On April 22nd, we were flooded with emails, tweets, and posts about corporate commitments to tackling climate change. And while some may view Earth Day as a construct for businesses and banks to tout their CSR goals, the fact is that Corporate Social Responsibility is the present and the future of good business practice.
In the latest episode of 11:FS, host Adam Davis invited Matt Rees of the European Investment Bank and host of the Climate Solutions podcast, Georg Ludviksson, CEO & Co-Founder of Meniga, and Clare Reilly, Chief Engagement Officer of PensionBee to discuss business strategies and share insights on this Green Financial Wave.
Davis starts off by giving us a few stats to set the stage:
- There is a 68% decline in animal population since 1970
- 80 billion pounds of food is thrown away each year in the US
- The EU is looking to reduce carbon emissions by 50% by 2030 and net-zero 2050
- The UK wants to be carbon neutral by 2050
- HSBC will stop financing coal projects by 2040
This all paints the picture that this Green Financial Wave is not a passing trend but a commitment with intentional steps to drive change.
Matt Rees of the European Investment bank explains that there is a demand for sustainable products and investments. In the past, the priority was purely profit-driven, and environmental consequences, whether positive or negative were simply a byline that you could take or leave. Now, the environmental aspect has to be present — “you can't have either or, you have to have sustainability as part of it”.
"People are starting to get used to the idea of valuing sustainability…that ecosystems have an economic value.
The value of our ecosystems to the world economy is estimated at $125 trillion/ year, 7x the GDP of the United States.”
There has been a significant shift in how the financial sector views sustainability. Claire Reilly of PensionBee recognizes that with all the “goodwill”, there has to be regulation around the buzzwords we use.
“I’m a little bit cautious around some of it, we still need better regulations to protect consumers … regulations around the words like ethical, ESG, sustainable, net-zero.
We need to set the parameters around throwing these terms around and think that people will understand what they mean.”
The challenge with these buzzwords is that not only are they unregulated, but to the average customer, they are intangible. Ludviksson makes agrees that there is a rising consumer demand for sustainable products, “which is why we decided to build a carbon footprint product for the bank”.
Meniga’s Carbon Insight is a white-label green solution for banks that gives banking customers the ability to understand their carbon footprint, insight into how they can reduce it, and most importantly, the power to take action.
A major theme that continues to appear throughout this podcast is that the sustainability aspect must be holistically tied into business decisions. Rees conducted a climate survey of 30,000 people and one of the results showed that 56% of people want a Green Recovery as opposed to a recovery at all costs.
This demand comes at a consumer level which means that environmentally friendly products now have the potential to perform as good, if not better than “normal” products.
"When we look at the data, most of these sustainable funds outperformed normal funds (ones with oil in them) and purposeful companies (ones with better ESG scores) outperformed their peers because they are more resilient in times of trouble."
Ludviksson drives the point across that actions towards sustainability must be easy and convenient for the customer, but must be profitable for the bank.
“The whole point about the digital bank is making it convenient. By making the carbon footprint super easy to understand and super easy to take action.
Coming from PFM, we felt we can contribute by helping people understand it, and taking action one click away through certified offsetting project.”
We at Meniga are passionate about Carbon Insight and the impact it can have on the environment. We are thrilled to have been part of the conversation with Adam, Matt and Claire and our enthusiasm renewed knowing that we, along with other leaders in the financial industry are aligned in purpose-driven business.
I really cannot wait for some these solutions to seep into my daily banking apps. Personally I really believe that it will really move the needle.
Fintech Insider by 11:FS is a bi-weekly podcast dedicated to all things fintech, banking, technology and financial services. Hosted by a rotation of 11:FS experts including David Brear, Simon Taylor, Jason Bates, Sarah Kocianski and Ross Gallagher and joined weekly by a range of fantastic guests, they discuss the latest news, developments, and trends within the industry.
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