How sustainable payments innovation can enable climate action

The world is wak­ing up to the impor­tance of embed­ding sus­tain­able prac­tices in every part of soci­ety and busi­ness, from the start of the sup­ply chain to the con­sumer. It’s no longer enough to dis­play a few token envi­ron­men­tal efforts – whether you’re in fash­ion or finance, every indus­try is under sus­tain­abil­i­ty scruti­ny. Every­one wants to do their bit, and the finan­cial sec­tor has a cru­cial role to play.

Mobil­is­ing finance is list­ed as a vital step towards reach­ing the cru­cial COP26 goals of secur­ing glob­al net-zero by 2050, lim­it­ing glob­al warm­ing to 1.5 degrees, and adapt­ing our behav­iour to pro­tect com­mu­ni­ties and nat­ur­al habi­tats. The COP26 offi­cial agen­da states “to achieve our cli­mate goals, every com­pa­ny, every finan­cial firm, every bank, insur­er and investor will need to change.” It’s a tall order, but one which inno­va­tion in pay­ments tech­nol­o­gy can help with. So how exact­ly?

Satisfying the increasingly conscious consumer

“Com­pa­nies first need to address their own oper­a­tions and reduce their emis­sions. But beyond that, we can’t reach the tar­gets that gov­ern­ments are sug­gest­ing with­out con­sumer par­tic­i­pa­tion as well,” explains Mastercard’s chief sus­tain­abil­i­ty offi­cer, Kristi­na Klober­danz. “It’s about tak­ing these big coun­try and com­pa­ny-wide com­mit­ments down to an indi­vid­ual lev­el.”

Evi­dence sug­gests that con­sumers are not only onboard and ready to make this shift but active­ly dri­ving change through a desire to make bet­ter choic­es. The Covid-19 pan­dem­ic has giv­en con­sumers an increas­ing under­stand­ing of the envi­ron­men­tal impact of their pur­chas­es. 

Research from Mas­ter­card found that across 24 coun­tries 58% of adults are now more mind­ful of their impact on the envi­ron­ment, and 85% say they’re will­ing to take per­son­al action to com­bat envi­ron­men­tal and sus­tain­abil­i­ty chal­lenges in 2021. This sig­nals a grow­ing trend toward eco-con­scious spend­ing and con­sump­tion, explains Klober­danz. Peo­ple want to turn their pur­chas­es into mean­ing­ful action for the plan­et.

It’s not just talk. Con­sumers are watch­ing brands to see how they address sus­tain­abil­i­ty issues. Mastercard’s research found that 35% of con­sumers glob­al­ly now have increased expec­ta­tions of com­pa­nies to act with greater pur­pose and are plac­ing increased val­ue on brands that make eth­i­cal choic­es. And 24% of con­sumers are like­ly to stop shop­ping from brands with no sus­tain­abil­i­ty plans for the future. Under­stand­ing the urgency to act, Mas­ter­card has recent­ly accel­er­at­ed its own net-zero com­mit­ment by a decade from 2050 to 2040.

Joining the dots with payments innovation

So where does finan­cial inno­va­tion come into this? With gov­ern­ments glob­al­ly work­ing towards ambi­tious tar­gets and organ­i­sa­tions feel­ing the pres­sure to devel­op more sus­tain­able prac­tices, the intent is clear­ly there to make changes. Mean­while, con­sumers are increas­ing­ly inclined to put their mon­ey where their mouths are and spend eth­i­cal­ly and sus­tain­ably. An organ­i­sa­tion such as Mas­ter­card, spe­cial­is­ing in pay­ment tech­nol­o­gy with over 20,000 banks and issuers around the world and the abil­i­ty to reach out to bil­lions of peo­ple world­wide, is in a prime posi­tion to mobilise its part­ners and cus­tomers to act on cli­mate change togeth­er.

To help con­sumers under­stand more about their spend­ing, and its poten­tial envi­ron­men­tal impact, Mas­ter­card has devel­oped a car­bon cal­cu­la­tor in col­lab­o­ra­tion with the Swedish fin­tech Docon­o­my. It uses dif­fer­ent cat­e­gories, such as food and drink, and trans­port, to show peo­ple the car­bon foot­print of each trans­ac­tion. The esti­mates are based on the Åland Index, which mea­sures car­bon impacts.

The cal­cu­la­tor has already been adopt­ed by sev­er­al of Mastercard’s bank­ing part­ners, from tra­di­tion­al finan­cial insti­tu­tions to emerg­ing fin­techs, who are inte­grat­ing it into their own con­sumer-fac­ing apps. As Oli Cook, CEO of deb­it card com­pa­ny ekko, explains: “Togeth­er with Mas­ter­card we will help our cus­tomers live more sus­tain­ably and become more aware of the car­bon foot­print of what they con­sume by doing noth­ing oth­er than using their ekko card.”

