How green are your finances?

You bike to work every day because you want to reduce pollution from cars?

That’s very admirable. Keep it up!

But what if your bank invests all the money you keep with them in the oil industry? Wouldn’t that cancel out your personal efforts?

That’s just one example of why you need to take control over what happens with your finances!

Your bank accounts

Did you know that the money you keep in your bank (payment account or savings account) is actually used by your bank to make investments and generate profit?

That’s fine, except that your bank might invest your money in sectors that clash with your convictions (fossil fuels, other polluting sectors, arms, tobacco, etc.) as these can be sectors with a high return.

Under EU rules (Non-Financial Reporting Directive), big European banks have to disclose sustainability-related information in their annual reports.

Ask your bank what sectors the money in your payment account and savings account is being invested in. If these sectors are not in line with your convictions, switch to another bank (new European rules make switching banks easy).

Your
pension

Did you know that the money set aside every month for your pension is actually invested through pension funds into various economic sectors to increase its total amount over time?

In itself, this is great, but the money may be invested into sectors you don’t want to finance (fossil fuels, other polluting sectors, arms, tobacco, etc.).

Ask your private pension fund in which sectors your money is being invested. If these sectors are not in line with your convictions, switch to another pension fund.

Your investments: funds

There are more and more ethical investment funds, which invest your money only in certain economic sectors. Look for funds with high Environmental, Social and Governance (ESG) standards, which will not invest your money in harmful sectors.

If your money is invested in a passive fund, check information on the benchmark the fund tracks. Traditional benchmarks include securities across the whole range of economic sectors, including harmful ones. Look for funds that use low-carbon benchmarks, which cover economic sectors that contribute to reducing greenhouse gas emissions.

The European Commission has recently adopted rules on two new categories of low-carbon benchmarks, EU climate benchmarks, which are aimed at reducing carbon emissions and supporting ESG objectives. The rules also lay down minimum ESG disclosure requirements that administrators of all EU benchmarks (except for interest rate and currency benchmarks) will have to take into account.

Take a minute to check the information that is provided about the investment fund you are interested in. If they claim to be green, try to find out which sectors they invest in. Try to find more information online. Ask them questions directly. That’s what a fund manager is for.

Your investments: securities

If you are investing your money directly in the stocks or bonds of companies, you might find quite a lot of information on the Environmental, Social and Governance (ESG) standards of those companies via their annual reports, Corporate Social Responsibility (CSR) reports and/or company websites.

European rules (Non-Financial Reporting Directive) require big companies to disclose sustainability-related information in their annual reports. The Taxonomy regulation will require big companies, banks and insurers to disclose indicators of the proportion of their activities that are classified as sustainable.

Take a minute to check online for information on the company you would like to invest in. Read their annual reports.

Your
insurances

Many insurance products, for example life insurance, are actually financial products that invest insurance premiums in the financial markets.

EU rules (Non-Financial Reporting Directive) require big European insurance companies have to disclose sustainability-related information in their annual reports.

Ask your insurer what sectors the money is being invested in. If the sectors are not in line with your convictions, switch to another insurer.