Sustainable finance practices are no longer an option – they’re essential.
With environmental concerns on the rise, businesses and consumers are seeking out green banking solutions that align with their values, supporting the development of corporate social responsibility and green projects.
Copecto is leading the change with TIMBERCARD – a plastic-free and fully biodegradable wooden payment card body. It is ideal for any kind of issuer from banks to corporations looking to launch a premium card programme while enhancing their green banking credentials.
This article outlines the importance of adopting green banking practices, exploring how card issuers can integrate sustainable banking products like TIMBERCARD to reduce their environmental footprint while also attracting customers. We’ll also discuss the growing consumer demand for sustainable banking and how offering eco-conscious products can set card programmes apart in the financial sector.
By the end of this article, you’ll have an in-depth understanding of green banking strategies and how Copecto’s solutions can help strengthen the sustainable development of your business.
Digital Banking (or Open Banking)
Digital banking and open banking are revolutionising the financial industry by providing transparent, efficient, and accessible services.
Beyond convenience, digital banking plays an instrumental role in advancing sustainability within the sector.
Removing the need for physical branches, paperwork, and excessive energy consumption is significantly reducing the carbon emissions and footprint of the banking industry.
Open banking is a separate, but related initiative. It enables non-bank third parties to access the banking data of consumers and businesses, but only with their explicit permission. This fosters a more connected financial ecosystem and delivery of innovative banking services.
Such services include giving customers the ability to access and manage their accounts from multiple providers through a single platform.
This increased transparency empowers consumers and business users to make informed decisions, choosing green banks and payment service providers that prioritise sustainable practices.
While many aspects of digital banking are positive in terms of energy efficiency, such financial services still generally employ physical cards for payments. Integrating green banking practices, such as Copecto’s TIMBERCARD, can significantly boost organisations’ sustainability efforts and appeal to consumers looking for green banking products.
Benefits of Digital Banking
Green banking allows financial institutions to seamlessly offer and manage these products, all whilst providing customers with a digital-first experience that aligns with green banking initiatives.
While the digital banking sector produces low carbon emissions compared to legacy financial institutions, this is more of a positive unintended consequence of its service delivery model. Its development was never driven by an objective to support a more sustainable economy.
According to IDC, the widespread adoption of cloud computing could prevent over 1 billion metric tons of CO2 emissions from 2021 through 2024, due to the greater efficiency of aggregated computing resources. Cloud computing allows for better power management, optimised cooling, and more efficient server usage in large-scale data centres.
Beyond environmental benefits, cloud adoption could also have an impact of the economic growth of banks, potentially driving $1 to $3 trillion in value over the next decade.
By embracing cloud-based open banking, green banks can collaborate more effectively with third-party vendors, extending their ecosystems through API platforms and enhancing the overall customer experience.
This shift allows current and future generations to make more sustainable choices by analysing their transactions, such as energy usage and shopping habits.
Several green banks are proactively embedding green projects into their overarching business models to advance sustainability as well as strengthen client relationships. This will unlock new revenue streams, creating a competitive advantage.
Green Financial Products
As environmental awareness grows, the demand for green financial products is skyrocketing.
But today it’s not just the banking sector that can offer green banking initiatives. Any organisation from banks to fintechs and corporates can now do so, including issuing cards.
These products, designed to promote environmental sustainability, offer both banks and other financial institutions the opportunity to implement green practices while still delivering impactful financial services.
The range of green financial products is growing quickly from green bonds and sustainable investment funds to eco-friendly credit cards and loans that incentivise environmentally responsible behaviours.
Smarter Banking
For banks, offering green financial products is not just a way to meet consumer demand – it’s also a strategic move to align with global sustainability goals and regulatory requirements.
These products enable the banking sector (which is now not only banks) to tap into a growing market of eco-conscious consumers and businesses looking to reduce their carbon footprint.
For instance, green loans often come with favourable terms for projects that promote energy efficiency, renewable energy, and sustainable agriculture – encouraging borrowers to pursue environmentally friendly initiatives.
One standout example is the introduction of a sustainable and fully biodegradable wooden card body, like TIMBERCARD by Copecto. These cards are crafted from sustainably sourced wood, eliminating the reliance on plastic and lowering environmental impact. These cards can even be composted at home, except for the chip and antenna of course.
By incorporating such products into their portfolio, banks, fintechs and corporations can enhance their brand image, appealing to a broader audience and contributing to a greener future.
Green financial products can also help banks and corporates meet Environmental, Social, and Governance (ESG) criteria, which is becoming increasingly important in the eyes of consumers, stakeholders, investors and regulators.