As well as mon­i­tor­ing the car­bon foot­print of their spend­ing, the app can also be designed to sug­gest ways con­sumers can coun­ter­act their car­bon impacts, using com­par­isons such as the num­ber of trees required to absorb the same amount of CO2. Users could then make dona­tions toward tree plant­i­ng projects, or use their card’s loy­al­ty points. 

“Can this alone change everybody’s behav­iour? No, but it starts to shift the cul­ture of aware­ness,” says Klober­danz. “It gives peo­ple new insight and then the abil­i­ty to com­pen­sate for their own impact; it’s start­ing to empow­er indi­vid­u­als.”

Collaborative, sustainable thinking 

The next iter­a­tion of the car­bon cal­cu­la­tor, and oth­er prod­uct inno­va­tions like it, will be top pri­or­i­ties for Mastercard’s new Sus­tain­abil­i­ty Inno­va­tion Lab. Based in Swe­den, the cen­tre will ramp up its work next year, when it starts look­ing at new ways of work­ing with part­ners to explore how emerg­ing tech­nolo­gies such as 5G, quan­tum and advanced AI can be used to help tack­le envi­ron­men­tal chal­lenges.

Tech­nol­o­gy holds some of the answers, says Klober­danz, but many of these solu­tions don’t nec­es­sar­i­ly exist yet. “Fos­ter­ing inno­v­a­tive solu­tions with prac­ti­cal appli­ca­tions is urgent­ly need­ed to achieve glob­al cli­mate change goals,” she says.

As the glob­al econ­o­my rapid­ly digi­tis­es, she con­tin­ues, it’s essen­tial that both peo­ple and the plan­et can thrive togeth­er. Cre­at­ing solu­tions that sup­port sus­tain­able spend­ing and empow­er busi­ness­es and con­sumers to trans­form how they pro­duce, dis­trib­ute and pur­chase prod­ucts and ser­vices, will help achieve this.

Mas­ter­card is also work­ing to cre­ate new mod­els of col­lab­o­ra­tion with its glob­al net­work of part­ners. For exam­ple, the Price­less Plan­et Coali­tion, which Mas­ter­card launched last year and is run­ning with Con­ser­va­tion Inter­na­tion­al and World Resources Insti­tute. It brings togeth­er over 80 busi­ness­es world­wide to set about restor­ing 100 mil­lion trees, also sup­port­ing the World Eco­nom­ic Forum’s one tril­lion trees plat­form.

“What we can pro­vide is the frame­work and infra­struc­ture for part­ners so that efforts aren’t frag­ment­ed,” explains Klober­danz. “But it’s not sim­ply phil­an­thropic dol­lars… it’s us engag­ing with banks and retail­ers to help incen­tivise con­sumer behav­iour by run­ning engage­ment and dona­tion cam­paigns tied to their core busi­ness. This, com­bined with our net­work effect, can make a huge impact, espe­cial­ly when guid­ed by our experts Con­ser­va­tion Inter­na­tion­al and World Resources Insti­tute.”

As well as inspir­ing con­sumers, she con­tin­ues, it is about: “cre­at­ing a new mod­el for glob­al refor­esta­tion at scale… ensur­ing that we are doing this in a way that is going to have the great­est impact for the cli­mate, but also for com­mu­ni­ties and bio­di­ver­si­ty, too.” The pro­gramme will also fea­ture on part­ners’ bank­ing apps, enabling con­sumers to donate to refor­esta­tion projects.

Recog­nis­ing that col­lab­o­ra­tion is key to address­ing the cli­mate cri­sis, Mas­ter­card is also sup­port­ing the new Cli­mate Fin­tech Cards & Pay­ments Chal­lenge, launched in Sep­tem­ber by the New Ener­gy Nexus NGO. It brings togeth­er major finan­cial insti­tu­tions with fin­tech star­tups, to devel­op ideas that inform the way peo­ple spend, and how pay­ments are han­dled.  

Win­ners of the chal­lenge will be fast-tracked on Mastercard’s own Start Path engage­ment pro­gramme, which gives them access to the company’s tech­nol­o­gy and exper­tise to help scale their busi­ness­es.

No man is an island, and sus­tain­ably rev­o­lu­tion­is­ing spend­ing will take ded­i­cat­ed col­lab­o­ra­tion from finan­cial insti­tu­tions, fin­techs, mer­chants and con­sumers. The Covid-19 pan­dem­ic proved that when the sit­u­a­tion feels urgent enough, every­one can come togeth­er to tack­le an emer­gency. Now we must col­lab­o­ra­tive­ly apply that same urgency to future-proof­ing the plan­et.

To start Some­thing Price­less™ for our plan­et vis­it mastercard.co.uk

Pro­mot­ed by Mas­ter­card