Money 20/20 Las Vegas: is climate change a ‘Problem’ or a ‘Missed opportunity’?

Climate change has long been framed as a daunting challenge - one that’s cast a shadow over economies, industries and particularly the financial sector. For years, banks have found themselves in the crosshairs, accused of financing industries that contribute to environmental degradation. The narrative has often revolved around guilt and responsibility, pressuring financial institutions to reduce their carbon footprint. But is it time for a re-frame? 

Could climate change actually present a unique opportunity for banks to not only redeem themselves but also reap commercial rewards? At Money20/20 in Las Vegas, this question is more relevant than ever. The climate crisis might just be the opportunity banks need to both green and grow their loan books; at the same time helping to finance America’s transition to net-zero.

The growing demand for sustainable finance

The desire for sustainable finance isn’t just a trend; it’s a seismic shift in consumer behaviour. A staggering 70% of customers want their banks to take action in reducing their environmental impact. Customers are actively seeking out banks that offer green solutions; they want to understand the environmental impact of their spending and are eager for products that help them make more sustainable choices.

This growing demand represents a massive opportunity for American banks. By aligning their product offerings with the values of their customers, banks can tap into a share of $3.5 trillion a year in capital investment. The Energy Transitions Commission highlights the need for this level of capital investment to build a net-zero global economy by 2050. For banks, this isn’t just about doing the right thing; it’s about seizing a financial opportunity that could reshape the industry.

Greening the loan book: a triple payback

The concept of a ‘triple payback’ is at the heart of this opportunity. By focusing on sustainable finance, banks can achieve three critical goals simultaneously: reducing financed emissions; increasing their loan portfolio; and saving customers money. This is more than a moral imperative; it’s a business strategy that aligns purpose with profit.

Cogo, a leading green fintech, has been vocal about the potential rewards for banks that take this path. Ben Gleisner, CEO of Cogo, believes banks are uniquely positioned to meet customer demand for green products while driving systemic change. Cogo’s carbon footprint technology, which is integrated into banking apps, allows customers to measure and reduce their carbon emissions through green lending and other initiatives. This not only benefits the environment but also strengthens the bank’s relationship with its customers. 

Customer loyalty and commercial rewards

One of the most compelling reasons for banks to embrace sustainable finance is the impact on customer loyalty. Cogo’s data shows that customers using its carbon footprint feature experience a 14+ point uplift in Net Promoter Score (NPS), a key indicator of customer satisfaction and loyalty. This increase in NPS has the potential to translate into a 2% boost in revenue - a clear indication that green initiatives can be commercially rewarding.**

Customers today are more informed and engaged than ever before. They want to bank with institutions that share their values and are willing to reward those that do. By offering green solutions, banks can not only attract new customers but also deepen relationships with existing ones. 

Climate change: an opportunity, not a burden

As banks gather at Money20/20 in Las Vegas, the conversation around climate change is shifting. No longer is it just a global problem to be managed; it’s a missed opportunity if not acted upon. The financial sector has the power to drive the transition to a net-zero economy, and in doing so, it can unlock new avenues for growth.

The time for banks to act is now. By greening their loan books, they can not only contribute to solving the climate crisis but also position themselves as leaders in a rapidly changing market. Climate change doesn’t have to be a burden; it can be the catalyst for innovation, growth, and a more sustainable future.

The future is green

In the years to come, the banks that thrive will be those that see climate change not as a challenge but as an opportunity. By embracing sustainable finance, they can align their business strategies with the values of their customers, drive growth and make a positive impact on the planet. As Money20/20 unfolds, the message is clear: the future is green, and the time to act is now.

**Insights from anonymised Cogo clients, 2024