Concerned about climate change and environmental disasters, consumers worldwide are expressing a desire for more sustainable products and policies from the companies they patronize — even their banks.
Giesecke+Devrient (G+D), the Munich-headquartered security technologies company which, among other things, is one of the world’s top producers of banknotes, is leading the way in environmentally friendly practices and products.
The 170-year-old company is a trendsetter in this endeavor, most notably through the production of sustainable debit/credit cards and partnerships that support FinTech’s and banks in their own sustainability strategies. They want to give consumers more opportunities to make eco-friendly choices, because it’s what they want.
Just recently on Earth Day, G+D announced its latest partnership: Patch — the carbon footprint removal platform — and G+D are working together to provide bank customers with a seamless payment solution that actively helps consumers to manage and neutralize their carbon footprint of their purchase transactions and lifestyle. In addition, just a few days ago the company pledged to completely eliminate the use of virgin plastic in its payment card products by 2030 at the latest – an industry-first commitment.
“People more and more realize that something has to be done to protect future generations from climate warming, and from pollution,” says Dr. Carsten Wengel, head of global sales and distribution in the card & digital payment business at G+D. “One thing that we observe when we talk to financial service industries around the world is that many financial services institutions are picking up this megatrend – and that is not a surprise, because financial services are a mirror of society. When consumer behavior is changing, or awareness on certain topics is changing, that is usually picked up by the financial services industry.”
A 2020 study by the French bank, Oney, found that nearly 80% of Europeans surveyed “would like banks to put in place tools to measure the carbon impact of purchases.” Of the 75% surveyed, they said they would choose banks according to their environmental sustainability commitments.
Americans were right behind Europeans in this mindset. A survey by the Wharton School about U.S. consumers’ changing attitudes towards sustainability found that 75% of the Gen Z population valued sustainability over brand names, and that Gen X consumers’ “preference to shop sustainable brands increased by 24% and their willingness to pay more for sustainable products increased by 42% since 2019.”
G+D’s transition towards environmentally sustainable products was a reflection of changing attitudes of the population worldwide, the wish for a more eco-conscious living and a response to the United Nations’ 2030 Agenda for Sustainable Development, which was adopted by all member states in 2015. At the same time, people around the world began to view climate change differently, according to the Pew Research Center. Finally, G+D’s bank clients, conveying their own customers’ changing philosophies, expressed a desire to find sustainable alternatives for plastic products.
“We saw on the market that this was becoming meaningful for financial service institutions, and G+D is a 2.5-billion-euro company, with over 11,000 talents globally, and many factories and production sites worldwide,” Dr. Wengel says, “so we said, ‘How can we at G+D also contribute?’”
The firm began shaping its ESG — environmental, social, and governance — strategy to establish its own corporate sustainability guidelines. G+D set goals to reduce carbon dioxide emissions, as well as water and energy use. The firm commits to these goals publicly in its progress report, and then outside auditors track how closely G+D’s actions align with the criteria set forth.
“It’s a commitment of the company to become more environmentally friendly in the future. It’s mandatory for us as individuals, and also for us as companies and enterprises going forward,” Dr. Wengel says.
ESGs are a popular way for new investors, particularly of the Gen Z and millennial population, to decide if the companies they’re investing in are living up to their own personal ethics and standards. According to the most recent report from US SIF Foundation’s “Report on US Sustainable and Impact Investing Trends,” sustainable investing strategies have increased 42% in just two years, from $12.0 trillion in 2018 to $17.1 trillion in 2020.
[su_quote] At the time G+D was developing its ESG agenda, it began researching and developing solutions for non-first-use-plastic bank cards. It started with Polylactic Acid (PLA), a plastic substitute made from fermented corn or sugarcane starches. And then it began to develop recycled PVC cards. But in order to adhere to each bank’s brand standards and aesthetic, especially in terms of color, the first version of recycled cards couldn’t be made entirely from recycled material. Even though the bulk of the card was made out of recycled material, this created somewhat of an ethical dilemma at G+D. [/su_quote]
”It doesn’t make sense to just greenwash, and do 75% of recycled and then maybe 25% of normal — just to give the same image to the public,” Dr. Wengel says. Greenwashing is the act of marketing products to consumers as environmentally friendly when they’re actually not; or when there’s been little to no research to back up claims of a product’s environmental sustainability. So, G+D kept pushing to develop more sustainable cards, and finally created a bank card where 100% of first-use plastic layers was replaced by recycled material, “which is something quite serious.”