The Intergovernmental Panel on Climate Change (IPCC) warns that if current business practices continue, global temperatures could rise by 3 to 5 degrees Celsius by 2100, leading to extreme weather events, significant economic damage and loss of life. Businesses, particularly the world’s largest private banks, play a crucial role to reduce greenhouse gas emissions.
However, a report by Banktrack highlights that between 2016 and 2020, these banks invested $3.8 trillion in fossil fuel projects, threatening the goals of the Paris Climate Agreement.
Fortunately, the shift toward green banking principles shows promise. As the benefits of climate resilience and renewable energy become clearer, more banks and other card issuers are likely to prioritise addressing climate challenges over short-term profits.
Choosing Eco-Friendly Bank Services
When consumers or businesses are selecting a socially responsible bank or financial service provider, it’s important to find institutions that prioritise both people in balance with their profits.
Here are some key factors they may consider:
B Corporation Certification
Banks with B Corp certification are committed to the highest standards of social and environmental performance and transparency.
These banks and corporations are leaders in driving positive change within their communities and invest in businesses that support a sustainable economy.
Customers of B Corp certified organisations can expect fair and transparent financial services that also respect the broader wellbeing of society and the planet.
Divestment from Fossil Fuels
Many large organisations still invest heavily in fossil fuels, using customer deposits to fund oil and gas projects that harm the environment.
In contrast, eco-friendly organisations avoid fossil fuel investments and instead support climate-positive initiatives, such as reforestation, that protect the planet.
Positive Impact on Local Communities
Green banking involves a commitment to community development and environmental conservation.
Socially responsible organisations often fund projects that strengthen local economies and support environmental sustainability, reinforcing their mission to contribute positively to the communities they serve.
Implementing Sustainable Practices in Branches
While the number of bank branches has decreased significantly in recent years, incorporating sustainable practices within bank branches is a crucial step for financial institutions aiming to reduce their environmental impact.
By adopting eco-friendly measures, banks can significantly lower their carbon footprint and demonstrate their commitment to sustainability, both to customers and the broader community.
Energy Efficiency
Banks can retrofit their branches with energy-efficient lighting, such as LED bulbs and install smart thermostats to optimise heating and cooling systems.
Additionally, incorporating solar panels or other renewable energy sources can further reduce reliance on non-renewable energy and lower operating costs.
Waste Reduction
Implementing comprehensive recycling programs and minimising paper usage, through digital documentation and electronic communications, can greatly reduce the amount of waste generated by branches.
Encouraging customers to opt for digital banking services and statements also supports this goal, while enhancing customer convenience and reducing environmental impact.
Sustainable materials should also be prioritised in branch renovations and new constructions. Using eco-friendly building materials, such as recycled or responsibly sourced wood, low-VOC (volatile organic compounds) paints and energy-efficient windows can make a substantial difference.
Furthermore, incorporating green spaces, like indoor plants or outdoor gardens, can improve air quality and create a more pleasant environment for both employees and customers.
Community Initiatives
Hosting workshops on financial literacy with a focus on sustainable investment, partnering with local environmental organisations, or supporting green community projects can reinforce a bank’s commitment to sustainability and strengthen its relationship with the community.
By implementing these sustainable practices in their branches, banks not only reduce their environmental impact but also position themselves as leaders in the transition to a greener economy.
This approach not only aligns with global sustainability goals but also meets the growing demand from consumers who prioritise environmental responsibility in their financial decisions.
Sustainable Investment Funds
Sustainable investment funds, also known as green or ESG (Environmental, Social, and Governance) funds, are rapidly gaining traction as investors are increasingly prioritising ethical considerations alongside financial returns.
These funds are designed to support companies and projects that adhere to environmental sustainability, social responsibility, and strong governance practices, offering a way for investors to contribute to positive global change while pursuing sustainable economic growth.
Part of the primary appeal of sustainable investment funds is their focus on companies that are committed to reducing their carbon footprint, utilising renewable energy and adopting environmentally friendly practices.
These funds often exclude industries like fossil fuels, tobacco and weapons, instead favouring sectors such as clean energy, sustainable agriculture and green technology.
By directing capital towards these areas, sustainable investment funds help drive the transition to a low-carbon economy, encouraging businesses to adopt more responsible practices. The performance of sustainable investment funds has also been a strong draw for investors.
Contrary to the belief that sustainable investments yield lower returns, many ESG funds have shown competitive, and sometimes superior, financial performance than traditional funds. This is partly because companies with strong ESG practices are often better managed, more resilient to risks and positioned to capitalise on emerging opportunities in the evolving global market.
Sustainable Investment in Banking
For banks, offering sustainable investment funds is not only a response to rising consumer demand but also a strategic move to align with global sustainability goals. Funding allows banks to attract a growing segment of socially conscious investors and differentiate themselves in a competitive financial landscape.
