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March 2022

 

5 - 6 minutes

“Our goal is to reach 100 million consumers in three years”

Sustainability can present a challenge, but fintech ecolytiq offers a solution for banks. Here, CEO and co-founder Ulrich Pietsch explains why he believes personalised data is key to change, why they are partnering with Visa on its first sustainability-focused card products, and how cutting carbon is just the start.

Picture this: while checking your banking app, you see an extra figure in kilos next to the cost of the flight you’ve just bought. It’s the amount of carbon dioxide your purchase will “cost” you in emissions – it’s the carbon footprint. Clicking on the figure, you learn that e.g. 50 kilos of CO2 are the equivalent of driving over two hours in a car1.

Next to the purchase, you’re provided with information about the impact on the climate: next time opt for a direct daytime flight rather than a redeye with a stopover to shrink your purchase’s footprint. And with a few simple steps, your flight is offset.

ecolytiq, a Sustainability-as-a-Service company® founded in Berlin in 2020 has been collaborating with Visa since its inception. Their mission? To empower millions of consumers by providing transparency about their personal environmental impact, as well as personalised information to enable them to lead more sustainable lifestyles. “It’s about the little things we can do to move the needle,” says CEO and co-founder Ulrich Pietsch. “Because as an individual, I'm often asking myself, what can I do?”

After all, no one can be unaware of the drive to reduce carbon emissions, with seven years said to be left to limit global warming to 1.5°C2 and 60% of all greenhouse gas emissions caused by consumers3 – of whom 7 in 10 want products that do not contribute to climate change4. To that end, the Cambridge Institute for Sustainability Leadership (CISL) in collaboration with Visa has identified ways payment networks can help achieve net zero emissions targets5.

These include empowering consumers through innovation; providing data-driven insights to facilitate change; collaborating with partners on new solutions; and using advocacy – all of which are embodied in ecolytiq.

How ecolytiq aims to change the game

Ulrich, an entrepreneur, co-founded ecolytiq after his sons became upset after watching a documentary about the climate crisis, prompting his decision to dedicate his technology background to sustainability. A way to do so presented itself while he was working on a project to build a bank for a European retailer with David Lais – now his co-founder and ecolytiq’s chief product officer – who was focusing on fraud analysis around payment transactions. “His idea was: why don't we use payment transactions to calculate carbon footprints, because transactions reflect everything we do? We thought, that’s a nice idea.”

“We collaborated with Visa from the very start,” Ulrich explains. ecolytiq initially partnered with Visa in 2020, through the Fintech Partner Connect programme, which brings new, innovative solutions to issuers and Visa launched Visa Eco Benefits, its new package of sustainability-focused benefits for account issuers6 in November 2021.

This new proposition offers cardholders ecolytiq’s carbon footprint calculator, personalised climate insights around “greening” their habits, carbon offsetting (compensating for emissions by funding an environmental project such as renewable energy) as well as the ability to donate to relevant charities. Cardholders are also incentivised and rewarded through ESG-themed campaigns and promotions to help them continuously engage in sustainable consumption.

Why personalisation is key

At the heart of Visa Eco Benefits is the personalised data about the cardholder’s carbon footprint. ecolytiq bases that calculation on the Open Payment Standard published by the Organisation for Sustainable Consumption, which uses the open-source EU Open Sustainability Registry, a collaborative and constantly updated platform, to achieve the most precise research-based data possible.

“We’re really transparent as to how we come to the numbers,” says Ulrich. “There are about 30,000 studies coming out each year on this topic, so this question can only be solved by collaboration.”

ecolytiq tailors the data to the cardholder’s country, merchants of choice, and their current habits. That’s because the same transaction differs in carbon impact for say, a cardholder in France, which relies on nuclear energy – “carbon neutral by definition” – compared to a cardholder in another country more reliant on fossil fuels. Cardholders are also asked about their dietary habits, allowing them, for example, to click to see how reducing meat intake could change the footprint of their supermarket shop.

Then, the issuer might choose to automate carbon offsetting for every transaction, as does ecolytiq’s partner CarbonPay, or offer the cardholder ways to invest in sustainable products – but the crucial feature is that the cardholder can do something about their impact.

“We see a lot of CO2 calculators coming out around payment transactions, which is good,” says Ulrich. “But for us it’s only a starting point on a whole journey.” As a result, ecolytiq sees cardholders cutting their carbon footprint by 10% on average7 – which does not necessarily translate into reduced spending. “For example, a Tesla is more expensive than a traditional car, and it’s the same with clothing and grocery shopping.”

Banks change their approach

Interest from the sector has intensified in recent months, says Ulrich. “The shift has been driven by Europe”, he says, but it is a “global phenomenon – together with Visa we’ve just announced the first Visa Eco Benefits card in the Middle East”.8

So, what’s changed? ”Pressure is building up, from the stakeholders, from CEOs, but also from the consumer side,” he says.

In a proprietary Visa research project, participants said they had never made a connection between payments and the planet – yet when it was explained to them, 50% said they would definitely consider changing to a more sustainable bank9. From rolling out new sustainable products, to realising the opportunity to engage their customers here, those banks that move the quickest are positioned to benefit most, he believes.

