New Bank of the West Report Highlights Major Consumer Knowledge Gaps in Sustainable Finance | Sustainable Brands (2024)

Fossil fuels and other climate-risky endeavors are still big money for banks; and even if consumers find their bank continues to fund them, it’s something they often feel powerless tochange.

For all of our ongoing efforts to reduce emissions, use better materials andadopt other climate-friendlier practices, one of the biggest barriers to movingthe needle still revolves around money.

A new Bank of the Westreport released todayhighlights some of the resulting disconnects with consumers: Although 79 percentof respondents are “passionate” about climate change, only 22 percent actuallyknow if their bank is financing fossilfuels.

“Increasingly, we’re seeing that ESG is the most important factor in choosing abank,” Melissa Fifield, Bank of the West’s head of corporate socialresponsibility & sustainability, told Sustainable Brands™.

The San Francisco-based institution appears to have transparent andstringent environmental financingpoliciescompared to many of its peers in the US; so the report is as much of anopportunity for the bank to walk its talk as it is to shine a light on bigfinance’s role in the climate conversation.

“We stand out from our competition in the specific financing policies we have inplace, and how that appeals to Gen Z consumers,” Fifield says.

As investment advisor Vanguard found out lastfall,financial transparency matters more than ever; and moving in the wrong directioncan have business impacts well beyond the bottom line.

Not surprisingly, younger generations know and care more

The report found the highest awareness of bank-related climate funding landedwith millennials (24-39) and Gen Z (18-23) consumers. Of course, those agegroups care more as a whole about how their purchases can make a difference; buttranslating that to banking is a much more difficult task.

The report illustrates that obstacle, finding that 66 percent of respondentswould stay with their bank, even after learning it had “no restrictions onfinancing certain commercial businesses, areas or sectors” (regardless ofperceived impact). However, 61 percent of Gen Z respondents said they wouldchange their bank if they knew their current institution was financing fracking,for example.

While more and more banks have begun to mobilize around climate change and havemade individual net-zeropledges,their continued investment in polluting sources ofenergyflies in the face of those pledges — and external pressure is mounting for themto put their money where their mouths are. December saw a promising move tophase out coalfinancingfrom British banking giant HSBC; but the grandaddy of all investors,BlackRock, continues to hedge its bets on forgoing financing for fossilfuelcompanies.Fossil fuel-producing businesses are still big money for banks — to the tune oftrillions ofdollars— and it’s something that consumers often feel powerless to change in the grandscheme of the climate conversation.

In response to this, consumer awarenesscampaignsfrom activist organizations such as Bank.Green have emerged to make iteasier for individual investors and banking customers to discover where theirbanks’ money is going — and, if necessary, to move their money intoinstitutions whose practices align with theirvalues.

Sustainable finance is good for business — internally and externally

While it’s not surprising that a bank-funded report would highlight datasupporting the reputational benefits of climate-friendly financing, what wassurprising was the positioning of how internal stakeholders could help advancethose conversations.

“When it comes to the response of business leaders, mid-level executives are anuntapped resource,’ Fifield says.

By and large, the report found more than half of director- and manager-levelemployees didn’t know if their company’s bank was financing efforts such asArctic drilling, coal power plants or deforestation. It also found that thesemiddle managers are more likely to ask for changes in their company’s financingplans as opposed to those at the top (VP or higher).

Granted, those types of structural changes are easier said than done; but itdoes show that these mid-level, typically younger, employees are ushering in anew era of transparency demand, and it would serve both companies and banks toembrace and execute around that.

Limited insight into its own future strategy

When asked about how these findings could affect the Bank of the West’s future —and its sale to Bank ofMontreal,expected to close at the end of the year — Fifield said she couldn’t commentopenly about the latter, but did note that they are focused on what they’redoing today.

She explained that the bank is two years ahead of schedule in meeting a $1billion financecommitmentto clean and renewable energy. CMO Ben Stuart added that the Bank's 1% for the Planetcheckingaccounthas “tens of thousands of account holders” and is largely responsible for Bank of theWest’s total certified giving as a 1% for the Planet member of just over $4.5million. Fifield noted that about a quarter of new-to-bank checking customersare opening that account.

As this latest report shows, as consumer awareness of their banks’ activitiesgrows, demand for efforts like these are sure to grow with it.