Sustainability Matters: Here’s How Financial Institutions Can Help

Sustainability Matters: Here’s How Financial Institutions Can HelpToday’s consumers are becoming increasingly environmentally conscious. A whopping 85% of consumers reported prioritizing sustainability more in their purchase habits over the last five years, and millennials and Gen Z appear more likely than older generations to opt for sustainable options when available.

These environmental priorities can be hard to reconcile with the world of finance, however, even for individuals. Plastic cards are made with PVC, and modern cards include an EMV chip, which only increases the complexity involved in recycling.

Most expired banking cards end up in a landfill, and with 3-4 cards per adult in some countries, that’s literally billions of cards taking up space and adding to humans’ already sizeable carbon footprint.

Sustainable Card Options

Fortunately, banks and credit card companies are taking steps to reduce the impact payment cards are having on the environment. Sustainable physical card options exist in a variety of forms: recycled plastic, recovered ocean-bound plastic, PLA, biodegradable, metal, and compressed wood.

In addition to sustainable card materials, tools are emerging that can help consumers track the carbon impact of the items they are purchasing with the cards. For example, purchasing gas for a vehicle will likely have a higher carbon impact than buying vegetables at your local farmer’s market.

A couple of challenger banks are taking a more direct hand at offsetting the carbon footprint created when consumers use their cards. Aspiration, for example, guarantees customers that purchases never fund oil or coal, and it offers an option to plant trees based on consumers’ purchasing behavior.

Similarly, Treecard offers a sustainable debit card made from a mix of wood and recycled plastic. Merchants are charged a small fee every time the card is used, which then goes toward planting trees in 15 countries through more than 20 tree-planting projects. Challenger banks like Aspiration and Treecard are likely to attract environmentally conscious consumers away from traditional banks and credit unions.

Actions by Traditional Financial Institutions

Challenger banks aren’t the only financial institutions making changes. Incumbent institutions of all sizes are prioritizing eco-friendly practices and consumer options. Last month, Bank of America announced that starting in 2023, both its debit and credit cards will be made from at least 80% recycled plastic.

U.S. Bank is also making an effort to reduce its environmental impact. The bank has launched an eco-friendly debit card that is made from recovered ocean-bound plastic; reportedly, for every one million of these debit cards produced, over one ton of plastic is diverted from entering the world’s oceans.

Another sustainable option a growing number of financial institutions are offering took deeper root after the emergence of the COVID-19 pandemic: contactless and mobile payment. While most consumers still report a desire to have a physical card, 85% of consumers expect digital options to available during in-person shopping.

Consumers, especially those in younger generations, are increasingly seeking out eco-friendly options in all areas. Banking products are no exception, whether that means using an eco-friendly card, contactless payment, or a challenger bank’s sustainability-focused option.

Financial institutions of all types will need to make changes that benefit the environment if they want to remain competitive. To learn more about how financial institutions are working to make payment cards more eco-friendly, read my report Eco-Friendly Card Material: Bringing Sustainability to Card Issuance or reach out to me at [email protected].

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