How can I ensure my savings no longer finance fossil fuels?

Welcome to Banknote, a highly requested section on Madmoizelle! After the success of Settlement of accounts, which analyzes readers’ finances, many of you were hoping for more practical advice. Tadam!

In each episode of Banknote a finance expert will answer the question posed by one of you. Today, we answer your questions about saving and how to make this type of investment more responsible. To help you see more clearly, Aurore Pinon-JacquesTaking part in the interview was , Chief Marketing Officer (CMO) of Goodvest, a startup specializing in responsible investments.

The financing model of traditional banks cannot last

Hello Madmoizelle. I learned that my savings (life insurance) have funded fossil fuel producers, how can I ensure they help the ecological transition?

Are green savings funds more transparent about how the money is used? If I move the money I have saved will I lose all the interest accrued up to that point?

I would really like my investments to reflect my eco-consciousness. Thanks in advance for all your replies,

Clear

If you recognize yourself in Claire’s message, and your ecological conscience pushes you to change your habits, you will find many answers in this article. Also, don’t hesitate to ask direct questions to your bank. The first step is to try to already understand what is currently happening with your money : “My money is invested in life insurance. In concrete terms this means that it finances which type of fund? Are these funds labeled? Do you finance oil, coal, gas? “.

If the answers obtained do not satisfy you, it’s time to revise your strategy or call another player like Goodvest.

To miss. How is it possible that traditional banks mainly finance environmentally harmful projects?

Aurore Pinon-Jacques. It is a historical phenomenon. Since the end of the pre-industrial era, our society has burned fossil fuels to grow rapidly. The banks have understood this well and therefore they largely finance this type of project… And this is how they have become dependent and almost dependent on fossil fuels, because it is a sector that has been making a lot of money, very quickly, for a very long time.

The problem is that this is not a long-term approach. For obvious environmental reasons, as these are limited resources, but also for financial reasons.

And, recently, there is another problem: even when we invest in products labeled that claim to be sustainable or responsible in a traditional banking institution, we actually have few guarantees. Some studies show, for example, that a labeled investment fund has a 47% probability of being less virtuous than a non-labelled fund. Greenwashing is a plague in all sectors of the economy, in consumer goods, fashion, etc. The financial and banking sector is not spared.

But what is reassuring is that more and more people are aware and understand the importance of decarbonising the financial and banking sectors, but also that we should not trust all the promises.

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How to be useful thanks to your savings?

To miss. Is depositing your money in a specialized savings fund the most significant individual gesture in favor of the ecological transition?

Aurore Pinon-Jacques. All actions count, so I would rather say that it is an additional action lever that should not be overlooked! Hence the importance of talking about it to those around you, because it is a topic that is still too little known.

Saving responsibly is a gesture that certainly has an impact and sends a very strong signal to our banks. Because financing is the foundation of our system. A business that does not have financing will have difficulty operating. And if everyone started withdrawing their funding tomorrow, I think there would be big questions in the financial sector.

It is also one of the simplest gestures in reality. It’s just administrative stuff. While changing your daily life like stopping using plastic bottles, stopping eating meat, stopping flying, these are actions that, I think, cost a lot of people a lot.

Changing banks or savings solutions providers, yes, initially takes time, but then it’s over. There is no habit to get into.

To miss. By transferring my money to a specialized fund, will I have transparency on the distribution of my money and the projects it finances?

Aurore Pinon-Jacques. It depends on the supplier. To take the example of the Goodvest site, the investment theme choices are clearly displayed. We allow our clients to easily invest in ecological transition, forests, access to water, etc. For example, by investing in Goodvest, your money can be invested in a fund called M Climate Solutions.

It is a certified fund that uses your savings to invest in companies that produce renewable energy (solar, wind, etc.), or in the production of charging stations for electric cars. In short, it is a fund that actively contributes to the energy transition!

We are able, for each fund we collaborate with, to provide concrete examples of financed companies, as well as past financial performance.

And, in their space, our clients are informed of the impact of their investment with data such as the temperature of their portfolio, which complies with the Paris Agreement (whose goal was a maximum of 2°C), since this makes part of our commitments. And, soon, we will also point to low-carbon electricity generation produced thanks to portfolio financing.

Such a level of transparency and information is unique to this day.

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Are responsible savings funds also advantageous?

To miss. Will the funds in which my money will be invested be as attractive as funds from a traditional bank?

Aurore Pinon-Jacques. There is a huge misconception about responsible investing, which is completely false. Many people think that investing responsibly means giving up returns. But it must be understood that companies already engaged in a process of ecological transition are anticipating the necessary changes. These companies have a better chance of thriving in the future than companies that persist in an unsustainable approach.

It is obvious that the share of renewable energy will continue to increase in the future. All countries will have to be involved, it is a sector that will inevitably explode. The ecological transition also creates opportunities. Responsible investments have return prospects that are in no way inferior to traditional investments in oil, coal or gas. Investing involves risks of capital loss and it is important to remember this.