Earth Day 2021: Green is the New Black in FinTech 💚
Updated: Apr 27, 2021
In 1970, Senator Gaylord Nelson in the United States created Earth Day as a way to force this issue onto the national agenda. This year, on April 22, 2021, Earth Day marks the 51st anniversary of the modern environmental movement.
Given the current pandemic situation, Earth day celebrations may be subdued, but the COVID-19 crisis should rather implore the innovators and entrepreneurs around the globe, about the real threats and challenges before our planet and its residents.
Early this year Sir David Attenborough, an English broadcaster and natural historian, made an impassioned plea to the members of the security council reminding them of their prime responsibility of holding the key to preventing a global catastrophe. Along with national leaders, innovators and entrepreneurs from the startup ecosystem also have a significant responsibility to ensure sustainable development and eco-friendly growth.
This article aims to highlight some of these climate-conscious initiatives that fintech startups are focusing on to deliver immediate and impactful results and drive transformative change for people and the planet.
FinTech Segments Driving the Green Agenda 🌱
In recent times various banks such as JP Morgan Chase, Citi, Bank of America, Morgan Stanley etc. have unveiled their trillion-dollar commitments towards the planet with a sustainable finance budget to be spent across multiple decades. The fintech industry is taking the mantle with a right-here-right-now approach to sustainability.
Key fintech segments driving the green agenda:
Digital Challengers & Neobanks: Most of the digital banks, owing to their branchless & paperless business models, may be considered relatively greener than their traditional counterparts. However, the flip side is their technology-powered business runs on millions of servers with considerable impact on climate. In recent years many neobanks have stated their objectives to achieve net-zero carbon emissions by planting trees, using renewable energy sources or preventing deforestation. In 2020 Nubank and Oaknorth Bank claimed to have achieved net-zero carbon emissions targets. In addition, these neobanks have also launched initiatives to enable their customers to pursue a climate-conscious lifestyle with various initiatives.
Impact Investment Platforms: There’s a variety of impact investing platforms that focus on helping customers apply socially responsible parameters while making investments decisions and enable them to manage a green portfolio.
Enabling Tech Platforms: Various technology providers, especially the open banking enablers, have partnered with banks - both traditional and digital to turn banking apps into eco-friendly advisers. These apps help customers track their carbon footprint automatically and also recommend ways to reduce their carbon footprint.
The UK Leads the Green Neobanking Phenomenon 🇬🇧
Just like the previous neobanking phenomenon which started and gathered steam in the UK during 2014-16, the country is home to over 10 neobanks who are marching ahead with their green initiatives. The US is not far behind with several emerging green neobanks. Several European countries such as France, Germany, Italy, Sweden, the Netherlands, etc. also have a good presence of eco-friendly neobanks.
This list of green neobanks in the UK and Europe includes a great mix of established and emerging players which bodes well to the innovation imperative. Various marquee investors such as Y Combinator and Plug and Play are betting on the Green fintechs that are emerging in the UK and Europe.
FinTech Green Innovation Agenda: A Spectrum of Climate-Conscious Initiatives 🌏
FinTech startups across segments have taken up a diverse set of climate-conscious initiatives. These initiatives span from tracking carbon emissions, launching biodegradable cards, planting trees, facilitating green investments, climate-linked parametric insurance, etc. The below table describes some of these climate-centric product innovations and the corresponding set of fintech startups leading the innovation category.
Below is a list of notable climate-conscious innovations from the FinTech startups ecosystem:
Ant Forest: In August 2016, the Chinese Fintech Alipay took its first step to promote climate action with the launch of the Ant Forest project. It rewards its users with “green energy points” each time they take a step to reduce their emissions, such as by biking to work, going paperless and buying sustainable products. These green energy points grow into a virtual tree on the user’s app, which Alipay matches by planting a real tree or protecting a conservation area, in partnership with local NGOs.
Stripe: In August 2019, Stripe announced a Negative emission commitment. Along with the initiative to fully offset their greenhouse gas emissions, this commitment went a step further with a commitment to pay for the direct removal of carbon dioxide from the atmosphere and its sequestration in secure, long-term storage. In November 2020, Stripe also rolled out a payments feature for Green Investments that allows retailers to make direct payments to climate change initiatives.
bunq: In November 2019, bunq launched bunq green card in partnership with Eden Reforestation Projects. For every €100, spent with this card, bunq promised to plant a tree. Within 3 months bunq claimed that they had planted over 70,000 trees and went with the launch in 22 additional European countries.
Yova: In April 2020 Yova, an impact investment robo-advisor, raised funding from several angel investors. Yova positions itself as a sustainable asset manager by offering clients the ability to develop and manage sustainable investment portfolios.
Celsius Pro: In September 2020, CelsiusPro announced its membership in the InsuResilience Global Partnership, joining a community dedicated to strengthening the resilience of developing countries against the impacts of climate change and natural disasters. CelsiusPro is an InsurTech company that specializes in industrializing index insurance solutions to mitigate the effects of adverse weather, climate change and natural catastrophes.
Starling Bank: In October 2020, Starling launched a customer tree planting refer-a-friend scheme in partnership with Trillion Trees. Starling’s customers may refer their friends & family for a Starling account and once their personal or business account is open, the referral process will be complete, meaning that one tree will be planted by Trillion Trees. To get the green ball rolling, Starling also made a one-off donation to Trillion Trees for 2,014 trees to be planted.
TreeCard: In October 2020, Treecard launched the world's very first wooden debit card that helps plant trees with every purchase and is very popular among Gen Z customers. TreeCard offers NFC-enabled wooden debit cards as well as virtual cards for consumer payments.
PensionBee: In November 2020, PensionBee launched the UK's first fossil fuel-free fund in partnership with Legal & General which gives consumers the choice to exclude certain companies that do not meet their ethical investing requirements from their pension.
Greenly: In December 2020, Greenly, a carbon footprint tracking mobile app teamed up with the European Open Banking platform Tink to assist individuals and companies to track their carbon footprint automatically. The mobile app helps track customers' climate dashboard, understand which expenses have the most impact, and learn how to choose greener alternatives daily.
My Drop in the Oceans: My Drop In the Oceans has developed a global currency platform called MY DIO. It rewards consumers and businesses for their sustainable actions, in turn, returning value to nature. The platform creates a link between the value of environmental costs and the issuing of a digital currency that can be used by consumers to pay for purchases at participating businesses.