Grace Murray from The Switch Cambridge – a student-led campaign for ethical banking – explores how switching banks has the potential to create a paradigm shift in the finance industry. Grace got involved in The Switch Cambridge during her time at university. She now lives in London, works for local government and is passionate about systems change for a better future, including how we bank!

In the face of impending climate breakdown, and with political leaders apathetically inching towards reducing emissions, it can often feel a helpless situation to the average individual. What on earth can one person do to stop environmental collapse?

Cutting flying and reducing meat consumption have been identified as the two biggest planet-friendly lifestyle changes a person can make. This is absolutely true! But perhaps there is something further we can do, with just as much impact. At The Switch Cambridge, we believe that changing our banking habits has the potential not only to divest money out of fossil fuel extraction, but also shift the entire paradigm of the finance industry. 

Ethical banking – how does it work?

In a previous blog, Switch Campaign founder Sienna Sexton shared the story of the anti-apartheid student movement Boycott Barclays. As students moved their money out of Barclays accounts, the resultant financial pressure forced Barclays to stop financing the South African apartheid regime in 1987. 

The Switch Campaign seeks to draw on the same, powerful, student purchasing power, encouraging as many students as possible to switch their bank accounts from less ethical to more ethical providers. Our tagline is, ‘encouraging divestment out of harmful industries and practices’. 

It’s a simple idea, really. For the average university graduate, switching their bank account from a provider who finances fossil fuel extraction to one who doesn’t will divest upwards of £1 million over the course of their lifetime*. This money can instead be used to finance really positive things, such as renewable energyhouse building, supporting charity initiatives. Switching banks can truly support positive change. 

A million pounds is a lot of money (even after skyrocketing inflation!). Although corporations, governments and the super-rich are disproportionately contributing to climate chaos, it would be a mistake to think that we therefore have no role to play. A simple switch, which takes on average 30 minutes to do, has a tangible impact divesting from fossil fuels. This enables each of us to feel personally empowered in the face of climate action: there is something meaningful we can do. 

As Christians, it’s also an essential part of financial stewardship which goes beyond how we spend our money to where we store it in the first place. Tithing and giving to charity are great and essential parts of our discipleship to Jesus if we are able to do so. But if the other 90% of our income sits in a bank which funds harmful and destructive industries, we may have missed the point. 

‘Herd behaviour’ and financial markets

Clearly, making the switch is a fantastic personal decision to make. But what if the power of switching bank accounts went beyond the individual impact we each can have? What if by switching our bank accounts, we could transform the entire landscape of financial markets, mounting so much pressure that all banks would give up on fossil fuel funding completely? What if we could have another Boycott Barclays moment?

The concept of ‘herd behaviour’ is used in economics to describe the behaviour of investors in financial markets, who will frequently ‘follow the crowd’ in what they invest in. Investopedia describes it neatly: 

‘an investor who exhibits herd instinct generally gravitates toward the same or similar investments as others’

Herd behaviour causes all sorts of problems in financial markets – think back to the 2022 pensions panic in the UK, which prompted rapid Bank of England intervention to avoid a financial crash. 

The idea of ‘herd behaviour’ tends to be thought of as a fact of life in financial markets, as well as a cause of market crashes. It’s honestly not a great thing. Currently, many investors are still ‘following the crowd’ by pouring billions of dollars into fossil fuel investment. 

But what if we could use herd behaviour – turn it into something which saves the climate, not harms it? What if, by encouraging hundreds, and then thousands, and then tens of thousands of people to switch away from an unethical, fossil-fuel-investing bank (such as HSBC) – we could pressure that bank to change their investing habits? And what if another bank noticed what was happening, and panicked that all their clients would switch away from them too? And what if bank after bank after bank suddenly began to panic that if they kept on investing in fossil fuels, they would have no customers left at all? 

Imagine a situation where millions of people are putting their money where their values are. Maybe it would shift the entire finance industry away from fossil fuel investment. Perhaps it would kickstart a wave of positive investment in renewable energy, affordable housing, local community initiatives, and more. It might just be the thing that keeps our planet at a liveable temperature.

A call to action

At the Switch Campaign, we believe it’s possible to have a positive individual impact by personally divesting, as well as contributing to this tide of switching which could trigger the finance industry to ditch fossil fuel investment altogether. We want to operationalise herd behaviour to create action on climate change. Period. 

We encourage you to check out The Switch Cambridge resources about ethical banking. We’ve spent a bit of time doing some of the research ourselves and have found out which are the banks to go with and the ones to avoid, as well as how the switching process works. We also encourage you to tell all your friends, family, colleagues, and everyone you pass on the street. If we want to create systemic change, it starts with small actions from all of us! 

Join the movement. Together, let’s build a better (banking) future.

Find out more about the Switch Campaign:

* The average graduate earning a starting salary and working the average number of years from graduation to retirement will earn at least £1 million over the course of their lifetime. 

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