By: 8 June 2023

Transparency is crucial to avoiding the greenwashing label and truly delivering meaningful change in the ongoing climate crisis

Money20/20: Banks and fintechs urged to avoid the greenwashing trap

Amid extreme weather, record high temperatures and swift ice melt, banks and fintechs are being urged to avoid ‘greenwashing’ and do their bit to help tackle the climate crisis.

In the Money20/20 Europe session, Enemy of Greenwashing: How to Provide Authentic & Sustainable Payments?, three panellists identified common mistakes and offered useful tips for helping to create a sustainable future.

Chitua Kalio, global head of services of Giescke+Devrient, which has pledged to end the use of virgin plastic in its payment cards by 2030, said: “Pick a place to start. Create an awareness around your footprint. Think about the whole journey of a product, such as a plastic bank card.”

She added: “3b chip cards are issued every year. What happens to them when they expire?”

Joe Crutwell, European general manager of Patch.io, acknowledged that “products labelled as sustainable sell more”, so there is an incentive for banks and fintechs to do this, but they must be wary of greenwashing.

There are challenges for banks in particular. Crutwell said: “Banks are using carbon credits as a way to keep on emitting. There needs to be transparency as to what consumers are buying.”

“We need consistency” around regulations, he continued. “Banks have a huge role to play. They emit CO2. They finance a lot of businesses that may emit CO2.

“Software can bring data to help consumers make more informed decisions. We need the public to change companies. But many companies are afraid of being called out for greenwashing.”

Carl-Johan von Uexkull, chief compliance officer of Doconomy, said: “Customers and shareholders play a key role as they expect companies and banks to act sustainably.

“Banks should act with integrity. They need a plan to reach net zero for their business. They can use carbon removal technology and should hold executives accountable to make these changes happen.”

He continued: “Banks should engage their customers [and think about how to] drive behaviour change in a consumer. Inspire people to make more sustainable choices.

“There is a no one silver bullet. You need to know how you will play a role. What will your business model be? If banks take a first step others will follow.”

Tide was cited as a good example of fintech’s progress. It has pledged to remove 100% of its emissions with durable carbon removal from 2022 onwards, among other promises.

Concluding, Crutwell urged banks and fintechs to identify areas of potential impact and make a plan. Of course, they must do all of this in a transparent way, otherwise they risk receiving the greenwashing label.

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Image: Canva