FinTech's Appeal to Climate Conscious Consumers
At the Andreessen Horowitz (“a16z”) summit in 2019, general partner Angela Strange gave a presentation which proclaimed that, in the not-too-distant future, every company will derive a significant portion of its revenue from financial services.
In short — “Every Company Will Be a FinTech Company”
Since then, a worldwide pandemic rapidly increased adoption rates and demand for enhanced functionality of digital financial services, and global FinTech funding exploded to record highs levels with total financing volume reaching over $140 billion, triple the volume raised in all of 2020.
While FinTech reached new heights, the resurgent sector of ClimateTech, or companies focused on reducing greenhouse gas emissions/addressing the impacts of global warming, surged back into the spotlight a decade after its valley-of-many-deaths, with the launch of dedicated billion-dollar funds (e.g., TPG Rise Climate Fund — $5.4 billion, Brookfield Global Transition Fund — $7 billion, General Atlantic’s BeyondNetZero Fund — $4 billion) and funding levels never seen before (e.g., $60 billion raised in just the first half of 2021!).
As consumers mass-migrated to digital-first financial services, and both FinTech and ClimateTech companies received record amounts of funding, incumbent financial services providers began to receive heat, heat, and more heat for greenwashing and funding the very companies which contribute most to global emissions. The relationship which banks held with their customers degraded, and a new group of companies emerged which offer “greener” options for consumer financial services across banking and wealth management products. In this brief article, we highlight several companies appealing to the growing masses of climate-conscious consumers and where to go when your existing providers just aren’t doing enough to turn the climate tide.
Some 71 per cent of UK banking customers are more likely to choose a bank with a positive social and environmental impact, according to new research from Deloitte.
Banking and Savings Products
The companies in this segment offer many of the same services that the digital-native “challenger” or “neo” banks offer, such as Chime, which include low/no-fee debit/savings accounts, credit cards, and early wage access, but are purpose-built for climate conscious consumers.
Aspiration — A climate-oriented digital-native bank which plants a tree every time you swipe a card, guarantees deposits aren’t funding oil and coal projects, offers higher rewards for socially responsible businesses, and offsets carbon for a monthly fee.
Atmos — In the vein of Aspiration, Atmos offers similar products but, in some respects, further expands on Aspiration’s vision by exclusively allocating deposits to drive clean energy deployment and innovation.
Wealth Management
Invest Your Values, a project by non-profit As You Sow, shows which granular details on leading employers retirement plans which have exposure to carbon-emitting assets and provides ways for retirement plan holders the resources to demand change.
And because just 100 companies are responsible for 71% of global emissions, investment dollars can make a significant difference in making the world more climate resilient. But these steps aren’t enough if the incumbents aren’t willing to change, leading to the creation of companies like Carbon Collective and Trine, described below.
Carbon Collective — Digital-native investment advisor focused on climate change by divesting in public companies which produce the most greenhouse gas emissions, reinvesting in companies building climate-positive solutions, and applying pressure to companies that have the ability to make significant strides in their carbon footprint.
Trine — Similar to Kickstarter for renewable energy projects, Trine allows individuals to invest in renewable energy projects via funding loans to support development.
And although the tide is rising for both FinTech and ClimateTech, and these companies are but a few of the many targeting this market segment, there won’t be progress made toward our climate goals unless consumer behavior changes.
Look at where you bank, whom you invest with, and the financial services providers that you use. If the climate-positive decisions you make in your daily life are inconsistent with your bank’s lending, retirement account assets, or financial advisor actions, perhaps it’s time for a change.
The companies above are a good place to start.
