Helping banking customers go green

Apr 01, 2022 - 6 min read
Also Available in : Français
Magali Pouchin, Head of corporate responsibility at Sopra Banking Software

Sopra Banking’s Insights regularly bring our readers the latest developments on the ecological side of the financial services industry, from the environmental impact of asset auditing to the ABC of green financing to how banks can help the world meet its environmental targets

In this latest article, we reveal the steps that banks can take to support their end-customers in their journey to become more green, and why this will ultimately be a boon for those banks that go the extra mile.  

Financial institutions can play a huge role in cutting global carbon dioxide (CO2) emissions. To achieve their environmental goals, banks around the world are striving to reduce indirect emissions from external projects they’re funding.

But fighting climate change is a collective effort, and needs to be tackled from all angles. We’ve previously written about banks’ direct emissions, but what about banks’ customers? How can banks empower them to go green?

A new wave of eco consumers

Consumers are increasingly vocal about their interest in brands that embrace purpose and sustainability.  For example, a survey by Deloitte revealed that 34% of UK consumers choose brands with sustainable practices and values in 2020.

This is true for their financial services, too. A separate Deloitte study (looking at banking customers in the UK) found that 71% are more likely to choose a bank with a positive social and environmental impact.

In particular, customers are interested in working  with their banks on going green. A July 2021 report by Cornerstone Advisors (looking at US customers) found that almost three-quarters of Generation Zers and seven in ten millennials are interested in using a carbon footprint tracker provided by their bank. On top of that, around half of each group said they’d like:

  • To see estimated emissions data in their mobile banking app
  • Help from their bank to reduce emissions
  • An overview from their bank regarding their carbon footprint

That’s why, as well as demonstrating eco-awareness via their indirect and direct actions, banks should make going green easier for their customers. By doing that, they improve their operations, build trust and attract new business.

Why banks should lead the way in going green

More and more people may be going green, influencing their consumer choices, but it seems that significantly fewer people are willing to take concrete actions in the fight against climate change. 

According to a 2019 study by Harvard Business Review, while 65% of people surveyed said they want to buy purpose-driven brands that advocate sustainability,  only about 26% actually do so. 

This could be explained, in part, by a lack of know-how. Indeed, evidence from Deloitte highlights that 15% of UK consumers haven’t adopted a more sustainable lifestyle because they don’t feel they have enough information. Similarly, research by Cornerstone Advisors shows that even though the majority of Americans recognize climate change as a critical issue, only 9% track their carbon footprint. 

Banks could become part of the solution by advocating climate-conscious lifestyles across their customer base. Because of the central role they play in many people’s everyday lives, they have the potential to make a far-reaching positive impact.

That being said, it’s not just about being altruistic. Helping people reduce their emissions is an opportunity for banks to futureproof themselves in the rapidly changing and environmentally aware world we’re living in. 

What steps can banks take to help customers go green?

Because banks have access to vast amounts of transactional data, they’re able to build a picture of consumer behavior, spending patterns and preferences. By leveraging their marketplace, they can advise customers and educate using gamification. Below, we’ll take a look at several methods.

Carbon footprint tools

Banks can equip customers with country-specific digital calculators, giving them emissions data on their purchases. For example, Enfuce’s My Carbon Action tool is tailored to each region and relies on user input regarding lifestyle preferences: diet, housing, heating, transport and shopping. 

It integrates with banks’ apps and services via application programming interfaces (APIs) and takes the total eco-impact of purchases into account – raw materials extraction, manufacturing, shipment, use and disposal.

By combining people’s transaction information with their way of life, banks arm customers with valuable insight into the environmental impact of their choices. They can also use the data to offer consumers personalized sustainability tips.

Meniga’s offering is Carbon Insight, a solution for banks to empower customers, drive engagement and introduce eco-friendly products while strengthening their Environmental, Social and Governance (ESG) strategy.

In March 2021, Islandsbanki partnered with Meniga to integrate Carbon Insight into its digital banking product suite, enabling mobile users to track their CO2 emissions. The tool highlights spending areas that are most detrimental to the environment and inspires customers to take action.

Meanwhile, Mastercard has partnered with Doconomy to launch the Mastercard Carbon Calculator. Powered by the Aland Index API, partners can embed the tool in their website or app.

Climate-friendly account features

Alongside carbon tools, banks can also consider monetary incentives on green purchases. The Visa FutureCard is an example to take note of, offering 5% cashback on climate-smart spending.

Financial enticements are popular among US consumers, with 73% of Gen Zers, 60% of Gen Xers, 56% of millennials, 55% of seniors and 49% of baby boomers in favor, according to Cornerstone Advisors.  

Another option involves rounding up customers’ purchases to the nearest Euro (or equivalent) and planting a tree with the spare change – a proposition Plant Your Change is centered around, with 49,494,561 trees planted to date.

There’s also appetite for features such as:

  • Payment cards made from renewable or upcycled materials
  • Ensuring customers’ deposits don’t fund fossil fuel exploration or production
  • Carbon offsets for purchases using the account’s payment card

Opportunities for banks and their customers

Climate-oriented consumers want to make a difference, but they’d like help making that a reality. Banks can capitalize on the situation by pivoting towards eco-focused products and policies. Furthermore, in the coming years, being a green-friendly brand may be essential for organizations – including those in the financial services industry – who want to lead the way in their respective sectors. 

Sopra Banking Software is committed to fighting climate change, and environmental causes are at the heart of our company-wide 2022 strategy. 

We are currently putting in place an environmental management system at all of our offices to better manage and ultimately reduce our consumption of resources. 

Furthermore, in line with the Climate Pact agreed at the UN Climate Change Conference of the Parties (COP26), we aim to be net carbon neutral by 2028. To do this, we will reduce all direct and indirect emissions, and compensate for any remaining emissions by investing in certified carbon capture projects.