Out of an estimated 3 billion cards released into circulation every year, G+D issues many hundred millions. “Now imagine, if for these 3 billion cards you would not use first-use PVC any more. That would save 20 million liters of oil, and that’s the equivalent of 10 Olympic-sized swimming pools.”
Two years ago, as the first major payment card manufacturer, G+D partnered with Parley for the Oceans, to develop cards on the market that are based on ocean-reclaimed plastics. Producing sustainable cards was just the beginning. What G+D is doing now is developing a whole ecosystem of eco-conscious solutions for FinTech’s and banks that they can provide to their customers.
“For consumers, doing ‘sustainable banking’ becomes more relevant, if the whole financial service offering of a bank is also reinvented.” Dr. Wengel says.
There are many possibilities: banks can plant a tree when a new customer opens an account, or offer clients investment opportunities in clean water and solar energy, or participate in ocean plastic removal or reforestation projects. For FinTech’s and financial services institutions, this has an added value for their brand, being able to then differentiate themselves from non-sustainable companies, and position themselves as a corporation that cares.
“It means you also have a story to tell as a bank, the offering of financial services becomes much more meaningful, and much more relevant also for consumers. They say, ‘That’s the bank where I want to spend my money. That’s where I want to get my advice on my financial future. And this is also how I can contribute even maybe a small amount of money into the global development of new economic-ecological projects,” Dr. Wengel says. “So, this is where it becomes a differentiation factor for financial services institutions, and this is where we want to tap into it, because we can connect these developments in the financial service industry with products and solutions that support this approach.”
[su_quote]Today, G+D’s collaborative partners include Patch, as well as Doconomy — a Swedish company that develops tools to track and measure the carbon footprint of a consumer’s purchase — and it is creating partnerships between financial services institutions and environmental organizations. The reclaimed ocean plastic card was for WLTH, the Australian digital lending and payments provider, but that collaboration with Parley for the Oceans didn’t end there. There was also a large-scale clean-up event on Australian shores, and a special offering: for every home loan settled with WLTH, Parley committed to cleaning 540 square feet of coastline[/su_quote]
For G+D’s part, its own ESG agenda refers also to the development of the product portfolio. G+D will pay particular attention to technologies and investments that contribute to sustainability to make the product portfolio even more sustainable and “greener” in the future.
To reach the targets laid out in the ESG agenda, not only within the company but also with suppliers, sustainability, especially on their product management and research and development teams, has become a considerable part of day-to-day work and conversations. When Dr. Wengel presents on behalf of G+D at conferences, it is always also about sustainability.
“We have established offerings — not only ourselves, but also through partnerships — that are currently leading edge in the financial services market. In every client discussion I have — in the U.K., in the United States, in Canada, in Brazil — it’s really highly valued. It changes the perspectives of our banks and our clients going forward.”
The prerequisites and framework conditions are different when it comes to the topic of sustainability. Last year, G+D held an exclusive roundtable discussion with 10 bank executives from around the world. Only a few said that sustainability was not a focus in their country. Dr. Wengel believes that banks who do not shift their products and practices towards sustainability will eventually become obsolete, both because they’ll lose touch with their consumers’ personal beliefs and desires, and because the issue of climate change is not going away.
“Banks that will not put sustainability on the agenda will lose share in the market, and they will even become irrelevant at some point — in some countries earlier and some later,” Dr. Wengel concludes. “As banks look to become more competitive and innovative, ensuring sustainable products and services could not only be live-saving for the planet, but also a new, profitable avenue worth exploring.”
Copyright © 2022 California Business Journal. All Rights Reserved.
This article was edited and published by Rick Weinberg, California Business Journal’s Founder, Publisher and Editor-in-Chief. Click here for Rick Weinberg’s biography.
For testimonials on the impact of California Business Journal articles, click here.
Contact us if you’d like an article written on your business: Rick@CalBizJournal.com / 949-648-3815