Banking and Sustainability

While it might be a little late to think about New Year’s resolutions, there is one part of my life that over the years I have alternately told myself that I should get better at, learn more about, or not worry about because I am still a student, and that is my personal finances. So I figured why not try to do something about it this time, and I wanted to share some of what I have learned with you! For some people money and finances are tough topics to talk about while for others it is just really boring…

and you are probably wondering what on earth finances and banking have to do with sustainability and the environment!

I think that no matter what lifestyle we choose, so including a sustainable lifestyle, it is intertwined with our finances. This is because we make decisions on what to buy with our money, how to make our money, and most important to this blog post, which institution to trust with our personal assets and loans. While at this point I will include the disclaimer that I am no expert on finances or financial institutions, I think there are a few important things to consider when choosing a bank or managing your investment portfolio.

This is what doing finance looks like… right?

As the 2008 financial crisis showed us, financial institutions are integral to the global economy. And currently the global economy seems hopelessly intertwined with non-renewable resources and unsustainable industries. It is investments and financial backing that allows many of these industries to continue to thrive. A recent letter to investors by the chairman of one of the largest investment firms – BlackRock – pointed out that climate change is a variable investors should start to take into consideration since climate change can be bad for business and so short term profit is not worth a ruined economy in the long term.

On a personal level, looking into which financial institution/services to use is similar to deciding whether buying more sustainable products since they are what you financially support. However, it can be a little trickier than looking at a label to make sure there is no palm oil in the makeup you are purchasing. So, below is some information on three of Canada’s largest banks. Specifically the businesses they have invested in through mutual funds and portfolios, which is how they support a variety of industries, and their environmental and community initiatives, which may or may not off-set their other work!

Here is one of the mantras I like to try and tell myself.
“I will be a responsible adult and take care of my finances!”
I think if it is repeated often enough it might stick!

Again, full disclosure and disclaimer, as I recently started this research out of my own interest and desire to learn more about how to manage my own finances and align them with my values, I do my banking with RBC because… that’s what my parents signed me up with! So while I know finance might not be the most interesting topic in the world to many of us, please learn with me below if you are interested, and leave more information in the comments if you have things to share!

Royal Bank of Canada (RBC): All of their high risk mutual funds include investment in energy or materials mining companies. Examples of companies which are included in these portfolios are Enbridge Inc, BP PLC, and Agnico Eagle Mines Ltd. I was able to find multiple mutual funds which did not invest in energy directly such as the RBC Canadian Short-Term Income Fund which invests in provincial and federal Canadian government bonds. However, the Canadian government does own a pipeline, so maybe it should be considered an energy investment. They also have funds that invest in other financial institutions and governments around the world, which have similar arguments for not being completely green investment funds. For example, their RBC Vision Fossil Fuel Free Global Equity Fund is invested partially in First Republic Bank, an American bank and wealth management company. Therefore, while this bank does not produce fossil fuels, it almost certainly invests in companies that do.
RBC does state they are committed to reducing environmental impacts, but it is mostly focused on reducing their own operational footprint. They are listed on the Dow Jones Sustainability Indices (DJSI), which is a list of the top 10% of investors, based on how much they contribute to environmental and social sustainability. They also have an RBC Climate Blueprint which states they have committed $100 billion in sustainable financing by 2025. Which is a step in the right direction.

Toronto-Dominion Bank (TD): TD has fewer mutual bonds in its list that I could find. It had some more interesting companies listed such as Coca-Cola in its TD North American Dividend Fund (US$) – I fund, which as a company produces lots of single use plastics, flirts with monopoly, and creates sugary drinks and processed foods which contribute to poor health, so I wouldn’t call them sustainable. Their precious metal fund is also invested in Agnico Eagle Mines Ltd. TD does have sector funds, which includes Health Sciences funds, which is great and while still large corporations they do good research. Somehow these funds still have 0.60% of the portfolio invested in energy. They also have a similar mutual fund to RBC where it invests only in Canadian government bonds, which it calls the TD Canadian Bond Index Fund.
They also have a section of their website dedicated to their commitment to the environment. It is also listed on the DJSI. They achieved carbon neutral operational status in 2010. They also target $100 billion in investments towards initiatives in low-carbon lending, financing, asset management and internal corporate programs but by 2030. They also focus on social sustainability through financial education of small business owners and financial education grants.

Bank of Nova Scotia (Scotiabank): Find Scotiabank’s list of mutual funds here. As someone not very familiar with finances, their funds were the hardest to navigate as they are not as intuitively named. However, it has funds as well, such as the Scotia Canadian Income Fund which mainly includes Canadian government bonds. Interesting companies are included in its Scotia U.S. Opportunities Fund, such as Netflix,, and Walmart Inc. The Scotia Resource Fund is invested completely in resources such as Suncor Energy Inc.
They also have a commitment to being a sustainable business, with a specific Climate Commitment declaration. They are also listed on the DJSI, and their $100 billion pledge is for 2025, but it is more broadly allocated than only into their investing. They also include spending money on ensuring their direct operations will reduce environmental impacts. (Generally, I am starting to see a pattern, and I believe they might be talking about what they should all agree to, and no more… Is that too cynical?)

Now that was a lot of information! There are also many more banks in Canada of which I still have to look into their investing and levels of support of fossil fuel companies, so I don’t think I have found a definitive answer on what the most environmentally friendly banking option is yet.

In addition, there is also a new class of banks emerging, which are called challenger banks. These banks mostly provide all their services online and app based. This cuts down on the environmental burden of office spaces, although data centers still require resources to run, and it assumes everyone has reliable access to mobile phones with data plans. However, since these are currently smaller startups, there is great potential for some to be more environmentally focused and steer clear of volatile energy investments! As with actual banks, challenger banks are still based out of a specific location, so despite it being all online without a UK address you still cannot sign up for a challenger bank based out of there, like Monzo.

On a last financial note – tax season is here! So don’t forget to grab your T4s, T4As, and anything else that might entail for you personally when they become available, and continue on your own personal finance saga.

Nikki van Klaveren
Blog Team


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