Additionally, as regulatory bodies increasingly emphasise sustainability disclosures and reporting, offering ESG funds can help banks stay ahead of regulatory compliance.
By aligning financial growth with ethical practices, these funds are set to play a pivotal role in shaping the global economy for years to come.
Carbon Offsetting Programmes
Carbon offsetting programmes are becoming an essential component of sustainability strategies for banks and other types of organisations aiming to reduce their environmental impact.
Environmentally friendly projects allow all types of larger organisations to compensate for their carbon emissions by investing in projects that reduce or capture an equivalent amount of greenhouse gases elsewhere, such as reforestation, renewable energy initiatives, or carbon capture technologies.
Implementing carbon offsetting programs can help mitigate the environmental impact of their operations, from energy consumption in branches and data centres to emissions from corporate travel. By supporting projects that actively reduce carbon from the atmosphere, banks can balance out the emissions they produce, working toward a net-zero carbon footprint.
Customer Carbon Offsetting Programmes
In addition to internal offsetting efforts, organisations can offer carbon offsetting options to their customers, whether they are B2B or consumer end users.
As well as offsetting internal processes that may negatively impact the environment, organisations can offer their customers carbon offsetting options.
In this way, customers can choose to take direct action against climate change, enhancing customer engagement and loyalty.
Advantages
The effectiveness of carbon offsetting programs lies in their ability to finance projects that have a measurable, positive impact on the environment.
This includes initiatives such as reforestation projects or the development of wind and solar energy farms. To ensure credibility, organisations should partner with reputable service providers that verify and certify these offset projects according to international standards.
Carbon offsetting programs can serve as a valuable tool for banks and other types of organisations to meet increasingly stringent regulatory requirements related to climate impact and sustainability reporting.
By transparently disclosing their offsetting efforts and the impact of the projects they support, organisations can strengthen their reputation in the fight against climate change.
Incentivise Sustainable Behaviours in Customers
Encouraging sustainable behaviours amongst customers is a powerful way for organisations to extend their environmental impact beyond their own operations.
Offering incentives for eco-friendly choices, they can engage customers who are increasingly prioritising sustainability in their daily lives.
TIMBERCARD by Copecto
Payment cards are often the centrepiece of financial services.
One effective approach to engaging customers is for banks, fintechs or corporations to introduce financial products that reward sustainable actions. TIMBERCARD from Copecto is a sustainably sourced, fully biodegradable wooden card body made from maple trees and sustainable forests. It’s a fusion of science and nature that makes a strong statement about reducing plastic waste.
Organisations that offer TIMBERCARD as part of a premium card programme will appeal to eco-conscious consumers by providing a unique and environmentally friendly alternative to traditional plastic cards.
Customers who choose TIMBERCARD will feel they are making an active choice to support sustainability efforts. Every card is naturally unique and each payment is likely to spark conversations each time it’s used.
Reward Programmes
Organisations can implement reward programmes to incentivise customers to reduce their carbon footprint.
These programmes might offer cashback or discounts for spending on sustainable goods and services, such as electric vehicles, public transportation, or energy-efficient appliances.
Some companies are also developing apps that allow customers to track the environmental impact of their purchases, providing insights into their carbon emissions and offering tips on how to make more sustainable choices.
Customer Investments
Investments are a powerful tool in promoting green initiatives.
Organisations can support customers in making sustainable investments by offering green financial products or matching contributions to eco-friendly projects.
This could include higher interest rates on savings accounts dedicated to funding renewable energy projects or special loan terms for customers investing in home energy efficiency upgrades.
The Future of Green Banking Services
By integrating the incentives discussed above into their product offerings, banks and other types of organisations can not only drive sustainable behaviours but also build stronger relationships with customers who value environmental responsibility.
Copecto’s TIMBERCARD and other eco-conscious products can differentiate financial services in competitive markets.
Ultimately, by incentivising sustainable behaviours, card issuers of all kinds can lead by example, empowering customers to contribute to a more sustainable future while aligning with global environmental goals.
Conclusion
As the financial industry increasingly embraces sustainable finance, integrating green banking strategies and products is no longer just a trend; it’s an evolution.
The shift towards green financial products, sustainable investments and carbon offsetting programs demonstrates the sector’s capacity to lead climate action.
By introducing breakthrough eco-conscious initiatives as the centrepiece of their financial services programme, card issuers can capture the attention of environmentally conscious consumers.
Organisations that prioritise sustainability not only positively contribute to a greener future, but position themselves as leaders in a rapidly changing financial landscape.
By embracing TIMBERCARD, Copecto is offering businesses the opportunity to actively participate in the green finance revolution. Take the first step toward a more sustainable future by choosing TIMBERCARD today – where your spending power meets environmental responsibility.