In the process, he sees banks as having a leading role in helping their millions of customers to reduce emissions, given the investment and time needed to update the world’s physical infrastructure: “You might swap from a car to a less impactful bus journey, for example, but that bus might still be based on gasoline or diesel.” But if that customer can pay for their journey with a card which allows them to easily address its carbon impact, then it could unlock powerful change.

Why the future is green

Of course, achieving change is not without its challenges. That is why ecolytiq has been working to “shortcut” the technical integration for issuers, so an existing partner like Visa is effectively delivering these new services. Open banking has been helpful here – “it allows us to move faster” – and this model allows rapid scaling. “Our goal is to reach 100 million consumers in the next three years,” Ulrich says. “If they each reduce their footprint by 10%, we are talking about a reduction of 100 million tonnes of carbon.”10

A daunting prospect? It doesn’t have to be. “Banks don't have to become sustainability experts, they just have to build sustainability features into their traditional products – and then they will be generating more sustainable revenues.”

Stephen King, VP Sustainability Solutions, Visa Europe added: “This is just the beginning of what we expect to be a detailed journey to close the awareness/action gap for different customer segments, but it’s an important start.

“Drawing on Visa’s experience and partnerships, we can help our clients deliver solutions – helping consumers to live more sustainably, accelerating a merchant’s path to sustainability, or helping governments plan and deliver more sustainable cities.”

How fintech CarbonPay is creating a community of conscious consumers & businesses

One of ecolytiq’s first clients is CarbonPay, a sustainable fintech platform. “Our proposition is simple,” says founder and CEO Rory Spurway. “For every £1 or $1.50 spent, we automatically offset one kilogramme of CO2 at no additional cost to the cardholder.”

After the idea came together in early 2020, CarbonPay joined Visa’s FinTech Fast Track program in the US in January 2021. Our partnership with ecolytiq is based on a fundamental alignment in both our companies’ missions, to educate and empower cardholders all over the world to take climate action,” says Rory. “I felt that existing carbon footprinting data wasn’t giving a clear picture to consumers. So, when Doug Sabo (Visa’s Chief Sustainability Officer) mentioned what ecolytiq were doing, it was perfect. It’s transparent data. It’s open source. It is controlled, but it’s not controlled by one company.”

Integrating ecolytiq’s services took the company’s developers around four weeks, he says – “it was really seamless” – with CarbonPay’s first product, CarbonPay Business Ctrl a prepaid card aimed at businesses that launched in March .

“Partnering with ecolytiq enables us to track the carbon footprint of each purchase made by our cardholders. We then share this data with the cardholder and business so they can better understand the environmental impact of their spending behaviour, empowering them to make smart data led decisions on how to reduce the carbon footprint associated with their purchases.”

To learn more about how ecolytiq or Visa Eco Benefits can help you, contact Visa’s Fintech Partner Connect team at ComponentPartnerHub@visa.com for further information or for a call with one of its experts.

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All brand names, logos and/or trademarks are the property of their respective owners, are used for identification purposes only, and do not necessarily imply product endorsement or affiliation with Visa.

Case studies, comparisons, statistics, research and recommendations are provided “AS IS” and intended for informational purposes only and should not be relied upon for operational, marketing, legal, technical, tax, financial or other advice. Visa Inc. neither makes any warranty or representation as to the completeness or accuracy of the information within this document, nor assumes any liability or responsibility that may result from reliance on such information. The Information contained herein is not intended as investment or legal advice, and readers are encouraged to seek the advice of a competent professional where such advice is required

1 U-OSR, Open Payment Standard, accessed 3 March, 2022, https://www.euosr.com/standard

2 According to the MCC Carbon Clock, which shows how much CO2 can be released into the atmosphere to limit global warming to a maximum of 1.5°C and 2°C. https://www.mcc-berlin.net/en/research/co2-budget.html

3 ‘Environmental Impact Assessment of Household Consumption’, 2015 https://onlinelibrary.wiley.com/doi/abs/10.1111/jiec.12371

4 ‘about seven in ten (consumers) want to choose products that do not contribute to climate change’, GlobeScan report, 2021 https://globescan.com/2021/10/21/consumer-research-reveals-escalating-concerns-about-climate-change-forest-biodiversity/

5 Payments for Net Zero: How the payments industry can contribute to the transition to a net zero economy, 2021 https://www.cisl.cam.ac.uk/resources/publications/payments-for-net-zero

6 Visa Announces the “Visa Eco Benefits” Sustainability Bundle to Empower Issuers to Meet Climate-Conscious Consumer Demand, Visa 09 November, 2021, https://www.visa.co.uk/about-visa/newsroom/press-releases.3142789.html 

7 ecolytiq, 2021, internal study based on client data

8 Etihad Guest partners with First Abu Dhabi Bank and Visa to create the world’s first Visa co-branded sustainable credit card proposition to reward sustainable choices, Etihad, 3 February, 2022, https://www.etihad.com/en-gb/news/etihad-guest-partners-with-first-abu-dhabi-bank-and-visa-to-create-the-world-s-first-visa-co-branded-sustainable-credit-card-proposition-to-reward-sustainable-choices

9 Visa research project in partnership with Spielfeld Innovation Research 2020 as detailed in Visa Consulting & Analytics: Mind the Sustainability Gap

10 Ecolytiq data: Average yearly footprint of a German / UK citizen is around 10 tons of CO2, 10% reduction of CO2 = 1t per user per year, 100m users = 100m tons saved

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