Brian Haugh, Head of BDO Valuation & Financial Modelling Centre featured in The Irish Times Special Report on Green Finance.
Savers and investors are becoming increasingly environmentally conscious but how sure can they be that their cash isn’t being used for environmentally destructive purposes?
“If we’re talking about deposit savings accounts, the short answer is ‘not very’,” says Brian.
“The key question is “what does the bank do with the money that I give it?”. To the best of my knowledge no Irish banks are offering specifically “green” savings accounts. These are accounts which would be ringfenced to provide funding for green projects. As such savings accounts form part of the overall deposits at the bank and are linked to the total lending that the bank does,” he points out.
In fact, given that the banks are raising finance through green bonds in order to allocate cash specifically for green lending, this may mean that the savings accounts are more likely to be part of the funding mix for non-green lending.
“That’s not to say that non-green lending is necessarily environmentally destructive, for example mortgages would fall into this category. However, if the bank is funding any environmentally destructive purposes then deposit holders are contributing towards this,” he cautions.
While some European banks, such as Triodos, explicitly state that they will not fund unsustainable projects, they don’t offer savings accounts in the Irish Market.
“At the moment savers looking to ensure that their savings are truly green will have to consider specialist products such as green bonds or green investment funds which come with strict restrictions around what the money can be used for,” he adds.
Content adapted from The Irish Times.
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