EXCLUSIVE: ‘DO-ing the right thing’ – Mathias Wikström, Doconomy and Ruediger Vogt, Giesecke & Devrient in ‘Discover Money20/20’
The ‘Greta effect’ forced governments to listen up on climate change. Another Swedish activist is having the same impact on the financial system. Mathias Wikström, CEO and Co-founder of Doconomy, and Ruediger Vogt G+D’s Head of Payment 4.0, explain
“If nature were a bank, they would have already rescued it” is a phrase coined by one of the great radical writers of Latin America, Eduardo Galeano and later appropriated (albeit slightly altered) by US politician Bernie Sanders.
Mathias Wikström, CEO and co-founder of Swedish B2B Doconomy, reaches for it now to illustrate the pressing need for action to tackle climate change, drawing a parallel between the urgent measures brought in by governments to rescue the financial system in 2008, and the comparable inertia in dealing with the environmental catastrophe that is on our collective doorsteps today. That means it falls to each of us, on an individual level, he believes, to effect change.
Fully launched in 2019 – the same year that the best-known climate activist of modern times, a then 15-year-old Greta Thunberg, addressed the United Nations Climate Change Conference – Doconomy set out to help her fellow Swedes be the change she wanted to see by reducing and/or offsetting their carbon footprint through the spending choices they make. A ‘tool, an ecosystem and a constantly evolving platform’, Doconomy has since influenced millions of people across the world through the vector of banks and other institutions as it attempts to bring about structural change to the financial system, as Wikström explains.
“Our ambition is to enable a sustainable lifestyle for all, because we think, at the core, most people want to do good, but there just aren’t sufficient tools to assist them in driving the change of behaviour that we see is needed. Our job is to provide those tools. We have two core services; one that calculates the environmental footprint of every transaction, and one that calculates the cradle-to-gate footprint of a product.”
Doconomy’s mission is to take people and banks outside of their comfort zone, and challenge the way things have always been done. “It’s important that is done in a credible and a trustworthy fashion,” adds Wikström. So, fundamental to the Doconomy offering is the Åland Index – a joint venture with Ålandsbanken which, through partnerships with other banks and payment providers, now touches 360 million users in 18 countries. The Index measures the carbon impact of financial transactions.
“Sixty per cent of an individual’s carbon footprint is linked to the choices they make in daily consumption. The Åland Index has the ability to calculate the CO2 footprint of each and every transaction, using the data available to us,” says Wikström. “The Index puts together a sort of scorecard of CO2 emissions per merchant category, so you get your individual spending’s representation in that industry’s total carbon footprint. Then we convert that back from CO2 equivalent emissions measured in kilos,to the local currency, using the societal cost of carbon at approximately US$130 US.
Using payments to effect change, gives Doconomy maximum leverage, as Wikström goes on to explain.
“You have a buyer and you have a seller, and at the very core of that transaction is the payment. We want to address the issue and educate people at that moment, so that it’s manifested as an opportunity for both the seller and the buyer to take greater responsibility.
“That’s where we can also work to shape a new kind of brand preference, a new kind of loyalty, driven not by incentivising more consumption, but by incentivising a greater sense of responsibility.”
In Sweden, the DO mobile banking app is connected to a credit card that enables the cardholder to track and measure the carbon footprint for every purchase. It also allows for the consumer to save and invest in UN-certified environmental projects worldwide to compensate for their carbon impact. In what it claims is a world first, Doconomy launched DO Black, a premium credit card with a pre-set ‘carbon spending’ limit beyond which the card will be declined. It was an innovation that so impressed Mastercard that it subsequently made an equity investment in the startup and rolled out a carbon calculator that its issuers can integrate into their apps.
It’s not only a practical instrument to mitigate climate impact, but it also provides banks with a product to attract potential customers who are keen to do their bit for the environment. A recurrent theme across so many climate change projects is that individual responsibility is, of course, important but collaboration between big institutions to tackle a massive global problem is an imperative. Any bank can use the Åland Index via an API and Doconomy has partnered with many entities apart from Mastercard, including Standard Chartered, S&P Global, Klarna and DirectID. A recent partnership with payments specialist Giesecke+Devrient (G+D) continues this trend. G+D’s intention is to find opportunities to provide more sustainable payment solutions, also impacting the card lifecycle itself. Whether in production and choice of material, such as recycled PVC or ocean plastic, to fulfilment or recycling stages, its efforts to become even more eco-friendly is an indispensable journey.
With Juniper Research in 2019 saying that, despite virtual cards processing more than $1billion by 2025, less than 20 per cent of people making purchases will use them, such a significant move to make production of traditional cards ‘cleaner’ can only be welcomed. But G+D head of payment 4.0 Ruediger Vogt says that the partnership with Doconomy is about more than just providing cards that are climate-kind.
“About two years ago, two of my colleagues were looking into how we can create an offering that combines eco-friendly payment cards with a tool for the client to manage and improve their CO2 footprint,” he says. “That’s when we first came across Doconomy and the great work it’s doing in the field of everyday climate action. And now, by jointly offering to track consumers’ carbon footprints, G+D and Doconomy will address the needs of banks and fintechs that have ambitious environmental goals, and a strong focus on innovation. The joint offering of the two companies will enable banks to build a strong brand loyalty, through sustainable solutions, and a have visible commitment to climate protection.”
The Åland Index gives that credibility.
“The Index is a great way of not only creating awareness of how what you’re doing as a consumer in your everyday life is influencing your CO2 footprint, but it also gives you a tool in order to act. And that’s important because consumers really want to take the next step and change for the better. Studies show they are really willing to pay more for environmentally-friendly products and they are willing to contribute to making a positive impact. Customers really are asking for change.” Banks need to be in tune with that, believes Vogt.
“Environmental issues have really shifted general attitudes, so it’s really now a key value proposition that banks can and are driving. In the World Economic Forum’s 2020 Global Risk Report, for example, the top three risks identified are all climate related, and the report strongly requests that financial institutions work to improve these risks, so that shows you how important this is for the financial sector, too.”
“I think a lot of the challenges that we are facing today as a species on this planet needs a new narrative,” adds Wikström. “It needs a new story to be told, it needs hope, it needs tech, it needs data, and it needs commitment. All of those factors we’ve found in G+D, and that’s why we think this has the potential to be a very fruitful partnership for us, but also for the world.”