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.

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 comments: “Fintechs 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 that 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.

“Despite their success in facilitating a net-zero market for others, fintechs should not dismiss the importance of taking responsibility for their carbon footprint. Fintechs are often not associated as one of the leading global GHG emitters 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.”

Baber continued: “As consumer attention and knowledge are being increasingly drawn to a more resilient sustainable future, it is essential that fintechs can meet the rising demand for regulation disclosure, alternative sustainable practices, and data transparency. 

“In an attempt to meet this demand, carbon offsetting programs 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.

“Carbon offsetting programs are invaluable when partnered with alternative strategies reducing emissions at the source, however, the sole use of these programs has previously been construed as greenwashing. This practice has been widely criticized as sidestepping the real issues of climate change and a way for fintechs to avoid taking responsibility for their 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.”

Baber added: “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 fintechs 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 sustainable practices, the removal of plastic use in crypto carbon offsetting, and improving mining efficiencies.

“For complete carbon emission responsibility, more global environmental metric data should be reported and 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 fintechs to measure, report, and compare their environmental metrics.”

Baber concludes: “For fintechs 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 into business models and published, promoting transparency for the consumer. Alongside this, sustainable partnerships such as planting a tree and offering virtual, plastic-free payment cards are valuable in offsetting the remainder of unavoidable emissions and waste.”