How to Divest From Fossil Fuels

Have you ever wondered what happens to your money when it hits your bank account?

You might not know that most large, traditional banks use your deposits to fund the fossil fuel industry.

In fact, up to 30% of the money in a conventional Big Bank account can be loaned out for coal, oil, and gas projects. That means your hard-earned savings could be quietly fueling the climate crisis - which, if you’re like us, is a huge problem.

That’s where fossil-fuel divestment comes in, which is a fancy way of saying stopping your money from bankrolling Big Oil.

Not only is divestment one of the best ways to lower your carbon footprint and fight climate change, it’s way easier than you think. Individuals who move their money to a greener bank like GreenFi can reduce their personal carbon footprint by an average of 76%, and it often takes just a few minutes to sign up for a new account.

This guide will walk you through exactly what fossil fuel divestment is, why it’s a powerful move for the planet and your wallet, and how you can get started today.

Key Takeaways

• Fossil fuel divestment means moving your money out of the banking system that is helping fund the climate crisis

• Aligning your money with your values – and a healthier planet – is easier than you think

• Divesting from fossil fuels can be a good move for your wallet, too

What is Fossil Fuel Divestment?

Simply put, fossil fuel divestment is the act of removing your money—whether it's in savings, investments, or retirement accounts—from companies involved in extracting, transporting, and burning coal, oil, and natural gas.

Think of it as voting with your dollars. By shifting your finances, you help reduce the capital available to these corporations, which slows their expansion and accelerates the world’s transition to clean, renewable energy.

It’s a foundational principle of sustainable finance and ESG (Environmental, Social, and Governance) investing, built on the powerful idea that our money should help create a better, healthier world.

Why Your Money Matters: The Powerful Impact of Divesting

Making the switch creates tangible change. The argument for divestment is twofold, touching on both our shared values and our financial futures.

The Moral Case for Divestment

The science is undeniable: the climate crisis is the defining challenge of our time, and as the leading scientific group, the Intergovernmental Panel on Climate Change, has made clear, fossil fuels are the primary driver.

The impact of climate change—from extreme weather to rising sea levels—disproportionately harms the most vulnerable communities around the globe.

Divestment is a powerful tool for climate justice. It holds the fossil fuel industry accountable and aligns your financial footprint with a more equitable, sustainable future, supporting goals like the UN Sustainable Development Goals (SDGs).

When you join the millions of people and institutions in the global divestment movement, you’re helping build a powerful coalition for change.

The Financial Case for Divestment

Moving your money out of fossil fuels doesn’t have to come at the expense of your financial goals.

As the world slowly transitions to a greener economy, investments in fossil fuels face significant risks from:

• Stranded Assets: Fossil fuel reserves that become worthless as regulations tighten and demand for clean energy grows.

• Decreased Demand: The global shift to renewables is reducing the long-term profitability of oil, gas, and coal.

• Tighter Regulations: Governments worldwide are implementing policies that make polluting more expensive.

How to Divest From Fossil Fuels in 3 Simple Steps

Ready to align your money with your values? Taking action is more straightforward than you might think.

• Move Your Daily Banking: Your checking and savings accounts are a great place to start. Every $1,000 you have deposited in a big bank can have an annual carbon footprint equivalent to flying from New York to Seattle. Moving to a climate-friendly banking option like GreenFi ensures your money isn't being used to fund pipelines or coal plants.

• Analyze Your Investments: The first step is understanding your current financial footprint. Are your retirement funds, mutual funds, or stock portfolios invested in fossil fuel companies? If you’re not sure, tools like Fossil Free Funds can help you scan your investments.

• Divest Your Personal Investments: If you’ve found fossil fuel holdings in your investment portfolio, you can choose to sell them. Do research into ESG and climate-friendly funds, like GreenFi’s Redwood Fund.

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Common Divestment Myths, Busted

Myth 1: "My small investment won't make a difference."

Reality: Every drop fills the bucket. The global divestment movement has become a trillion-dollar force because millions of individuals decided their contributions mattered. Collective action is the engine of change.

Myth 2: "I'll lose money if I divest."

Reality: While all investments carry risk, holding onto fossil fuels presents significant long-term financial risks in a world moving toward net-zero emissions. Investing in a diversified, sustainable portfolio is a strategy aimed at long-term, stable growth.

The Future of Finance is Green

The global energy transition is happening now. It’s a shift away from the fuels of the past and a move toward incredible opportunities in green hydrogen, advanced battery storage, and carbon capture technology.

Fossil fuel divestment is both a declaration of hope and a practical step toward building the world we want to live in. By taking control of your finances, you become a key player in the clean energy transition.

Ready to get started? If you haven’t already, check out GreenFi. We have created the Redwood Fund, an investment portfolio with a 66% lower direct carbon footprint (Scope 1 and 2 emissions, per Clarity AI) than the broader market (S&P 500).

(Note: All investments carry risks, and past performance or environmental metrics do not guarantee future results.)

We also offer climate-friendly checking and savings accounts that guarantee your money never funds fossil fuels. You can also round up your change to help plant trees (we’ve funded the planting of over 33 million already), you can get cash back at climate-friendly brands and EV chargers, and there are no mandatory monthly fees or minimums for standard accounts.

Get started today at greenfi.com!

FAQs about Fossil Fuel Divestment

Q: What is the difference between fossil fuel divestment and ESG investing?

A: Divestment is a specific strategy focused on completely removing investments from fossil fuel companies.

ESG (Environmental, Social, and Governance) investing is a broader approach that evaluates companies on a wide range of factors. An ESG fund might still include some energy companies if they score well on social or governance metrics, whereas a divestment strategy would not.

Q: How can I be sure a bank is truly 'fossil-fuel-free'?

A: Look for banks that are transparent about their investment and lending policies. Many green banks are certified B-Corporations, are members of the Global Alliance for Banking on Values (GABV), or explicitly state that they do not lend to or invest in any part of the fossil fuel industry.

Q: Is it difficult or expensive to divest my money?

A: Not at all. For daily banking, opening a new account online takes just a few minutes. For investments, modern apps like GreenFi are designed to make the process simple and transparent, guiding you at a pace that’s comfortable for you.

Q: Will I have to pay a lot in taxes if I divest my investments?

A: Tax implications can vary depending on the type of account (like a 401(k) vs. a brokerage account) and your personal financial situation. While we always recommend consulting a licensed financial advisor, many strategies can help you divest in a tax-efficient way.