Green neobanks, a new model of online banks, are targeting an eco-friendly clientele to weigh in on the fight against climate change. Can they really make a difference?
ADVERTISEMENTGreen-Got and Helios are two French neobanks created in 2020 that share similar goals: To strip market shares from traditional banks that participate in fossil energy exploitation.
Between January 2016 and June 2023, French banks participated in more than half the bonds issued by the global fossil fuel industry worldwide, according to an investigation by a consortium of journalists published in September 2023.
In such operations, banks don’t directly loan money, but advise oil companies on how to get loans with private investors.
Financing green investments
Green-Got’s founders insist the liquid assets deposited in their current accounts generate fewer emissions than they would with a traditional bank.
“One euro produces four times fewer carbon emissions than one issued by a big French bank,” Green-Got co-founder Maud Caillaux told AFP. She claimed the neobank’s projects “always have the same foundation: reduce carbon-gas emissions and preserve biodiversity”.
Some of their recent projects include planting trees in a forest in Brittany following wildfires in 2022, and a solar power plant in India.
Caillaux said she would like to start proposing savings accounts to her clients, as Green-Got’s offering so far only entails life insurance, professional accounts and joint accounts.
On the other hand, Helios chose not to offer that option. “It comes with rules, and isn’t 100% managed by the bank issuing it,” Helios’ co-director Maeva Courtois explained to AFP.
A November 2023 law allows French savings accounts to finance the defence industry.
Too small to make a significant difference?
French neobanks have financed projects worth €6 million in total since 2020. But €6 million over three years is not much in the fight against climate change.
In a report published earlier this year, economist Jean Pisani-Ferry and finance controller Selma Mahfou estimated about 2% of any entity’s GDP is necessary to successfully finance the green transition.
That’s €60 to €70 billion every year for France alone.
However, green neobanks are rather new in the finance landscape, and have time to grow and attract a larger clientele. For instance, Green-Got already claims it has amassed 62,000 clients and processed €327 million in transactions since it was founded three years ago.
But one thing remains a major obstacle to their attractiveness, and to their making a difference: they’re not real banks, as they don’t have a banking licence.
As such, neobanks cannot deliver mortgages to their clients, restraining their capacity to compete with traditional banks.
