A new digital bank called Ando promises to invest only customer money in green initiatives, providing users with a level of transparency that its CEO says is lacking among traditional institutions.
“There are a lot of different banks that say they’re green and they have all these different green investments,” said JP McNeill, who started the challenger bank after assessing his family’s carbon footprint. “But at the end of the day, are these green loans making up 1% of your total loans, or 2% of your total loans? This level of transparency creates accountability that I think will ultimately lead to behavior changes.”
San Diego-based Ando partners with New York-based Community Federal Savings Bank to offer Federal Deposit Insurance Corp-insured bank accounts. (FDIC).
McNeill said Ando, who launched last month, is joining forces with a coalition of banks that already have green loan programs.
“We take our clients’ deposits, and then we partner with community banks across the country, and then they use those deposits to invest in a variety of different green loans,” he said.
Ando’s goal is to invest clients’ money in carbon reduction projects such as clean energy, sustainable infrastructure and regenerative agriculture.
“At the end of the day, it’s consumers like you and me who have the final say on where we want to park our money, and so the concept is that we want to partner with community banks that grow their portfolios of money. green assets, ”McNeill said. “We want to support this because we believe it is in our collective interest.”
Ando, which offers a free savings and chequing account, lets customers see where their money is being spent through a feature of its mobile app called Ando Impact Center.
The startup also calculates the impact of the carbon reduction on the basis of the average balance. Ando says that every $ 175 in his account reduces the carbon output equivalent to the labor of a fully grown tree.
“The approach is to first provide these banking features to retail customers and make them recognize that they ultimately have more influence and power than they realize,” McNeill said. “Their deposits are what keep a bank running.
Amid growing calls from environmental groups for greater corporate responsibility on climate change, in addition to the Biden administration’s focus on policies to reduce carbon emissions, McNeill said he believed that more banks would adopt transparent policies about where they park customer money.
“Having this dialogue with your customers, I think, will improve financial performance,” he said. “I think the trust scores and the net scores of promoters within the financial services industry will increase due to some of these changes that are now possible, as information and connectivity can be used in a way that could not be used previously in the banking sector. “
Thirty-five of the world’s largest banks have facilitated $ 2.7 trillion in fossil fuel financing since 2016, according to a March 2020 report Rainforest Action Network report.
While the banking sector has come under fire for its links to fossil fuel financing in recent years, some of the biggest players have pledged to cut carbon emissions.
Goldman Sachs said in late 2019 that it commit $ 750 billion more than 10 years towards projects focused on renewable energy, sustainable transport and affordable education. Establishments of Barclays To JPMorgan Chase also pledged to aim for net carbon emissions by 2050.
Morgan Stanley, Citi and Bank of America joins a group aiming to standardize the way banks measure and reduce their climate impact. And the regulators, New York Department of Financial Services has a CFTC panel presented suggestions to banks to increase their climate risk reduction.
Ando joins several other banks seeking to target climate-conscious customers.
Los Angeles-based Aspiration has over 1.7 million users and is backed by famous investors Leonardo DiCaprio and Orlando Bloom.
Climate First Bank, a de novo company based in St. Petersburg, Florida focused on promoting sustainable business practices, filed deposit insurance with the FDIC in October and expects to launch in spring.