How to "green" our personal finance

Tips on divesting your money to protect our planet’s future

<< CAN member Francesca Maguire digs out the facts on finance and emissions – the impact’s bigger than we think! If you’d like a CAN event to find out more, member John Adams offers presentations and Q&As. Info on local campaigns plus links and emails provided below - do share your tips and experiences, so we can take action now! >>

“The biggest economic disruption of our modern era will be the transition from fossil fuels to renewable energy.” Mark Campanale – Carbon Tracker.

It’s no secret that in recent years the move from fossil fuels to renewable energy has been at the forefront of almost every debate regarding climate change and the future of our planet. According to the Energy and Climate Intelligence Unit, around 80% of the energy consumed in the UK is provided by oil and gas and, despite a steady decline of greenhouse emissions from the UK since 1990, by 2019 the energy sector remained one of the top four contributors to the nation’s carbon footprint.

That same year saw the UK Government commit to the decarbonisation

of all sectors and net-zero by 2050, however following the latest and most damning IPCC report and last week’s announcement from Boris Johnson and the Conservatives of the most up-to-date Energy Strategy with a notable lack of onshore wind farms and atomic power at its core (pardon the pun), we seem to be once again falling short of what are now critical targets if we are to prevent an overall rise in temperature of more than 2 degrees.

So, what is divestment and how can where you invest your money make an impact on the future of our planet, climate change, and more specifically, the use of fossil fuels? “Divestment is a tactic in which an organization, such as an institution or individual, divests itself of stocks, bonds, or investment funds that are unethical or morally ambiguous.” – Green Business Bureau. It’s quite simple really, by opting to remove your money from funds and institutions that are investing in fossil fuels and removing your financial support, it threatens the long-term viability of fossil fuels and accelerates the transition to renewables. As environmental activist Bill McKibben said back in 2012 when he launched his campaign Go Fossil Free: Divest from Fossil Fuels, in order to save our planet, we must “revoke the social license of the fossil fuel industry.”

Easier said than done, right? Well, maybe not. Here are a few of the ways you can divest your money away from fossil fuels, as well as finding out how your money is currently being invested and some resources to help you decide where you’d like to reinvest it for the future of our planet:

Switching your bank account

According to Triodos, “Nearly £150 billion has been invested in fossil fuels by UK banks since the Paris climate agreement was adopted in 2016.” So, when deciding which bank to give to give your business to, there are a couple of questions you should ask:

· Is it clear how they will be investing my money?

· Are they financing climate change?

Now, you might be thinking that most people don’t have the time or the patience to research upwards of 50 banks to find the answers to those questions, but luckily for us there are some tools available to help us:

· Bank.Green is a website founded by volunteers in 2020 with the mission to tackle fossil fuel extraction by forcing banking institutions to divest from environmentally-destructive projects. The website contains a resource in which you can compare banks from countries all over the world and it gives a barometer rating of how high your banks contribution to fossil fuel investment is.

· Fossil Banks is a Netherlands-based website which gives a more in-depth analysis of the investment behaviour of hundreds of banks worldwide including specific details about how much of and where your money is being invested.

· Switchit is a not-for-profit which was set up to facilitate the move from institutions which fund fossil fuels. Go to their website and it takes just 15 seconds to find out how your current bank fares under their criteria.

Investing in a green pension fund

“Setting up a sustainable pension is one of the most powerful tools we have to minimise our climate footprint.” Jocelyn Timperly – BBC: How I Made My Pension Sustainable

As with your banking, there are some questions you should ask yourself about where your pension pot is being invested:

· Does your pension provider lack transparency?

· Are they investing in carbon-heavy sectors or fossil fuels?

· And in the case of private pension funds, have you sought independent advice about where to invest your money?

According to an analysis by WWF, Aviva and Make My Money Matter, moving the average UK pension to a sustainable equivalent reduces around 19 tonnes of greenhouse gas emissions per year, almost three times the average UK carbon footprint. These days, there are plenty of options out there and with the net-zero targets that many big-name firms such as AVIVA, NEST, Scottish Widows and BT have now set, there will be more to come, but for now here we have a few resources for you to help you understand where your pension is currently going and where you might like to switch it:

· The Good Guide to Pensions

· Make My Money Matter – 21x Challenge

Make My Money Matter also provide you with a template for starting a conversation with your employer or your current provider with regard to where your current pension is being invested. It is also worth asking the question as your current workplace pension fund may have an ethical option which will exclude companies that don’t meet ESG criteria.

If you are one of the just under 7 million people who rely on local government pension funds to provide them with an income when they retire*, you can turn to organisations like *UK Divest for information regarding where your pension is being invested and advice on how you can put pressure on your local councils to divest from fossil fuels, for example, signing petitions such as this one and making your voice heard for the local elections usually held in May, by quizzing your local candidates about their policies and action plan regarding climate change. For more advice on how to approach this and a list of candidates for the Newcastle-upon-Tyne area, check out the Divest Tyne & Wear webpage (and here's our 2022 blog Use Your Vote to Help Save the Planet).

Ethical Investment Funds

You may have previously heard the term ‘socially responsible investment’ which refers to “a strategy that considers not only the financial returns from an investment but also its impact on environmental, ethical or social change” – Corporate Finance Institute. Where once it was enough to just consider factors such as risk, ROI or inflation, when choosing funds, investors must now go one step further and assess the impact of their investment on the climate crisis and select companies which align with their own values and carry out practices which enforce them.

If investment portfolios are your thing and you’d like to make more conscious choices with regards to your carbon footprint, here are some resources that can help you make an informed decision:

· Good With Money is a website which contains guides to all different ways of investing your money ethically including The Good Investment Review and the Good Guide to First Time Investing.

· This blog post gives a comprehensive breakdown of what green investing is, how it works and some of the different platforms you can use here in the UK to access climate-friendly funds.

· This study from ADHEC discusses the greenwashing of supposedly climate-friendly funds and shows you what to look out for when making investments.

· Finally, Ethical Consumer provides an introduction to green investing here and you can find comprehensive lists of companies which provide ethical investment funds as well as banking institution and pension providers, though for the most up-to-date versions a subscription is required.

These are just some of the ways you can use your money to make a difference. Links added, if you’d like to follow up in other ways. And do let us know your tips or queries:

· REQUEST A CLIMATE ACTION NEWCASTLE GREEN FINANCE EVENT: email climatenewcastle@gmail.com

· SUPPORT DIVEST TYNE & WEAR CAMPAIGN TO END £230m FOSSIL FUEL INVESTMENT BY A HUGE LOCAL PENSION SCHEME: link here to its local election report about party policies on investment in fossil fuels by Tyne & Wear Pension Fund. Campaign video and petition coming soon!

· SUPPORT TYNE & WEAR PENSION FUND MEMBERS “OFFSETTING” FOSSIL FUEL INVESTMENT WITH GREEN DONATIONS: spread the word about the “Reinvent our 3%” scheme to anyone you know who has a local authority pension and encourage them to write to Tyne & Wear Pension Fund about divestment. Facebook page, JustGiving page, or get in touch via reinventour3percent@gmail.com

How to get involved with Climate Action Newcastle

Here at Climate Action Newcastle, we want to empower you to make change for the good of our community and the planet. If you’d like to be kept informed of events and initiatives happening in our region, feel free to become a member of our community by signing up on our website. You’ll join our mailing list and receive regular newsletters sharing tips on how to tackle climate change, info on meetings and events such as our monthly members meeting and our regular litter picks, and blogs such as this one to keep you as up-to-date as possible with all the ways we can help. And, it goes without saying, we absolutely welcome all of your ideas, queries and support!