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Paul Pester Is Working To Help Consumers Reduce Their Carbon Footprint — and Save Money
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Tandem Bank is one of the longest-running challenger banks in the U.K. These digital-first banks burst onto the scene in the mid-2010s along with a boom in fintech: technology that gives customers easy mobile access to banking and finance. Most challenger banks operate without physical locations and...
Tandem Bank is one of the longest-running challenger banks in the U.K. These digital-first banks burst onto the scene in the mid-2010s along with a boom in fintech: technology that gives customers easy mobile access to banking and finance. Most challenger banks operate without physical locations and provide customers with financial services across lending, savings, and credit. Tandem, led by Chairman Paul Pester and CEO Alex Mollart, has sought to stand out from other challenger banks by focusing on sustainability, helping customers to adopt more environmentally friendly practices through incentives, and green savings and lending options.
“We want to help mainstream customers reduce their carbon footprint and save them money at the same time,” says Pester.
How Does Banking Go Green?
There are obvious environmental upsides in reducing or eliminating physical branches and paper-based communications with customers, but this isn’t quite what Paul Pester and Alex Mollart mean when they talk about Tandem’s sustainability efforts. Rather, the focus is on connecting with the environmental ethos of its customers, particularly millennials and Generation Z, by offering them ways to make their banking activity support sustainable causes.
More than 67% of Tandem’s lending activity supports green initiatives, and it has pledged to not invest in any fossil fuel or other environmentally harmful industries. It’s also been clear in communicating to customers that funds from Tandem savings accounts will be used to fund sustainable investments.
“As a company, you have to be really clear on what problem you’re fixing for your customers. That’s the most fundamental thing,” says Pester. “Just because you can do something with the technology doesn’t mean you should do it, and it doesn’t mean the customer’s going to care about it.”
Tandem believes its customers care about the need to transition to a carbon-neutral lifestyle, and it has designed products — including low-emission motor loans, loans for green home improvements, discount mortgages for energy-efficient homes, and green savings — to speak to that need.
Through the bank’s green savings accounts, savings deposits are used to fund renewable energy initiatives and other sustainable ventures. The accounts offer consumers a competitive return on their savings while ensuring their money is being used to support the transition to a greener economy.
Tandem has also developed a range of green mortgages, targeting consumers purchasing energy-efficient homes or those looking to make green improvements to their existing properties. These mortgages often come with lower interest rates or cashback offers for properties with high energy performance certificates, incentivising energy efficiency upgrades.
One of the key advantages of digital banking is increased transparency in one’s personal finances. Tandem provides its customers with insights into their carbon footprint based on their spending patterns. Through the bank’s app, users can track the environmental impact of their purchases and receive tips on how to reduce their carbon footprint.
Closing the Green Gap
When Mollart took over as CEO of Tandem in 2022, he launched an initiative for the bank to report on the “green gap,” the deficit between consumers’ intentions to adopt a greener lifestyle and measurable activity and progress toward that end. These reports, which are published annually and updated throughout the year, provide some insight into both the increasing demand for more sustainable products and services in the U.K., and ways in which there remains a shortage of opportunities and efforts to meet that demand.
In the 2023 report, consumer concern about climate change stood at 61%, with 40% of respondents interested in learning about reducing environmental impact. There was some evidence of progress — for example, a 31% increase in solar panel installations, a 27% increase in electric and alternative fuel vehicle registrations, and a 45% expansion of the country’s electric charging network.
Yet there remains room for improvement in these numbers, and Mollart and Pester are hoping that a push for more sustainable finance and banking, along with increased policy support for sustainability initiatives, can play a role.
“March’s update to our green gap research again shows a continually improving picture as more and more U.K. consumers choose to take steps on their journeys to a greener lifestyle,” said Mollart in a statement on the most recent update, which highlighted increases in rail travel, smart meter installation, and energy performance certificate ratings, but also project a 23% green gap for October 2024.
“I’m particularly pleased to see a notable improvement in Scottish homes’ EPC ratings, especially given the impact of COVID and further pressures on household budgets since 2019. Let’s hope English and Welsh housing stocks can follow suit,” he continued. “Despite the improving picture though, the fact does remain that the green gap persists — and unless extra support and action is taken at a macro level, consumers’ actions will not marry up to their good intentions.”
One of Tandem’s latest moves to help close the green gap was to appoint James Streeter to the newly created position of head of environmental, social, and governance. The bank, like many companies across industries, is now working on publishing regular ESG reports to track its progress toward sustainability goals, and to analyse broader industry trends and opportunities to make a greater impact.
“ESG is rapidly working its way into the very fabric of companies, particularly in financial services, with banks being driven by compliance and the constantly evolving regulatory environment,” said Streeter in a statement announcing his new position in October 2023.
“Tandem is going further than that. A greener lifestyle is mission critical. And that means there’s a real opportunity to make a difference, to help develop and build our offering, and work with like-minded partners and customers to do so. Tandem’s already done some great work on developing an ESG framework around product, people, and planet. It’s had some good results, but there’s more to do.”
A challenger bank is a type of digital bank that operates without traditional physical branches, offering services primarily through mobile apps and online platforms.
Green savings accounts are financial products where deposits are used to fund environmentally friendly initiatives, often offering competitive interest rates while promoting sustainability.
A carbon footprint measures the total greenhouse gas emissions caused directly and indirectly by an individual, organization, event, or product, usually expressed in equivalent tons of carbon dioxide.
ESG stands for Environmental, Social, and Governance. It refers to the three central factors used to measure the sustainability and societal impact of an investment.
Green mortgages are home loans that offer favorable terms for properties that meet certain energy efficiency standards, promoting environmentally friendly homeownership.
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