How Fintech companies can authentically have a positive impact on the environment
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More people care about their impact on the environment. There is a growing demand for companies to act responsibly, which will influence consumers’ decisions to support businesses. There is no better time for companies to reflect on how their practices impact climate change – environmental considerations are now a necessity across all industries – including fintech.
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Along with the current wave of interest in environmental, social and governance (ESG) investing, many companies are beginning to make serious efforts to adopt net zero pledges and develop new solutions to address climate change. In addition, there is also growing concern about “greenwashing”, where companies make false claims about environmental practices. Regulators such as the Australian Competition and Consumer Commission (ACCC) have become more critical and vigilant towards businesses that do not keep their promises and provide misleading information. ASICS (Australian Securities and Investments Commission) has even issued its first ever greenwashing fine, which is indicative of more enforcement action to follow.
When done authentically, sustainability practices can present unique opportunities for growth, innovation and investment for your company – and set an example for others to follow – strengthening your brand’s reputation along the way. There are many ways fintech companies can address the needs of ESG and sustainability practices. One of the most important opportunities lies in the power of connectivity and automation of processes through technology, such as digital online payments – but there are also a number of other factors to consider.
Look at the gaps in the societal issues that the financial sector can help address, how your capital investment can be used to raise awareness about climate change, or ways that the industry can practice a more transparent way of financial and economic reporting.
Reducing the total emissions associated with your business is a sure way to show your customers that you really care about the environment and are taking action to improve the planet. This goes beyond just setting a target for reduced emissions, but being able to provide evidence to customers and investors that you are taking action to meet this promise, for example the release of quarterly reports indicating your current emissions rate. Another step you can take to carefully consider ESG factors is to create a roadmap that includes donations to, actions or interactions with an environmental organization that interests you.
In light of the collapse of REDcycle, advocates place responsibility on manufacturers and retailers for the vast amount of plastic being made. At a time when greenwashing and recycling are more prevalent than ever, with each Australian using around 130kg of plastic annually (less than 12 per cent of this plastic ends up being recycled), companies need to take matters into their own hands and start making authentic, effective obligations. For example, a unique approach to partnership can put purpose at the heart of influencing climate change. WLTH partnered with Parley for the Oceans to undertake extensive clean-ups in the Whitsunday Islands, and our first of many trips picked up a total of 630 kilograms of debris over a total area of 11,500 metres.2 of beach and coastline. We also recently launched a VISA debit card with G+D made from recycled and intercepted marine plastic, and absolutely zero virgin plastic – the first of its kind in Australia. As our business is focused on raising awareness of and protecting Australia’s waters and coastlines from pollution, it made sense for us to partner with a like-minded organisation.
For fintech companies looking to start their eco-conscious journey, it can be very beneficial to look at which sector of the environment you want to focus on and use that as an indicator of which businesses you want to consider partnering with. Doing business with credible organizations with values similar to your own company is a good indicator to customers, investors and other businesses that you take ESG seriously.
When it comes to payment methods, fintech can introduce new features such as monitoring systems that enable customers to track where they spend their money and help set ESG goals. Examples of features may include charting payments on utility bills and turning this into an estimated carbon footprint, or allowing the user to set a limit on where they spend their money and align this with environmental goals – such as a limit on spending by fast-fashion companies.
A passion for the environment is essential for the fintech industry and will reflect well in your business practices. To be a successful fintech that takes into account ESG factors, you must authentic care about climate change, and not jump on the bandwagon to retain or attract new customers. This undermines consumer confidence and can prevent meaningful action. Be determined and make a difference in climate change through education and changing behavior – starting from practice in the organization and consumers.
