With 85% of consumers saying they shifted their purchases towards being more sustainable in the past five years, according to the Global Sustainability Study 2021, it is not surprising that banks have started to offer eco-friendly cards. A few early movers have created innovative cards that really can reduce climate change, and card issuers that develop meaningful products can gain a competitive advantage.
While it might seem like eco-friendly cards have begun to proliferate only recently, they actually started more than a decade ago. In 2007, the United Nations Environment Programme Finance Initiative released a Green Financial Products and Services report focusing on initiatives in North America and Europe. At that point, ‘green’ credit cards typically offered donations to non-profits of about 0.5% of each purchase. Only a handful of ‘green’ cards existed in North America, with leaders including MBNA’s Sierra Club card and Royal Bank of Canada’s WWF card. In Europe, the GreenCard Visa claimed to offset greenhouse gas (GHG) emissions from the manufacturing and use of products or services purchased with its card.
After that small start in the 2000s, interest in eco-friendly cards waned. Only a few banks continued to issue green cards and many just gave a small fraction of sales to non-profits.
Driven by consumers demanding change and by boards that have seen opportunities or risks, there has been a resurgence in eco-friendly cards in the past few years. A few banks have issued innovative card products that go beyond donations and have features with far bigger positive climate impacts, with some offsetting carbon emissions for purchases and others seeking to change behaviours.
Banks in Asia are among those leading the charge. DBS Bank Taiwan, for instance, launched a ‘DBS eco card’ made of a biodegradable polymer. To encourage consumers to use green transportation, DBS offers rewards of 5% for spending on vehicle or scooter sharing – or charging electric scooters. In India, DBS launched an environment-friendly debit card made using 99% recycled PVC material. The Green Debit Card rewards customers for adopting eco-friendly practices and encourages them to reduce their carbon footprint through programmes such as rewards for sustainable travel and tourism. Customers can also check their carbon footprint on a carbon calculator.
More recently, E.SUN Bank in Taiwan launched a digital credit card which saves the nearly 1 kilogram of carbon emissions needed to produce a card and offers 10% rewards on ‘green purchases’ such as bicycles, scooters, or car sharing.
One of the leaders in the US is Aspiration Bank. Its tracking programme monitors the impact of spending on the planet and people, and it offers up to 10% cash back for spending at socially responsible businesses. It automatically offsets the carbon dioxide from every gallon of petrol consumers purchase, and debit cards are made from recycled ocean plastic. The Plant Your Change programme enables consumers to neutralise their carbon emissions by planting a tree, by rounding up each purchase to the nearest dollar. Aspiration Bank says its community plants more trees every day than the number of trees in New York’s Central Park.
Debit cards are going green too. Ando in the US issues a debit card and promises to fund only green initiatives such as renewable energy with customers’ deposits. Customers earn 1.5% cash back, and Ando also plants a tree for each transaction made by customers who opt in for the Change That Counts feature, for up to 100,000 trees.
While products such as these focus on creating big impacts by changing customer behaviour or offsetting carbon emissions, other cards have far smaller effects.
Some banks donate a small percentage of card purchases to an eco-friendly charity. HSBC in Hong Kong, for example, donates 0.1% of spending to the ‘HSBC Green Roof for Schools’ programme.
An increasing number of issuers are also touting cards are made of recycled PVC, reclaimed ocean plastic, or bio-sourced plastic substitutes. Indeed, card producer Thales said the weight of plastic used to produce payment cards every year is equivalent to 125 Statues of Liberty. Thales has sold 30 million eco-friendly cards made with sustainable components, including cards made from corn or from ocean plastic. Standard Chartered Bank, for example, launched carbon-neutral credit and debit cards using non-plastic cards from Thales.
While the programmes are positive, they have relatively little impact. The weight of a credit card is miniscule compared to other plastic products in consumers’ lives. While donations to charities are good, the programmes do not encourage consumer behaviour changes such as travelling less or reducing purchases that create carbon emissions. These cards have far less impact than ones with incentives to change behaviour that causes climate change or to offset emissions.
Since more consumers are concerned about climate change and want to make a difference, card issuers can gain competitive advantage by developing innovative programmes.
And climate is becoming a bigger issue for consumers. Similar to the Global Sustainability Study, a study by Nielsen found that 81% of global respondents feel companies should help improve the environment. Perhaps surprisingly, this passion for corporate social responsibility is shared across gender lines and generations. In the US, research by Escalent found that 72% of consumers and small business clients are interested in environmental sustainability. And in Singapore, the UOB ASEAN Consumer Sentiment Study 2021 showed that consumers in ASEAN are more influenced by sustainability issues than ever before.
‘Consumers have begun to reflect more deeply on environmental sustainability concerns and the payment card is a highly visible and important physical connection between banking brands and the customer.’ – Smart Payment Association, UK
Issuers that want to gain competitive advantage may well benefit by being early movers in developing innovative eco-friendly card programmes that go beyond just donations or non-plastic cards and actually do change the world.
Richard Hartung, Research Director, Singapore, Payments Consulting Network, has more than 20 years of experience in the payments and financial services industry, primarily in the Asia–Pacific region. He has held executive management roles in payments in the US, Japan, and Singapore. He is also a freelance writer for The Asian Banker and other media. He is proficient in Japanese. Richard has a BA from Pomona College and an MBA from Stanford University. He is active in community organisations, including serving on the board of the Jane Goodall Institute.
Payments Consulting Network provides advisory and market research services to the financial services and payments sectors and has presence in Asia–Pacific, North America, Europe, and Africa. The firm also supports organisations in the retail, hospitality, tourism, and not-for-profit sectors lower the cost of payments acceptance and optimise the customer experience.
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