In the wake of the latest Intergovernmental Panel on Climate Change (IPCC) report, which delivered a “final warning” on the climate crisis as “a code red for humanity” earlier this year, the time for sustainable net zero or even net negative global CO2 emissions is now to ensure a sustainable future before it’s too late. The finance sector holds the answer to this – historically, it has always led the way for incorporating low-carbon practices, and now with environmental consciousness at an all-time high, they could hold the key to mediating a transition to greater sustainability.

Recent research from the open banking platform Tink has revealed that 40% of customers wish to track their environmental impact through services provided by their bank, highlighting a gap for fintechs to help hold retail businesses accountable to their green initiatives. With consumer demand for sustainable transparency continuing to rise, once again the responsibility falls to financial businesses to lead the green charge.

“The rise of financial technology over the past decade has created a new era of potential for sustainable investing, particularly in the fields of ESG investing, green financing and carbon neutrality,” says Jeremy Baber, CEO of Lanistar. “Fintechs have always enabled innovation and contributed positively towards sustainability for a lower-carbon world, particularly as they aim to disrupt traditional finance operations in a customer-focused way.

“Digital payment solutions can lead the charge towards sustainability and a low-carbon economy. The carbon footprint brought by physical currency – i.e., its creation, transportation, disposal, etc. – is minimised or else eclipsed by using digital cash transactions.”

Baber stresses that the consumer demand for sustainability is there more than ever: “Gen Z and millennials are more environmentally conscious than previous generations, being more likely to change their spending habits and support sustainable businesses. Fintech businesses that promote more sustainable practices are more likely to gain support from this demographic, in comparison to their energy-inefficient and carbon-consuming competitors.

“The demand for banks to track their carbon footprint is there, as well as that of retail businesses consumers spend with. Whilst banks have said they would offer tools to aid with this, currently they have no plans to do so. Fintechs are in the best position to capitalise on consumer demand and hold banks and retail businesses alike accountable for their green impact through digital transaction history.”

Baber concludes that sustainability change absolutely requires a business incentive in order to be easily adopted by CEOs. “In highlighting a consumer demand, businesses can feel more secure in continuing to fight for innovations in technology and lower-carbon alternatives, as both enable them to have an edge from a consumer standpoint.”

“Customers are smarter and more discerning than ever when choosing financial services and are more likely to scrutinise green credentials before committing to a provider. Therefore, it is no longer as simple as just claiming to support green initiatives; real meaningful action is needed at every step and with every initiative to attract and secure interest from target consumers, lest they leave to seek a stronger alternative elsewhere.”