ESG banking: How to choose a bank that aligns with your values
If so, ESG banking may be right for you. Where traditional banking may prioritize profit and growth over sustainability, ESG banking aims to put values first.
If you're concerned about the impacts financial institutions are having on the world — and want to put your money where your values are — learn more about ESG banking and how to choose the right bank for you.
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ESG stands for environmental, social, and governance issues. These three pillars broadly support sustainability, but cover a wide range of factors. Here's a breakdown of each:
Environmental: The environmental perspective focuses on a company's impact on the environment. This may include addressing climate change impact, pollution, declining biodiversity, and more. These environmental threats can hurt more than just the planet — they can negatively impact a company's reputation and harm employees or stakeholders.
Social: Social factors include how a company interacts with and affects its stakeholders, such as customers, owners, employees, and the local community. Potential threats to these issues include discrimination, a lack of transparency, and investing in harmful industries or practices.
Governance: Governance refers to a company's integrity and how well it avoids corruption. Ignoring these governance issues can hurt customers, employees, the environment, and a company's reputation.
In many cases, environmental, social, and governance issues overlap. For instance, poor governance can lead to environmental degradation and have negative impacts on communities.
Generally speaking, ESG banking considers the environmental, social, and governance issues in how financial companies operate. In practice, this might look like investing in ESG funds, offsetting carbon emissions, or donating to ESG-related nonprofits. However, there's no official definition of ESG or what it entails. Many issues fit under the ESG umbrella, and banks may define ESG differently.
Several firms assign a metric called an 'ESG score' to banks and other companies. One such firm is S&P Global. While scoring models can vary by firm, S&P Global's scores measure 'a company's performance on and management of material ESG risks, opportunities, and impacts informed by a combination of company disclosures, media and stakeholder analysis, modeling approaches, and in-depth company engagement via the S&P Global Corporate Sustainability Assessment (CSA).'
Read more: 9 common types of banks: Which one is right for you?
Because there's no universal or official definition of ESG banking, there aren't perfect examples of 'ESG banks.' However, there are several banks that make ESG a central focus of their mission and marketing. Some examples include:
Amalgamated Bank: Carbon-neutral; invests in clean energy, environmental protection, health and wellness, and community empowerment
Beneficial State Bank: Fossil-free certified; finances clean energy systems; lends to mission-impact sectors and businesses led by marginalized groups
Climate First Bank: Carbon-neutral operation; finances clean energy and affordable housing
Forbright Bank: Offers sustainable lending; has carbon-neutral operations and LEED-certified buildings; donates to nonprofit organizations
GreenFi (formerly Aspiration): Offers carbon offsets; has a rewards program for sustainable spending; donates to climate action nonprofits
Read more: The 10 best national and super regional banks of 2025
The easiest way to look up a bank's ESG score is to enter the bank's name and 'ESG score' into a search engine. For example, to look up JPMorgan Chase's ESG score, you could enter "JPMorgan Chase ESG score' in Google's search bar.
You can also search for a bank in a specific scoring company's database. Examples of entities that publish ESG scores include:
S&P Global
Morningstar Sustainalytics
LSEG
MSCI
Keep in mind that scores can vary by firm, as there's no standard procedure for ranking a bank's ESG score. If you want a better understanding of what these scores mean, you'll have to dig into each company's methodology.
The benefits of ESG banking may be obvious to you if you're personally interested in ESG causes. But these benefits can also extend to other stakeholders, such as the banks themselves, their local communities, and the environment.
Here are a few broad benefits of ESG banking:
You can align your financial activity with your values. Beyond your personal habits, ESG banking allows you to financially support causes you believe in.
Local communities can feel a positive impact. By holding themselves to higher environmental, social, and governance standards, banks can have bigger positive impacts on the communities they serve. This can look like donating money to nonprofits, building sustainable bank branches, or investing in local industries.
Banks invest in environmentally friendly causes and infrastructure: ESG banking can direct money away from harmful industries and toward sustainable ones. For example, banks might invest in renewable energy instead of tobacco or fossil fuel companies.
The popularity of ESG banking can cause a domino effect: As ESG banking becomes the norm, customers will expect it. Banks that aren't already focused on ESG may begin to feel the pressure to adapt to stay competitive, leading to a larger global impact.
ESG banking may be a good financial move: While there isn't a clear consensus on the data, several studies show that ESG investing delivers similar or better results compared to traditional investing.
If you're committed to finding a bank that aligns with your values, it may take some research. Start by visiting a bank's website and looking for something called an 'impact report,' 'ESG report,' or 'sustainability report,' which you can often find in the website's 'About' section. These reports often share detailed data about the company's lending portfolio, philanthropy, workforce inclusivity, and more.
For a third-party perspective, you can look up specific banks' ESG scores. Be sure to review the corresponding methodology so you can understand how the bank was rated.
Finally, confirm that a bank offers the financial products, services, and features you need before opening a new account.
Read more: How to switch banks: An easy step-by-step guide
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