Under the Microscope: The True Costs of Banking

Hass McCook
Jul 12, 2014 at 13:15 UTC
Updated Jul 24, 2014 at 11:39 UTC

It is very hard to quantify the global impact of the banking and finance system, however, there are some key figures that we can draw on for an order-of-magnitude estimate.

The World Bank publishes several world development indicators, of which one is financial access. The table below shows their data and associated estimate calculations (World Bank, 2014), based on a world adult population of 5.325 billion people (Indexmundi, 2013).

Hass McCook, Table 15

A model developed by the CoolClimate Network at one of the world’s leading and most respected universities, the University of California, Berkeley (CoolClimate Network, 2014), assesses the carbon footprint of businesses based on business sector, the number of locations, employees, annual revenue, and square feet of facilities.

This allows us to estimate the carbon footprint of the world banking and finance industry within an order of magnitude. Inputs into the model are calculated below.

Bank branches

Model inputs

Number of employees

While it is difficult to quantify the number of people employed by the world’s banking and finance industry, using the Pareto principle (80-20 rule), the world’s largest 20% of banks most likely employ 80% of all banking employees. Employee statistics for the world’s largest 30 banks are shown in the table below.

Table 16 – Number of People Employed by the World’s 30 Largest Banks

Bank Name No. Employees Source
Agricultural Bank of China 444,238 abchina.com
Industrial & Commercial Bank of China 405,354 www.icbc.com.cn
China Construction Bank 329,338 www.ccb.com/en/home/index.html
State Bank of India 295,696 www.sbi.co.in
Bank of China 288,867 www.boc.cn
Sberbank 286,019 www.sbrf.ru
Wells Fargo & Co 264,900 www.wellsfargo.com
JP Morgan Chase & Co 255,041 www.jpmorganchase.com
HSBC Holdings 254,066 www.hsbc.com
Citigroup Inc. 251,000 www.citigroup.com
Bank of America 242,000 www.bankofamerica.com
BNP Paribas 200,000 www.bnpparibas.com
Banco Santander 186,763 www.santander.com
Société Générale 171,955 www.societegenerale.com
Crédit Agricole Group 161,280 www.credit-agricole.com
Unicredit Group 148,341 www.unicreditgroup.eu
Barclays PLC 139,900 www.barclays.com
Banco do Brasil 118,900 www.bb.com.br
Royal Bank of Scotland Group 118,600 www.rbs.com
Group BPCE 115,000 http://www.bpce.fr/en/
BBVA 109,305 www.bbva.com
Lloyds Banking Group 104,000 www.lloydsbankinggroup.com
Banco Bradesco 103,385 www.bradesco.com.br
Deutsche Bank 98,219 www.db.com
ING Group 84,718 www.ing.com
Mitsubishi UFJ Financial Group 80,900 www.mufg.jp
Royal Bank of Canada 80,000 www.rbc.com
Bank of Communications Limited 79,122 www.bankcomm.com
Toronto-Dominion Bank 78,748 www.td.com
US Bancorp 65,565 www.usbank.com
TOTAL 5,561,220

Assuming that the 5,561,220 figure in the table above represents 80% of all bank employees, it can be concluded that there are a total of at least seven million people employed by banks and financial institutions internationally.

Annual revenue

An analysis undertaken by McKinsey & Company in 2012 shows global banking revenue of $3.4tn (McKinsey & Company, 2012).

Square foot area of facilities

From personal experience designing offices in Australia, a good rule of thumb is about 100 square feet per employee (10 square metres) to satisfy access and egress requirements in commercial building codes.

An area of 50-150 ft2 is recommended by the online US resource Engineering Toolbox (Engineering Toolbox, 2013). Using a value of 100 ft2 leads to a total area of about 60 million ft2 for the world’s 600,000 bank branches.

Model output and sensitivity analysis

Plugging the above inputs into the UCB model yields a result of 383.1 million tonnes of CO2 per year. A sensitivity analysis using four other scenarios shows little difference in overall footprint. Because the data on revenue is accurate, that variable remains fixed in all scenarios.

Hass McCook, Table 17

As can be seen from Table 17, the governing factor of the model appears to be the amount of yearly revenue generated, as significant changes to number of employees and branches have little effect on the model output.

Sense check

The World Resource Institute categorises world greenhouse gas emissions by end-use and activity (World Resources Institute, 2009).

In its 2009 report, it was identified that commercial buildings account for 6.3% of world emissions, and the mining of non-ferrous metals (including gold) and aluminium account for 1.3% – an impact ratio of commercial buildings to mining of 4.86.

Considering that only a relatively small amount of gold is mined every year (a few thousand tonnes), it is assumed that banks account for larger proportion of all commercial buildings, as gold mining does for non-ferrous metal mining.

This would mean that banks should have an impact of between six to eight times greater than that of gold. Having calculated a value of 54 million tonnes of CO2 produced by the gold mining industry, this would put the impact of the banking industry between 324 and 432 million tonnes of CO2, which is well within the same ballpark as the value of 380 million tonnes calculated by the UCB model.


While ATMs reduce the need for bank branches, these machines have their own carbon footprint which isn’t insignificant.

It is estimated that each of the world’s 2,394,700 ATMs has an energy usage of 0.25 kWh (Roth, et al., 2002). This translates to a yearly energy use of 18.9 million GJ, or 3.2 million tonnes of CO2.


The environmental impact of the world’s financial access points are summarised in the table below

Hass McCook, Table 18

Using the rate of $100/MWh, the above energy use would equate to an annual energy bill of $63.8bn, or, roughly 2% of total revenue.

At 0.75 million tonnes of CO2 produced per year, Bitcoin has 99.8% fewer emissions than the banking system.

Check back next week for the concluding article in the series, in which Hass McCook undertakes a comparative summary of all three areas to evaluate the relative sustainability of the bitcoin network.

Bank image via Shutterstock