Rise of the ecology economy: Why brands must go green

In a speech in April 2024, Simon Stiell, Executive Secretary of the United Nations Framework said the next two years are “essential in saving our planet”. Steill laid out a terrifying time frame which emphasises the urgent need to mitigate the climate crisis. Businesses play a key role in helping to reduce the carbon emissions which plague the environment, and effective ESG policies are at the centre of this.

This desperate need for action is evident to consumers too. A recent Nielsen report showed that 66% of global respondents were willing to pay more for ethical and sustainable products. Likewise, Accenture’s global survey of 30,000 consumers found that 62% want companies to take a stand on current issues such as sustainability or fair employment practices.

So, ESG policies are vital for companies wanting to reduce their carbon footprint, and they are also imperative to meet customer needs and achieve any long-term business goals as these issues only become more important.

In order for ESG policies and initiatives to make the required impact, they need to be integral to the governance of any forward-thinking business, rather than being a ‘nice-to-have’ bullet point on the agenda of board meetings. ESG policies help consumers, businesses and the environment; they can no longer be an afterthought.

Consumers understand the severity of the climate crisis

Caring about the environment is no longer a low-stakes game. A quick search of Instagram hashtags shows that #sustainable has 16.9m posts, #sustainablefashion has 20.2m and #ecofriendly racks up an impressive 22.2m posts. These keywords demonstrate the rising trend of people actively caring – and sharing – how they value supporting the environment.

Subsequently, recent years have seen a huge change in consumer behaviour. More so than ever, customers want sustainable and ethical products and services, and so companies are dedicating more time and resources to delivering them. Crucially, at a time when sustainability and ethical practices are at the forefront of many customers’ minds, effective ESG policies also help businesses to shape consumer’s relationships with their brand.

How do payments fit into the picture?

Virtual cards and mobile wallets have been adopted by customers on an impressive scale. Although virtual payments are by no means a carbon-zero option, they bypass the plastic production and postage of physical cards, and use existing technology which customers already own like mobile phones. Similarly, the rise in email receipts presents the demand for an eco-friendly option, as they curb the 11.2bn paper receipts the UK prints annually which can’t be recycled.

The surge in digital payments has the additional benefit of providing both businesses and customers with valuable data behind their spending. This can help merchants, providers, and issuers streamline operations, with more informed insights leading to better decision-making. Any revenue saved can be reinvested in ESG initiatives and even carbon offsetting.

For consumers, that financial data offers opportunities to cut carbon footprints. A range of fintechs are now using spending data to inform their customers where they can make greener choices, advising on their spending from travel to fashion.

How can you use payments to prioritise your ESG strategy?

• Embrace transparency: Be honest with customers about where you’re starting from and your goals as a business. Carbon emissions disclosure is crucial when building trust with consumers, alongside clearly demonstrating your sustainability efforts. Don’t exaggerate progress or cover up bad practices, that will only make improvements harder in the long run.
• Introduce sustainable payment methods: Offer sustainable payment methods such as electronic transactions, mobile wallets, or digital currencies. These payment methods minimise environmental impact by reducing paper usage, energy consumption, and higher carbon emissions that are associated with traditional payment methods.
• Engage suppliers who are aligned with your goals: Encourage sustainable practices throughout the supply chain by prioritising suppliers and partners that align with your ESG values. You can even go one step further and negotiate payment terms that incentivise suppliers to adopt environmentally friendly and socially responsible practices.
• Listen to customer feedback: Pay attention to what your consumers tell you, and create an accessible and effective place for them to provide feedback on both your sustainability initiatives, and the payments process for your business. If you can, actively solicit input from customers and incorporate their suggestions. This will help you create solutions that work for your customers, demonstrate a willingness to listen and learn, and will likely generate new ideas and thinking.

There are a number of brands dedicated to creating strong customer loyalty and relationships through their commitment to taking care of the planet. From the large retail chains like Patagonia and Lush, to smaller financial services providers.

See our article on Patagonia’s impressive ESG strategy here: The Future of the Responsible Company

The work of Ekko is particularly admirable. Ekko use embedded finance to give customers user-friendly ways to track their environmental impact, or Green-Got in France, who ensure that each time a customer uses their card, they donate part of their profits to projects that preserve the planet. These programs are extremely effective, for example, four times less CO₂e is emitted with a Green-Got account compared to the three largest French banks.

The time to act on ESG policies is now, they can no longer wither behind purely short-term and profit-led initiatives. Businesses that overlook the values of their customers will find out soon enough that it’s an expensive mistake to make.