by Dana George | Oct. 14, 2020
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It will take effort from everyone to create a more sustainable environment, and fintechs are doing what they can to help
A "fintech" is a company that provides financial services, from mobile payment apps to cryptocurrency, through software or other technology. In short, any company that uses technology to perform financial services or connect with financial services is considered a fintech. Fintechs, it turns out, are on the front lines battling climate change. Here's how some of them help create a more sustainable environment.
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Aspiration is an online financial institution catering to socially conscious customers who want their deposits and investments to improve the world. Aspiration developed a program called "Plant Your Change" that allows customers to round up their debit purchases to the next whole dollar and contribute the amount they've rounded up to planting trees. For example, a customer pays by debit for an item costing $10.51; with the Plant Your Change program, Aspiration rounds that debit up to $11, and directs the extra $0.49 to a fund earmarked to plant trees. Aspiration rewards its customers by depositing cash into their bank accounts after they've helped plant a specific number of trees. For example, once 30 trees have been planted via a customer's contributions, Aspiration rewards them with a $5 deposit.
Planting trees may not seem like a big deal, but in fact, studies have placed it among the most effective ways to slow climate change.
"Planet Protection" is another of Aspiration's programs. The company promises to provide carbon offsets for every gallon of gasoline the customer purchases with an Aspiration card (though you have to opt in).
Vesbox is not a bank or credit union, but it is a vital fintech player, poised to help financial institutions invest money in the energy companies with the best shot at slowing climate change.
Given the urgent need to stop the planetary changes that will occur if climate change is not reined in, it's easy to fall into the trap of investing in any company that appears to have a good idea. That's where London-based Vesbox comes in. This energy fintech company launched software that measures how viable an idea is.
For example, a business may want to build thousands of windmills on the coast of a European country to provide a renewable energy source to residents. Vesbox's platform measures the odds of the windmills accomplishing what the business claims they will achieve. The platform identifies all risk factors the windmills will encounter over their lifecycle, and includes a performance report analysis, a sustainability report, and a host of other measures designed to help banks know whether their investment in the company is wise.
In less than five seconds, Vesbox's technology provides the kind of real-world answers financial institutions need to make a smart move. While the technology is fascinating, what's meaningful about the Vesbox platform is that it helps banks direct their money to the projects most likely to achieve new (or improved) forms of sustainable energy, thereby cutting down carbon emissions more effectively.
This San Francisco-based fintech supports global climate action by donating 1% of net proceeds from its "1% for the Planet" checking account to not-for-profit climate change organizations -- at no cost to the customer. Customers who sign up for the checking account also receive:
In addition, Bank of the West restricts financing to companies involved in harmful-to-the-environment practices, including big tobacco, fossil fuel, and palm oil companies.
While the environmental policies of these three fintechs are admirable, they are not the only banks and fintechs trying to help slow climate change. For example, American Express and the financial technology company iZettle have created credit cards and card readers using recycled ocean plastic. European Challenger Bank offers what it calls a "Green Card." For every $118 spent, the bank plants a tree through the Eden Reforestation Project. To keep customers in the know, it sends a monthly update.
No one group can stop climate change, but fintechs are leading the way, and hopefully, others will join in.
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