After all, when your company deposits money into its bank account, those funds aren’t collecting dust in a vault. Banks lend that cash—your company’s cash—as mortgages, car loans, business loans, and (it’s likely) to finance fossil fuels. In other words, your bank is using your company’s money to fund climate change. Even Patagonia, where our mission is to save the planet, is part of the problem. 

Our aha moment began when we joined conservation groups and tribal governments in protesting the Dakota Access Pipeline—an oil route from North Dakota to Illinois that would have destroyed local water supply and farmland. We realized how many of our financial partners (and most major banks) were among the institutions supporting this pipeline and refusing to exit support. That was unacceptable to us. 

We came to terms with the notion that if we give 1% of our sales away to environmental groups while banking with financial partners who finance extractive industries, we’re counterproductive hypocrites. That inspired and led us into a multiyear effort of trying to realign our company with financial institutions that share Patagonia’s values. 

After several years of work, we haven’t come up with a perfect solution, but we have some learnings we’d like to share. 

Step one: Determine which values matter the most to your business. At Patagonia, we’re in business to save our home planet. But because we’re a large, global company, we’ve had to rely on large, global banks to meet our complex finance needs. Today, there isn’t a single large, global bank that is fossil fuel–free, so we established a standard to only work with banks that, at the very least, refuse to finance the most harmful fossil fuel sectors, including coal, tar sands, and Arctic oil and gas. We also require our financial partners to publish transparent sustainability goals, pursue aggressive renewable energy lending commitments, and utilize methodologies like the Partnership for Carbon Accounting Financials for targeting and measuring financed emissions reductions. We intend to tighten these standards over time to help drive continued progress. 

Step two: Review your banking partners, or potential partners, to see how they stack up on sustainability. Patagonia came up with a scorecard that we sent out to dozens of banks soliciting information on their sustainability metrics, policies, and commitments. This scorecard opened the door to productive dialogue, where we spoke not only with our financial partners’ social and environmental responsibility teams, but also the commercial banking leaders who oversee major decisions on which industries the bank will or will not finance. A great resource for better understanding your bank’s fossil fuel policies and portfolio—and holding them to account—is the Banking on Climate Chaos report. Also, the fossil fuel finance activist community has been a valuable source of information and guidance for Patagonia’s strategy, and includes NGOs such as Rainforest Action Network, 350.org, BankTrack, Climate Safe Lending Network, and the Sunrise Project.

Step three: After researching your banking partners, consider charting a course of action that will better align your company with your values. Among the large banks, there is a spectrum of leaders and laggards, often with complex and evolving parent/subsidiary relationships that need to be evaluated. Patagonia is choosing to align itself with those institutions we feel are committed to and contributing most to the global energy transition. You can also diversify a portion of excess cash and lower-impact banking needs to more value-aligned banks. Where possible, Patagonia is reallocating some of our business to institutions that are 100% fossil fuel–free, certified Benefit Corporations (B Corps, for short), and members of the Global Alliance for Banking on Values. For example, we have begun to work with CNote, a women-led B Corp that helps institutional depositors allocate cash to small, local banks in financially underserved communities. We are also shifting a portion of excess cash from our banks into sustainability-focused investments, including a portfolio of green bonds. 

This process of spreading out our banking needs creates more work for our finance team, but it pays off by allowing us to drive change among large banks and support smaller banks aligned with our values. And, by the way, this finance strategy doesn’t just apply to our banking partners. We’re taking a similar approach in selecting insurance carriers who are committed to not insuring or investing in fossil fuels, and we’re looking at what choices our employees have in their 401(k) plans.

The scale and complexity of the climate crisis is such that we need to pull every lever in society to solve it, especially financial levers. Imagine our home planet after decades of investing in nature rather than taking from it. 

Ryan Gellert is CEO of Patagonia. Founded in 1973, Patagonia is a Certified B Corporation and is internationally recognized for its commitment to product quality and environmental activism.