Sustainability: A Key Focus in the Fintech Space

Q&A with Krish Shetty – Vice President of Product Development and Engineering at Deluxe 

Q: Why is sustainability a hot topic in the fintech space? 
From a climate change and sustainability perspective, we’re on the cusp of transformation. The catalyst for this? In December 2015, parties to the United Nations Framework Convention on Climate Change (UNFCCC) reached a landmark agreement to combat climate change and to accelerate and intensify efforts and investments needed for a sustainable low carbon future. This legally binding, international treaty on climate change is called “The Paris Agreement,” and it went into effect November 4, 2016.    

The Paris Agreement specifically recognized the central role of the finance sector in sustainability and states that addressing climate change will require “making finance flows consistent with a pathway toward low greenhouse gas emissions and climate-resilient development.”  

Fintechs are joining forces to drive a greener, more sustainable future. They’re bringing together technologies like advanced data analytics, artificial intelligence, blockchain, and the internet of things to build products, platforms, and solutions that companies can leverage to evaluate and measure their environmental impact and ultimately accelerate their shift toward a more sustainable future. 

Investors are then leveraging these products and platforms to channel their investments and operations toward these sustainable assets.  

Q: What sort of measurements or data should organizations be thinking about as it relates to their environmental impact? 
Consumers, business leaders, employees, investors and communities all want to understand an organization’s environmental impact. Obtaining the necessary data and measuring this impact can be very challenging. One way to start is to measure an organization’s carbon footprint; carbon emissions are responsible for 81% of overall greenhouse gas emissions.  

One of most impactful ways an organization can reduce environmental impact is by reducing their carbon footprint, which starts with measuring their carbon emissions through the Greenhouse Gas (GHG) Protocol Corporate Accounting and Reporting Standard. This classifies an organization's GHG emissions into three 'scopes'.  

Scope One emissions are direct emissions from company-owned and controlled resources, which are divided into four categories: 

• Stationery combustion (e.g. fuels, heating sources) 
• Mobile combustion (e.g. vehicles owned by company) 
• Fugitive emissions (e.g. leaks from refrigeration, air conditioning units)  
• Process emissions (e.g. emissions due to manufacturing activities) 

Scope Two emissions are indirect GHG emissions from the consumption of purchased electricity, steam, cooling, and heat from a utility provider, for assets owned by the organization. 

Scope Three emissions are indirect emissions that occur in the value chain of the organization. This includes emissions from both upstream and downstream activities. Upstream activities include business travel, employee commuting, purchased goods and services, transportation and distribution, waste generated, and related categories. Downstream activities include leased assets, investments, and more.  

Measuring all three scopes, especially scope three, can be challenging, but is the only way organizations can truly understand and thereby reduce their carbon footprint and become carbon neutral. 


Q: How is climate change essential to an organization's competitive advantage?  
According to the United Nations Global Compact—Accenture CEO Sustainability Study: 

• 54% of business leaders see opportunities for growth and innovation in addressing climate change  
• 57% believe that investment in climate and sustainability solutions is essential to competitive advantage 
• 48% report a clear business case for action on climate 

These percentages are even higher when it comes to leaders of the world's largest companies. What this reinforces is that we are on the cusp of change from a climate and sustainability perspective. And today more than ever, leaders and organizations understand the importance and opportunities of sustainable management. They understand that it’s critical to implement strategies that seek long-term rewards and benefits versus fast-earned gains. 

To provide some perspective, expected spend on sustainability efforts is estimated at $3 to $5 trillion annually for the next 30 years. That’s approximately five to eight times higher than the current spend of $600 billion per year. 

Here are a few areas where sustainability is giving organizations a competitive advantage: 

• Companies that are creating a value proposition not just for shareholders, but a more comprehensive set of stakeholders—including employees, supply chains, society, and the planet—are redefining their models to create value for all. 
• Organizations more effectively managing risk by evaluating their supply chains and operations for sustainability. Research by McKinsey found that sustainability efforts can unlock anywhere from 25-70% in EBITDA. Besides the financial benefits, championing sustainability across an organization's supply chain and partners can enhance corporate/brand reputation. 
• As organizations redesign or create new products, technologies, and processes, there's an opportunity to redefine how resources, energy, waste creation, and greenhouse gas emissions get reimagined. 
• Attracting and retaining talent is another potential advantage. Research suggests that organizations that have identified sustainability and solving climate change problems as core tenets are increasingly being sought after by job seekers. Many individuals want to work for companies that have a reputation for being both ethically and socially responsible. 
• On the consumer side, sustainability is becoming more important than ever, despite often meaning higher price tags for products and services. But, most consumers are willing to pay a premium to buy goods that meet environmentally sustainable criteria. Over time, that willingness is only going to increase as awareness of climate change and the impacts of greenhouse gases become more prevalent. 
  
  

Q: What is Deluxe doing to help reduce their carbon footprint? 
At Deluxe, we take our commitment to sustainability seriously and continue to drive improvements across the organization. As a recent example, Deluxe has combined its payables and receivables platforms to help customers digitize both their payments and remittance. As a result, millions of paper payments no longer need to be transported across multiple facilities, ultimately reducing our greenhouse emissions and carbon footprint.  

Learn more about Deluxe’s digital payment options.