Fintech’s are a leading contributor of sustainability initiatives tackling the climate crisis. But it is time that they also lead by example in addressing their own carbon footprint issues, argues Jeremy Baber.
In recent years, an estimated 69% of consumers worldwide have changed the products and services they use to more sustainable alternatives, according to a survey by IPSOS. Climate crisis messaging is more pertinent than ever as businesses and consumers become increasingly concerned about their footprint.
Go deeper with GlobalData
Fintechs must lead by example
With industries and consumers striving to achieve net-zero in the current landscape, it is of utmost importance that fintech leads by example not only through industry innovation but also through individual business models.
Jeremy Baber, CEO of Lanistar says: “Fintech’s have an ongoing responsibility to forward sustainable initiatives in the reduction of greenhouse gas (GHG) emissions across industry verticals spanning the globe. We are seeing an uptick in customers who buy into social responsibility standards and reject offerings which are deemed unsustainable. Fintech offerings have moved with this trend, and we are now seeing more ESG-leaning initiatives being rolled out.
“Successful initiatives include integrating renewables into power grids, providing consumers with carbon footprint analysis from their bank statements and harnessing AI to regulate greenwashing.
Rising demand for regulatory disclosure, data transparency
Despite their success in facilitating a net-zero market for others, fintech’s should not dismiss the importance of taking responsibility for their own carbon footprint, says Baber. He observes that fintech’s are often not associated as one of the leading global GHG emitters. This is mainly because they lack the same physical infrastructure as traditional finance. Although more recently, their oversight in addressing carbon emissions and the progression of unsustainable practices such as crypto mining has become apparent.
How well do you really know your competitors?
Access the most comprehensive Company Profiles on the market, powered by GlobalData. Save hours of research. Gain competitive edge.
Thank you!
Your download email will arrive shortly
Not ready to buy yet? Download a free sample
We are confident about the unique quality of our Company Profiles. However, we want you to make the most beneficial decision for your business, so we offer a free sample that you can download by submitting the below form
By GlobalDataBaber adds: “As consumer attention and knowledge are being increasingly drawn to a more resilient sustainable future, it is essential that fintech’s can meet the rising demand for regulation disclosure, alternative sustainable practices, and data transparency.
“In an attempt to meet this demand, carbon offsetting programmes such as carbon trading have become a popular practice within fintech, involving the purchase of credits, used to fund global sustainability initiatives such as forestry schemes, in return for a carbon-neutral title.”
He notes that carbon offsetting programmes are invaluable when partnered with alternative strategies reducing emissions at the source. However, the sole use of these programmes has previously been construed as greenwashing. This practice has been widely criticised as sidestepping the real issues of climate change and a way for fintech’s to avoid taking responsibility for their own footprint issues. Exposure to these accusations poses a potentially detrimental fallout, especially as consumer power remains a leading incentive for businesses, their approval and recognition deemed crucial.
Environmental metrics reporting: credible starting point
Baber adds: “In order to move forward, reporting of environmental metrics provides a credible starting point in identifying areas in which emissions can be reduced. However, this is often overlooked and although publishing data remains a largely optional practice, once metrics are reported fintech’s can harness their data to actively reduce their environmental impact at the source.
“Efforts to reduce emissions at the source exhibit a proactive approach to directly addressing carbon footprint. This could include hand-picking suppliers and vendors that are socially responsible by screening them for their own sustainable practices, the removal of plastic use in crypto carbon offsetting, and improving mining efficiencies.”
Mandatory ESG reporting
He says that for complete carbon emission responsibility, more global environmental metric data should be reported. And it should be made easily accessible so that it can function as a guideline and be worked into sustainability targets. When ESG reporting becomes mandatory for companies of all sizes, it will become easier for fintech’s to measure, report and compare their own environmental metrics.
Baber concludes: “For fintech’s to successfully address their emissions, they should invest time and resources into collecting and reporting their sustainability metrics as a foundation to improve upon.
“Once collected, these metrics can be incorporated in business models and published, promoting transparency for the consumer. Alongside this, sustainable partnerships such as plant a tree and offering virtual, plastic-free payment cards are valuable in offsetting the remainder of unavoidable emissions and waste.”
