep producing these fuels—when humanity needs to be reducing carbon emissions dramatically and rapidly—without these loans. New fossil fuel projects aren’t simply fleeting endeavors, but will operate for years, locking in a certain amount of emissions going forward.

At the same time, Brooks says, big banks are under-financing the green economy. As a civilization, we’re investing in the wrong kind of energy if we want to avoid the ever-worsening effects of climate change. Yes, 2022 was the first year that climate finance surpassed the trillion-dollar mark. “However, the alarming aspect is that climate finance must increase by at least fivefold annually, as swiftly as possible, to mitigate the worst impacts of climate change,” says Valerio Micale, senior manager of the Climate Policy Initiative. “An even more critical consideration is that this cost, which would accumulate to $266 trillion until 2050, pales in comparison to the costs of inaction, estimated at over $2,000 trillion over the same period.”

Smaller banks, at least, are less likely to be providing money for the fossil fuel industry. A credit union operates more locally, so it’s much less likely to be fronting money for, say, a new oil pipeline. “Big fossil fuel companies go to the big banks for their financing,” says Brooks. “They’re looking for loans in the realm of hundreds of millions of dollars, sometimes multibillion-dollar loans, and a credit union wouldn’t be able to provide that.”

This makes banking a uniquely powerful lever to pull when it comes to climate action, Foley says. Compared to switching to vegetarianism or veganism to avoid the extensive carbon emissions associated with animal agriculture, money is easy to move. “If large numbers of people start to tell their financial institutions that they don’t really want to participate in investing in fossil fuels, that slowly kind of drains capital away from what’s available for fossil fuels,” says Foley.

While the new report didn’t go so far as to exhaustively analyze the lending habits of the thousands of banks in the US, Foley says there’s a growing number that deliberately don’t invest in fossil fuels. If you’re not sure about what your bank is investing in, you can always ask. “I think when people hear we need to move capital out of fossil fuels into climate solutions, they probably think only Warren Buffett can do that,” says Foley. “That’s not entirely true. We can all do a little bit of that.”

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