Carbon footprint: offering consumers more insight on the impact of their purchases

Ethical consumer spending and finance in the UK has grown by nearly 24% from 2019 to 2020, and the size of the UK market is now valued at £122bn, based on a 2021 Ethical Consumer Markets Report.

This trend has been increasing over the last three years as more consumers become conscious of their environmental footprint.

Therefore, more people are committing to companies and brands that reflect such values, while also looking for solutions that make it easier to live more sustainably. As such, a crucial factor that contributes to a consumer’s choice of brand is a company’s Environmental, Social and Governance (ESG) practices. For financial institutions (FIs), helping consumers make more informed purchase decisions can drive brand differentiation while affirming their commitment to sustainability – a smart move.

However, sustainability is just one factor critical to exceeding customer expectations and in an increasingly competitive digital landscape, delivering experiences that can weave together convenience and security, as well as environmental and social responsibility are key to building a trusted digital future. Let’s explore a way of achieving this.

Consumers’ experience expectations

As the world turns increasingly digital, it is no surprise that two-thirds of consumers say they are more likely to prefer brands that offer convenient digital experiences. And 96% want their transaction information – including digital receipts and merchant logos – provided in a more consolidated manner, such as through an issuer’s digital banking application.

Digital receipts will also soon become a more commonplace tool that bridges the gap between digital and physical commerce. There are some brands that have invested in enabling digital receipts, providing an opportunity to connect with their customers in entirely new ways. This is an essential benefit as they provide much more than electronic delivery of a transaction record; they also provide the path to further customer engagement.

However, not all businesses have taken advantage of this technology yet and it’s a missed opportunity for those brands looking to increase trust, transparency, and customer engagement. This coupled with more enhanced digital tools that can provide consumers with more ways to spend sustainably, offers that more consolidated experience they are after…and a clear business differentiator.

Gaining insight into the environmental impact of purchases

Sustainability is becoming increasingly important for customers – 62% of consumers think it’s important for companies to do more for the environment. Considering this trend, it’s not surprising that three-quarters of the world’s largest 250 companies have targets in place to reduce their carbon emissions.

In light of this increasing microscope, new schemes are delivering carbon footprint data directly to cardholders through digital banking channels. It allows banks to adopt and customise for consumers who are looking for more ways to spend sustainably.

What’s more, it enables access to insights and data about carbon impact of their consumption and enables people to easily contribute to preserving the environment. It also innovates the payments experience since consumers get information in their digital banking channels beyond just transaction details.

How do carbon footprint scores work?

Carbon footprint scores allow FIs to embed details into their digital banking channels as part of the transaction history. This information enables consumers to receive a snapshot of the carbon emissions generated by their purchases across spending categories. It enables access to insights and data about carbon impact of their consumption and enables people to easily contribute to preserving the environment.

The strength of these types of tools is that the calculations are powered by independently verified sources and can be further enhanced with relatable and easy-to-understand estimates of CO2 generated, that could help consumers to live more sustainably.

In the future, it can also lay the platform to drive further opportunity for engagement. Consumers today are increasingly looking for their digital bank apps to do more that just provide them with their transaction history. They are looking for more functionality and offers around loyalty and rewards in a seamless way. This provides an opportunity for businesses to creating information-rich and customer-friendly experience.

Creating an elevated consumer experience

In order to make the significant changes needed to effectively address climate change, it has to be a collaborative effort between companies, consumers, and communities. This extends to the area of green finance and with this increasing demand – alongside an elevated experience – financial intuitions must start offer a wider range of purchase insights that goes beyond enhanced transaction details.

Carbon footprint information can be that first step in making a wide range of consumer engagement possibilities a reality. And providing more insight into the environmental impact of purchases, empowers customers as they now can make more meaningful decisions on what they spend. That way, financial services can elevate the consumer experience and reinvent their role in shaping a greener future.

Gaurav Mittal, Executive Vice President, Ethoca

Gaurav Mittal is the Executive Vice President of Ethoca, a Mastercard company. Gaurav is focused on executing and evolving Ethoca’s global strategy to help businesses further reduce fraud and disputes and create better digital customer experiences.

Gaurav joined Mastercard in 2014. Immediately prior to his role at Ethoca, Gaurav led Global M&A for Mastercard. He has also held leadership positions across Product Development and Enterprise Strategy. Prior to Mastercard, Gaurav worked at Booz & Company where he helped customers develop and focus on their strategic initiatives. Before Booz, Gaurav worked as an early employee and senior executive GEP, a B2B procure-to-pay technology company, where he oversaw rapid growth of the firm. .

Gaurav received his MBA from Columbia University and an undergraduate degree in Computer Science from Denison University.