FinTech for the Future: Will your carbon footprint become public information?
Reducing carbon emissions by changing consumer habits
Everyday consumer choices will be the biggest driver for decarbonizing our economies.
Producing material goods consumes energy and leads to direct carbon emissions, both from the production process and the transportation of the finished goods.
If consumers were to shift their spending from carbon-intensive material products to services and digital products, the effect would be dramatic.
Other consumer choices that would have huge climate benefits are:
- reducing travel and use of less carbon-intensive means of transportation (eg. switching to electric vehicles, using trains instead of planes)
- reducing meat consumption
- buying regional and seasonal produce rather than imported foodstuffs
Many consumers understand this. However, changing behaviors is hard, while motivation to do so is low if consumers don’t see many others changing their behavior as well.
Thus, it is entirely possible that we will see measures to increase peer pressure, as well as direct legal interventions. Consider the actions governments around the world have taken to reduce smoking (including bans of smoking itself, bans on advertising and large increases in cigarette taxes).
Consequently the number of smokers has fallen sharply in almost all developed countries, despite smoking being a highly addictive habit.
Falling short of legal interventions regulating consumer behavior, governments may resort to more indirect measures. Consider the experience of countries such as Sweden, Finland and Norway, where citizens’ taxable income is public information. This transparency is seen as having helped to reduce the gender pay gap.
Therefore, why not publish each citizen’s individual carbon footprint, or a carbon intensity score?
And going even further, why not introduce a cap & trade market for consumer carbon credits, similar to the one that already exists for industrial carbon emitters.
A key opportunity in such scenarios would be to become the provider of the most accurate carbon footprint analytics. Real-time consumer payment data may be a good starting point for that.
One thing is clear: consumers looking to decarbonize their lifestyles will need support. And why not help them to save money at the same time?
By Miles (CommerzVentures portfolio) does exactly that. With its “pay by the mile” car insurance, customers save money by driving less. Owners of electric vehicles typically drive less than owners of internal combustion engine (ICE) cars, thus By Miles also offers policies especially tailored to electric vehicles.
Alibaba’s FinTech subsidiary Ant Financial engages users of its AliPay payment system through “Ant Forest”. This is a personal carbon account, in which users collect virtual “green energy” whenever they engage in low-carbon activities (eg. riding a bike). The energy is used to grow a virtual tree, and every fully-grown virtual tree would be converted into a real tree planted in China.
In addition to these examples, I am confident that the market for decarbonizing consumer behavior holds many more startup opportunities in store for creative FinTech and InsurTech founders.
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If you are building a FinTech or InsurTech company helping to Decarbonize our economies, we at CommerzVentures would be happy to hear from you. CommerzVentures is an independent venture capital fund sponsored primarily by Commerzbank Group.
