Open banking: promoting sustainability and reducing our carbon footprint

It’s 2023, and there should be no doubts that sustainability is paramount, not only for our survival as a species but also for business development. 

Modern societies have gradually adopted more sustainable habits across the board, but it seems that there are still some misconceptions about the role we each play in this necessary transformation. 

Adopting policies that favour public transportation, reducing, reusing and recycling, holding back on plastic use — these are some ways individuals are trying to embrace to reduce our carbon footprint. 

Unfortunately, individual citizens are incapable of fighting this battle alone. Although some refuse to accept it, companies probably play a more significant role in reducing humankind’s environmental impact. 

Open banking is synonymous with sustainability, and can be a prominent tool when it comes to reducing our carbon footprint. 

Greenwashing: a reprehensible marketing ploy

Of course, this goes well beyond frugal attempts to claim that one’s products are environmentally friendly when they are really not, only to reap positive recognition — something that is commonly known as greenwashing.

What those businesses need to understand is the negative impact these practices can have on the way people perceive them. Deceitful marketing strategies intend to mislead the public, but people can see right through the smoke and mirrors. 

Greenwashing has become so popular that it tainted the way people look at businesses who paint themselves as “green.” Everything from the language of choice to hypocritical practices can break a positive connection between a company and its potential customers.

Next time you are faced with the possibility of trying to greenwash your customers, consider this: greenwashing only benefits your company when it successfully deceives your customers. So think long and hard about what your long term purposes are. 

Open banking: changing behaviours for a greener future

Of course, not all “green” claims are false. There are a lot of companies that choose a positive approach to sustainability and embrace their social responsibility. 

There are some “green marketing”  strategies that can prove very effective in communicating legitimate good environmental practices — honesty and transparency can go a long way. 

Best practices for reducing your company's carbon footprint:

• Focus on repairability instead of disposable products;

• Use recycled and/or renewable materials;

• Use non-toxic materials;

• Optimise your packaging;

• Refuse sweatshop labour;

The financial sector can probably even lead the efforts to empower positive change. Smart financial services, like those who make use of open banking technology, have the unparalleled potential to show individuals and businesses how their spending habits can have a direct impact on the environment. 

Besides, there is also the regulatory standpoint. In the European Economic Area, financial institutions are being called out to reach low-carbon targets in order to meet carbon neutrality by 2050. 

How can open banking help promote sustainability?

The digital era is here to stay, and if we can all see its evident benefits, there are some positives that may be harder to grasp at first sight. 

Companies need to understand that good sustainable practices can offer them a competitive advantage over those who choose to live in the dark ages. And in today’s volatile economy, sustainability makes even more sense as it grants:

• Cost savings

• More agile processes

• Growth opportunities

• Reputation benefits

But how can open banking really make a difference? How can a business be more sustainable by leveraging open banking technology?

Digitalisation means less paper waste

Let’s start with the obvious. Paper was absolutely essential to allow businesses to operate only a few years ago. In a lot of cases, this is still true, and that can change by relying on open banking to push your business forward. 

Open banking allows businesses to operate in an increasingly more digital fashion, eliminating the large amounts of paperwork necessary to several use cases. Documents can now be submitted electronically, with obvious benefits in terms of time and cost savings, not to mention the drastic reduction of paper use and transportation. 

Digital operations also have a positive impact by relying on electronic invoices and receipts, something that can even grant discounts on bills if the users choose to get payment confirmation over email. 

More data, greener choices

Knowledge is power. Without data, it’s very hard for people to truly understand their environmental impact. Open banking fundamentally changes that by tapping into people’s transaction history and providing singular insights that enable greener choices. 

The large amounts of data handled by financial institutions are an invaluable source of information that can be analysed and categorised to provide actionable patterns. These patterns can help businesses and consumers understand and track their environmental impact. Better yet, they can be used to build products and services that can make a difference. 

Loyalty programs, for example, can reward more sustainable choices that not only have an immediate impact on the planet, but serve as a catalyst for behavioural change that will benefit future generations.

Open banking as a driver for change

Let’s be honest with ourselves, climate change and other pressing environmental issues are not going to go away unless we all change the way we act. Words are no longer enough, greenwashing is not acceptable, and we are long past the intentions phase. It’s time to roll up our sleeves and actually do something about them.

Some companies are integrating carbon tracking features into their applications that can show CO2 emissions linked to daily spendings. Being aware of these data can lead to behavioural changes that translate to more sustainable habits. 

Through open banking, it’s easier for people to understand who is indeed promoting this much needed change. It also helps businesses gather relevant information that allows them to really make a difference and separate themselves from the competition, improving customer loyalty.

We are dealing with some of the most troubling and complex issues in human history. Now is the time to take the necessary steps for a better future. And open banking can be the first step towards the future you wish upon future generations.