What is carbon footprinting for banks?
Sustainable banking is transparent banking. Getting there means empowering bank customers with carbon footprinting based on their transaction. But it doesn’t just end there.
When it comes to carbon footprinting, banks are special. Why? Because they hold the key to accurate, useful carbon footprinting: payment transaction data.
Individual environmental impact can be traced back to our consumption habits. Harnessing payment data by enriching it with carbon emission values opens up a plethora of new opportunities.
In 2022, a trend is emerging: banks and financial institutions are engaging with sustainability. However, how banks embrace green banking and finance will separate the frontrunners from those at the back of the pack.
Carbon footprints for consumers
Carbon is a currency. Behind every product and service we buy, there lies a carbon price tag. That price tag has been invisible to the eye of consumer – until now.
By providing customer transparency, by telling clients the whole story behind their money, banks play a vital role in the fight against climate change: inspiring widespread climate action.
The rapidly growing climate-conscious customer segment is looking to harmonize banking with their eagerness to perform climate action. To help them do that, banks need to act.
Banks massively surpass their potential for impact by involving their customers in climate action instead of just relying on in-house CSR initiatives alone. Imagine the impact a 10% reduction in the carbon footprints of your customers. Combined from all customer segments -now that’s scalable climate action.
The transparency that environmental footprinting achieves lays the basis for climate engagement. From there, financial institutions can educate and nudge consumers through climate insights on interesting tips, tricks, and fun facts. That opens the door to more personalized banking experiences, where corresponding offsetting and ESG packages can be tailored to fit customer preference.
How does carbon footprinting work?
Many methodologies and philosophies on carbon footprinting exist – some more robust than others. Carbon footprinting of the basis of payment transactions is a specialized approach that takes into account the integral role that consumption habits have on individual environmental impact.
Most approaches break spending down into categories, for example, groceries, gas, transportation, restaurants, and the like. These can be broken down into further subcategories for more accurate categorization. Considering the variation that exists within those categories, some methodologies, like the one ecolytiq uses, account for country-specific variables.
The categories are then contextualized with research and publicly available emissions data to give consumers their calculations. Through customer feedback loops, the calculations are then refined.
How long was your flight? What are your diet preferences? What kind of fuel did you fill up with?
Carbon, however, isn’t the only lens through which environmental footprints can be measured. Footprinting is becoming just as diverse and rich as the environment is.
Now is the time for you to explore the future of sustainable banking and green finance:
Click here to get your free copy of our newest White Paper: Carbon Footprinting and Beyond – How transparency drives sustainable banking.
You’ll get all you need on topics such as:
- How carbon footprinting can change banking
- What banks can do to generate widescale climate action
- Where transparency creates opportunities for new, green banking products
Authored by Max Honzik, PR & Content Manager at ecolytiq