1. Aspiration: best practice in green fintech
US-based challenger bank Aspiration launched in 2015, making a selling point out of not investing in fossil fuels. “That is key,” says Estella Shardlow, acting senior consumer attitudes and technology editor at trend forecasting agency Stylus. “There is a big trust issue with consumers around where their money is going and what it’s helping support when it’s in the bank’s care. I think that’s a great example of showing how fintech can be a force for good.”
Other features of Aspiration’s green fintech include cashback on purchases from brands that “help build a better world”, including TOMS and Warby Parker, as well as allowing consumers to fund reforestation projects by rounding up their spend to the nearest whole dollar. Its rewards for spending with sustainable brands are “a best practice of how to incentivise that ethical behaviour”, says Shardlow.
The startup raised a series C round of funding worth £135 million in May, when it had some 1.5 million users signed up. Shardlow predicts that it’s point of difference from competitors will continue to win over customers. “What consumers want from their financial services is a reflection of what they want from every brand they interact with,” she says. Although banking has been a lot slower than other consumer-facing industries to demonstrate a commitment to environmental or social causes, it is now being forced to catch up as more consumers expect it.
2. TreeCard: debit card will plant trees as customers spend
For now at least, Aspiration is available only to US customers. For Europe, enter TreeCard, a wooden debit card that puts 80 per cent of its profits towards planting trees. The startup is working in partnership with Ecosia, the Berlin-based ethical search engine that uses advertising revenue to plant trees and now has 140 million monthly users. Ecosia has invested around £1 million in a pre-seed round of green fintech and TreeCard will be funding trees through Ecosia’s existing reforestation projects.
Co-founder Jamie Cox explains that TreeCard is “going after a different demographic to your standard neobank”. “We’re actually trying to scoop up users who care about cause rather than cashback or investing in crypto or more tech-focused sells,” he says.
TreeCard is not a challenger bank itself; it’s currently looking for a regulated banking-as-a-service provider to partner with on the card. With open banking technology, users will be able to pair the free card with their existing bank account, says Cox. So far it already has 10,000 users on its waiting list and is anticipating being ready to launch during the first half of 2021, in the UK, European Union and United States.
Although users have an average age of 25, Cox says that beyond the 30-years-old point, there is an even split across age groups. “It suggests there’s actually a real sentiment change rather than just generational differences when it comes to that climate change sentiment,” he says. That only applies to users in Europe, though, and not in America.
3. CoGo: fintech pushing customers towards green spending
CoGo was one of the early fintech players to introduce a carbon-footprint tracker allowing users to monitor the impact of their spending in real time. First founded in New Zealand in 2015, it launched in the UK in 2019 with its app that syncs to users’ bank accounts. As well as tracking emissions, it also suggests ways users could reduce their carbon footprint, such as by switching to a green energy supplier or plant-based diet.
The platform now lists more than 20,000 businesses that are accredited for their environmental or social impact and also suggests offsetting initiatives for users to support to reduce their net impact. According to CoGo, the majority of the company’s users are in the 21 to 30 age group, followed by 31 to 40, and 60 per cent are female.
Earlier this year, CoGo announced partnerships with two incumbent banks, Natwest in the UK and Westpac New Zealand. Shardlow at Stylus predicts we’re likely to see more collaborations like this. “I don’t think the big banks can replace fintechs because there’s an ingrained desire to do things differently. I think it’s going to be a combination of big banks collaborating and supporting fintechs, and ultimately improving their own behaviours,” she says. “But I don’t think they’re going to muscle out these disruptors because they’re already getting a lot of traction with consumers now.”
4. Almond: carbon data for businesses and consumers
Like CoGo, this UK-based green fintech lets users track the carbon emissions of their spending and encourages them to spend with brands whose values align with theirs. Donor brands have committed a certain percentage of transactions to reforesting projects, so Almond customers are encouraged to spend with them to support the planting of trees and, in doing so, offset their carbon footprint.
Where Almond goes further is in its business-to-business proposition, offering a sustainability-focused customer relationship management product on a software-as-a-service model. The startup was founded in 2018 and secured £500,000 in crowdfunding earlier this year.
“So there’s definitely a lot of activity in this space,” says Shardlow of Stylus, pointing to Sweden-based Doconomy as another example. “It’s nudging this planet-friendly behaviour in a way that’s very transparent and very streamlined for the consumer.”
5. Clim8: making impact investing accessible
This London-based startup has accrued £4.4 million in funding since it launched in 2019. Clim8’s platform, which is yet to launch, will allow users to invest in public companies that are working towards tackling climate change in sectors such as clean energy, sustainable food and smart mobility.
Its ultimate mission is to move billions in investments into planet-positive sectors. Clim8’s portfolio includes Greencoat UK Energy, a public fund that holds interests in UK on and offshore wind energy assets, and Ørsted, once Denmark’s government-owned oil and gas company that has upended its business model to become a renewables provider and quadrupled its profits in the process.
Clim8’s app is due to launch soon, but its proposition has already proved a hit with investors; its most recent fundraising of £2.4 million, via Crowdcube, was a 600 per cent increase on its original target. The fact that it has clinched funding from outside the dedicated environmental, social and governance investors – it has received funding on two occasions from 7percent Ventures – highlights the appetite for investments with sustainability at their core.
