The money hack the banks don’t want you to know  

Ever thought about what happens to your salary once it’s in the bank? Well, it doesn’t just sit there waiting for you to unbox it and call on it when needed for your weekly Deliveroo or latest Vinted purchase. 

This is the dirty secret the banks don’t want you to know.  

They use your money – all of it. Your salary, your savings, interest paid on a mortgage or a loan, your pension. They pool it together with everyone else’s money and use it to lend to other people, by way of loans, credit cards and mortgages. They also use it to lend money to businesses. That might be to small businesses such as your local corner shop, coffee shop, farmer or music venue. Equally, it might be to larger organisations such as tobacco companies, arms manufacturers or companies financing new oil field drilling or deforestation. 

Your bank’s finance for the fossil fuel industry is one of the reasons we are all still struggling to adequately tackle climate change. 

This is despite the fact that the science is super clear: burning fossil fuels leads to climate change.

Incredibly, lending by banks to the fossil fuel industry has continued at pace since the 2015 legally binding Paris Agreement on climate change that sought to hold “the increase in the global average temperature to well below 2°C above pre-industrial levels” and pursue efforts “to limit the temperature increase to 1.5°C above pre-industrial levels.” 

According to campaign group Make My Money Matter (check out Kit Harrington as you’ve never seen him before) the UK’s largest banks – Barclays, HSBC, Santander, Natwest and Lloyds - have loaned huge sums to fossil fuel companies since 2015 totalling more than $500 billion. 

In 2023 alone Barclays loaned $24.2 billion, HSBC loaned $12.9 billion, Santander loaned $14.5 billion, Natwest loaned $2.1 billion and Lloyds loaned $1.9 billion. 

This is money that could instead be directed to climate-positive solutions like renewable energy, sustainable travel or decarbonising homes, to tech start-ups, to healthcare, UK manufacturing or many other ethical businesses. 

But, surprisingly, given that the majority of Gen-Z (people born between 1997 and 2012) are in favour of phasing out use of oil, coal and gas, along with petrol or diesel cars, we’re still not yet applying the same logic to our finances. 

When it comes to all purchasing decisions, Gen-Z fall into two camps – the underconsumption corers vs the Shein haulers (BTW, did you know Shein ships more than 1 million parcels EACH DAY in the US?).

Forty percent of Gen-Z say that environmental impact is an extremely or very important factor when making purchasing decisions and, in 2020, there was a 71 percent increase in online searches for sustainable goods, with 66 percent of all shoppers saying they consider sustainability while shopping. In fact three-quarters of Gen Z prefer to buy sustainably rather than to go for brand names and 28 percent have stopped buying from brands with poor ethical or sustainability values. 

If you put the planet first when spending, why not also focus on sustainability when it comes to your savings or your bank account?  

Many people won’t make the link…  but choosing a more sustainable financial provider can be a vital act in helping solve the climate crisis.  

Okay, so you might not have a huge amount invested in your pension right now, but according to Make My Money Matter’s Climate Action Report, greening our pensions cuts our carbon footprint 21x more than going veggie, giving up flying and switching energy providers. 

Follow the money, and you’ll see it’s not vastly different when it comes to our choice of bank.