How carbon management can create engagement for banks

Getting to the carbon balance

Everyone knows that management starts with measurement. Carbon management is no different. For banks, this undertaking involves a new but rapidly maturing field of carbon accounting. In the same way that business operations come with their financial costs, they also have a carbon price tag. That price tag has remained invisible – until now.  

Banks have a central role in the climate change discussion. In the U.S., the 18 largest banks and asset managers were responsible for financing the equivalent of around 2 billion tons of planet-cooking carbon dioxide. This would make the U.S. financial sector the fifth-biggest emitter in the world if it were a country. And if it were a country, it would rival Russia in overall in emissions.  

[Dive deeper: What can banks do to fight climate change?]

The good news is that all this carbon can be managed and addressed. Carbon management is a systematic review of the carbon emissions released as a result of a company’s direct and indirect operations as well as its value and supply chains. Tracking down these emissions is the basis to managing carbon in banking.

Scoping out carbon management

Emissions are split into so-called “Scopes 1, 2 & 3” that categorize these commercial emissions. The majority of emissions is in Scope 3. Across high impact industries, Scope 3 accounts for around 75% of all emissions. For financial services, it’s even more.

Scope 3 encompasses the indirect emissions from a company’s entire value chain, both upstream and downstream. Think investment products, financing options, and digital banking services. In the financial services industry, Scope 3 emissions are the main culprit, considering the downstream impact of the investments as well as the facilitation of customers emissions through banking services. And the more overweight these emissions become, the more risk banks and their customers are exposed to.  

Derisking with carbon management

If your doctor tells you you’re at high risk of a heart attack, you know it's time to act. You may cut some things out of your diet, less steak and more leafy greens. It’s hard, but the long-term benefits are worth it.  

Well, it’s time banks go on a carbon diet. Our carbon addiction is putting the environment into cardiac arrest, and it won’t be long until to our economy is affected. The sustainability transition is well underway, and it not just bank assets that are at risk of being stranded. So are their customers.  

[Catch up: What is climate engagement?]

Customer demand for sustainable banking is through the roof. 40% of US consumers are looking to engage with green financial products in the coming year. Even more interest is bubbling up among Gen-Zers and Millienials. With 71% of them willing to use a carbon footprint calculator if provided by their bank, they are looking for more from their banks. And if they can’t find it, they are willing to leave.  

Driving engagement in banking is taking on a new form – personalized carbon management.  

Carbon Management-as-a-Service

Taking carbon management and scaling it to our customers as a value-added service not only is a huge opportunity to reduce emissions but also a great way to generate loyalty, drive engagement, and boost share of wallet value among your customers.  

Retail banking customers

Hyper-personalisation - that’s the key. People all over the world have a fire in their bellies; they want to take climate action. The issue is they don’t know where to start. Cue sustainable banking equipped with carbon management services.  

At ecolytiq we take the traditional digital banking experience and help financial services providers infuse it with transparency on personal impact and climate education. Carbon footprinting for each transaction in real-time establishes a link between spending and environmental impact for customers.  

Emboldened with that knowledge, we then empower the customer to take carbon management into their own hands. With integrated climate insights, customers receive daily tips for sustainable living directly in the banking app and over time can watch their carbon footprint shrink. 81% of end users saw their awareness around sustainability increase with ecolytiq.

Commercial customers

For small and medium-sized enterprises, the race is also on. 60% of SMEs have a carbon reduction plan in place, but many reported they lacked the tools and knowledge to carry them out. It’s crucial that these businesses get effective tools to help them engage with the sustainability transformation.

Banks are the perfect partner for that. SMEs trust banks, but it won’t stay this way forever, if banks drag their feet. ecolytiq is the perfect springboard to build customer-centric solutions for growing businesses.  

Providing carbon management for businesses gives great insight into the environmental toll of operations and the areas for improvement. Equip your clients with the tools to make them regulation-ready, while putting them ahead of their competitors.  

Get personal with carbon management and respond to overwhelming customer demand for products that deliver. Schedule a commitment free demo!