Professor of Financial Services Innovation
A large part of the debate about sustainability in today’s business is dominated by regulation, reporting and tracking scope emissions. It’s time to put the spotlight on consumers – and how businesses can take a leading role in nudging and steering their behaviour towards making more sustainable choices. Because if we want to tackle the climate change challenge, we will need both organisations and individuals to change their behaviour. Digital tools and data-driven solutions will play an important role in this behavioural change. Professor of Digital Financial Services Bjorn Cumps singles out one example and focuses on what we see happening in financial services.
In the digital age, financial transactions have become more than just monetary exchanges. The financial services sector is rapidly evolving, with a growing emphasis on sustainability. Let’s turn our attention to one specific trend. Banks and fintech companies are increasingly integrating CO2 emissions tracking into their services, helping consumers to understand the environmental impact of their financial decisions. This shift underscores a future where carbon emissions are as essential as currency in assessing the true cost of daily transactions.
A few months ago, the Dutch ING bank introduced “Footprint Insight” in its mobile app. This feature enables users to see the CO2 emissions associated with their purchases. By providing data on the carbon impact of transactions – whether it’s shopping, travel or dining – ING encourages consumers to make more eco-conscious decisions. The app helps users visualise the real environmental costs of their actions, driving a deeper awareness of how everyday spending contributes to climate change. In addition, customers also receive tips to reduce their emissions – and see a comparison with the average CO2 emissions of the Dutch. These are, of course, estimates and averages. But getting an idea of the order of magnitude is what counts here. Understanding that 40 euros of groceries is the equivalent of about 26kg of CO2 emitted (CO2e) gives you a basis for comparison.
The UK bank NatWest has a similar digital solution but takes it one step further. The bank gives tips on how to reduce your specific carbon footprint and ties this to a personal carbon manager and carbon budget. Much like a financial budget, a carbon budget sets a limit on how much CO2 an individual should aim to produce in a given time period. By aligning spending with sustainability targets, users can track whether their consumption habits are within their personal carbon budget. If their carbon spending exceeds the budget, the app provides recommendations to reduce emissions.
This concept is innovative in banking because it links financial literacy with environmental responsibility. Customers not only see the cost of their purchases in euros but understand the carbon cost in terms of their environmental impact – and they get the tools and insights to manage their footprint and impact too.
The integration of carbon data into banking platforms is a pivotal step towards making sustainability part of everyday decision-making. However, for these tools to be effective, users need to develop a basic level of carbon literacy. This involves understanding the causes of carbon emissions, knowing how different activities contribute to them, and being aware of the broader impact of carbon on climate change. As more people gain access to CO2 data, this transparency will hopefully drive behavioural shifts toward sustainability.
Banks can help to bridge the gap by providing users with real-time, personalised insights into their carbon impact, and stimulating them to make informed and sustainable financial decisions. As customers become more literate in carbon management, they will likely demand more accountability from businesses, governments, and other financial institutions regarding their environmental impact.
These examples signal a significant shift in the way we understand financial transactions. As CO2 emissions data becomes more integrated into consumer-facing platforms, it’s clear that carbon will soon be treated as a key metric, much like traditional currencies. Of course, we know that CO2 is not the only greenhouse gas to focus on – and the climate change discussion is infinitely more complex. Still, such digital tools can contribute to making impact data more transparent to end-users.
Financial institutions and tech companies are using data to nudge consumers toward sustainable behaviours, showing that “with great data comes great responsibility”. As this trend grows, we may soon see a future where the carbon cost of every transaction is as important as the financial cost, driving the global push toward a more sustainable economy.
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ChatGPT was used to generate and afterwards adapt parts of the text.