2024 Thoughts: ESG
Our short series of crystal ball thoughts continues with a look ahead to ESG and sustainability next year. In this article, Tribe Payments MD Alex Reddish answers the following question: "Will there be an increased emphasis on ESG and sustainability initiatives in 2024, and to what extent will financial institutions need to prioritise these efforts?
As regulation around sustainability reporting and greenhouse gas emission calculations also gathers pace, financial institutions (FIs) have a relatively small carbon footprint, but they have huge influence in educating consumers and businesses. As consumers demand more climate-conscious action from the brands they spend or deposit money with, FIs should be viewing ESG and sustainability as strengths they can flex to attract new customers – particularly younger consumers who feel climate issues more keenly.
We’re also seeing the need for banks and payment players to provide consumers with insights into their own ESG impacts and carbon footprints. Fintech-driven solutions like recyclable payment cards and carbon calculators are steps in the right direction. When combined with the data gleaned from Open Banking APIs, FIs can build even more appealing services that will get the attention of customers, like analysing payment transaction data to calculate carbon emissions, and guide customers towards more sustainable practices as a part of daily banking services.
But FIs need to use both direct and indirect approaches, from everyday banking services to financing green infrastructure or energy projects. Building sustainability measures into as many facets of their business as possible will make them a beacon for new customers and an example for their industry peers to follow.
You can find the first part of our 2024 predictions here, where Alex Reddish discusses neobanks.