How we chose a climate-friendly bank for our business — UPDATED December 2023
I looked at every “fossil free” bank in 2022, to find the best choice for our new business checking account. I found a disappointing lineup, with only a few workable choices.
Problem: Jaime (McCandless) Curtis and I are starting a climate-focused software consulting business. Our business, Option Zero, needs a company bank account. We want to use a bank that invests our funds responsibly in climate-positive projects. What bank should we choose?
Side note: I use the word “bank” in this article to include neobanks, credit unions, or wherever you can open a checking account. I know most of these are not technically banks. Thanks for the thoughtful letters ;).
As with many tricky problems, I found myself thinking in circles on this one. I’d almost open up an account with a bank, only to realize that it didn’t quite meet our needs, then I’d step back, do more Googling, and repeat ad nauseum. It was time to be more systematic. So, I started with setting out my priorities, and then reviewed each of the fossil free banks to see if they qualified. Below you’ll find a table below of my results, as well as a discussion of the finalists and where we ended up.
Priorities
Must-have priorities
- Doesn’t invest in fossil fuels or dirty projects. That’s what fossil free certification is for.
- I want to know that funds are used in a convincing climate-positive way. And I’d rather not settle for vague promises that money is invested for the climate — I want easily-accessible, hard numbers and case studies on what they’re actually invested in.
- I can actually open a business checking account for our Washington State business.
Nice-to-have priorities
- The bank should be a Certified B Corporation. This indicates that they have locked in a mission other than just maximizing profit, and they’ve committed to a transparent process for verification. Credit unions are good too.
- Good UI and customer experience. Unfortunately, this is hard to judge without trying everything. But we all know that a nice, ergonomic tool can be a joy to use, while a clunky, unreliable, written-in-the-1990s tool can just make you want to pull your hair out.
- I’d like to have a credit card from the same company to simplify cash flow. I prefer straight cash rewards rather than complicated points systems.
- Cash back debit is also a nice-to-have that some banks are now offering.
My process
I looked at the full list of 11 Certified Fossil Free Banks, plus Aspiration, since Aspiration seems to be an up-and-coming, shiny bank focused on climate impact. For each bank, I cut my investigation short when I found that a bank was disqualified for my purposes.
I put together an Airtable of all of my findings.
Results: a pretty meager lineup
Of the 11 fossil-free banks, only three of them meet the must-have criteria. Of all of the up-and-coming, pretty, modern-looking options (Ando, Atmos, Aspiration), none of them are currently offering business accounts in 2022.
Of all of the up-and-coming, pretty, modern-looking options (Ando, Atmos, Aspiration), none of them are currently offering business accounts in 2022.
The 3½ banks that qualify
That left four banks that meet the must-have criteria. None of them have UI that I’d consider good looking. Two of them (Amalgamated Bank and Beneficial State Bank) are older banks, with Google Play / App Store ratings hovering around 3.5 and rife with reliability complaints. Another, Climate First Bank, doesn’t even have enough downloads to qualify for a rating.
This could be a sign that Climate First Bank is up-and-coming and destined for success (indeed, their B Corp pending status indicates they’re on the right track) but — to stretch a metaphor — hopping on such an untested horse is not without its risks.
That leaves only one other option: Clean Energy Credit Union. And it’s a pretty special snowflake. It almost meets our criteria, so it’s worth digging into.
Honorable Mention: Clean Energy Credit Union
Clean Energy CU almost hits the sweet spot for us. It has good app ratings (around 4.0 with 1k or more downloads), mobile deposit, the Fossil Free Certification. They only provide loans for clean energy projects. Overall they exude this small-town vibe that I really love:
There was only one problem: they don’t currently support multi-member LLCs with checking accounts. Darn it! If you’re a single-member LLC or sole proprietor, I’d recommend checking them out.
Dishonorable mention: Aspiration
Aspiration deserves a special mention, as it’s the bank I was most split on. I found it had the sleekest marketing; it looked like they had really invested successfully in user experience design more than any of the others. Their apps have ratings above 4.0 and they look beautiful. I wanted them to be the winner. But the more I dug, the shadier their “green” claims seemed.
The only promise Aspiration makes is that they won’t invest in fossil fuels. Yet they haven’t bothered to get Fossil Free Certified.
Unfortunately, they provided little to convince me of their true alignment with fighting climate change. Their “impact” page vaguely promises that your deposits won’t be invested in fossil fuel projects, but doesn’t mention where they will be invested. When I contacted their support email (phone support knew nothing) to ask about this, they directed me towards their Redwood investment product, which is their green mutual fund, which is completely separate from their lending.
When it comes to their lending, the only promise Aspiration makes is that they won’t invest in fossil fuels. Yet they haven’t bothered to get Fossil Free Certified and they decline to explain what they do invest in. Investments themselves are handled by Coastal Community Bank, which makes no public claims about its climate lending.
Aspiration has other “green” features though — including a program where you can round up your purchases to plant trees. So essentially, you can pay them to plant trees. Forgive me if I’m not impressed by that — tree-planting schemes and low-quality carbon credits are (literally) a dime a dozen these days. Given the vagueness around Aspiration’s tree planting projects and high bar required for tree planting to constitute high-quality carbon sequestration, this feels like greenwashing to me.
In 2020 Aspiration claimed that their customers had planted 1 million trees. Which trees? Nobody knows; it’s not public information; at the time they made these claims, I tried to find details. I concluded that maybe Aspiration had contracted with someone to plant the trees, but the trees had almost certainly not been planted yet. So when they said “we planted 1 million trees” the reality was more like “we are planning to plant 1 million trees”. It all seemed pretty (if you’ll excuse the pun) shady.
For contrast, let’s look at transparency measures at a few other banks.
- Amalgamated Bank provides detailed annual reports of what they invest in, broken down by sector.
- Beneficial State Bank has an annual report which breaks down its loan categories, lined up with its values, in addition to their corporate CO2 emissions goals.
- Climate First Bank and Clean Energy Credit Union have clear lists of the types of loans they provide.
As an organization, I came away with the impression that Aspiration simply isn’t that committed in transparency or accountability for their green claims; they put their money instead into slick marketing.
Which bank to choose?
OK. So. 11 banking options, 3½ that meet our must-have criteria. Ultimately, I’d recommend any of the top 4: Amalgamated Bank, Climate First Bank, Beneficial State Bank, or Clean Energy Credit Union. Since we can’t use Clean Energy CU for our multi-member LLC, we’re left with the other three. Between those it’s a bit of a toss-up.
We’re going to start out with Amalgamated Bank, given that it has the most mature offering.
I’m trying to open an account today — wish me luck!
Update — December 2023
I started the process to open an Amalgamated Bank account, but the process involved a mandatory wait time. As a result I went ahead and created a Climate First Bank account and that’s where we ended up. Some quick notes on Climate First Bank:
- They have a homey small-bank feel.
- Their customer service has been very responsive and hands-on. I’ve truly enjoyed talking with their team.
- Pulling our account data into Wave works just fine. Initially there were some issues with duplicated transactions but they were able to resolve that quickly.
- The apps are not the shiniest UI you’ve ever seen, but they get the job done.
Bottom line: we’re happy with Climate First Bank and have no plans to move elsewhere anytime soon.
