Home Banking Challenger bank helps customers erase carbon footprints

Challenger bank helps customers erase carbon footprints

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The challenger bank Aspiration has an ambitious goal: help consumers neutralize their carbon footprint.

The Marina del Rey, Calif., fintech recently rolled out a Plant Your Change program that lets customers round each purchase made with its debit card to the nearest whole dollar; each time this happens, Aspiration plants a tree through a tree-planting charity.

The company, which offers checking and investment accounts as well as a mobile app, also has recruited the civil rights activist and former NAACP chief Ben Jealous to its board of directors. In an interview this week, Jealous said he has come to see climate justice and racial justice as one and the same.

Some traditional banks have or are thinking about offering similar climate-friendly accounts. Bank of the West launched a checking account last year with the nonprofit 1% for the Planet; the $101 billion-asset U.S. subsidiary of the French bank BNP Paribas said it will donate 1% of the net revenues generated by this account to environmental nonprofit groups. Citizens Financial Group in Providence, R.I., is considering offering a similar account. The entrepreneur Ken LaRoe is forming a Climate First Bank that will adhere to green principles.

Aspiration appears to go a step further. It offers an impact measurement that shows users “people scores” and “planet scores” for the places they spend money.

Ben Jealous (left), a civil rights activist who recently joined the board of challenger bank Aspiration, shares a vision with Aspiration co-founder Joseph Sanberg of how fintechs can promote climate justice.

When users purchase items at a CVS drugstore, for instance, they receive information about how the company treats its workers (the people score) and how it treats the planet (the planet score). The scores of rivals such as Walgreens and Duane Reed also would be shown.

Every time an Aspiration user buys gas, the company automatically purchases carbon offsets to neutralize the impact on the environment. Aspiration has committed to not doing business with oil and gas companies, and it requires its bank partners to make that same commitment. The company makes money primarily by collecting card-swipe fees and charging a $15 monthly fee on its premium account.

“Aspiration’s personal-impact score gives consumers an insight into how their day-to-day decisions impact their personal goals that are in line with their values towards a more sustainable environment,” the consultants and venture capitalists Theodora Lau and Bradley Leimer wrote in their new book, “Beyond Good: How Technology is Leading a Purpose-Driven Business Revolution.”

In an interview, Jealous and Aspiration co-founder Joseph Sanberg explained why they are focused on climate justice and how a small fintech is capable of taking on such a big issue. The interview has been edited for clarity.

Why is climate justice so important to both of you?

BEN JEALOUS: I’m the new kid, so I’ll start. Finance shapes both the communities that we live in and the planet that we live on. There are moments where those two things crash together. The climate events that we’ve been subjected to again and again, the thousand-year storm that becomes a hundred-year storm that becomes the annual storm, the annual flood, the annual drought. Though I’ve spent most of my life focused on issues of human equality, I’ve increasingly realized that we have to listen to the young people in our lives and really fight for their future and the future of the planet on which all of them depend.

When I became president of the NAACP, my big push was on criminal justice reform. But the first program I launched was our national climate justice program because when we polled the NAACP youth and college division in 2008, this was their No. 1issue — the existential threat to the planet that is climate change.

Then I met with [the actor and activist] Lou Gossett Jr. We talked about his lifelong fight for racial inclusion. At the end of the meeting he said, none of that matters if we can’t save the planet. And it became clear to me back then that there was a convergence amongst black activists who had spent their lives, however long, fighting on racial justice issues, that we had to be deeply involved in the fight to save our planet. Our communities are so vulnerable.

My grandfather’s great grandfather helped start a bank in order to strengthen his community right after slavery. That’s why I’m so proud to be joining a bank that’s focused on strengthening our planet. Back then it was about breaking through for black people. Now it’s about securing the future for all people and all of creation. That’s what makes me so excited about being here: Joe’s vision of the good economy and Andrei [Cherny]’s courageous path to create a bank that really puts its money where its mouth is and gives consumers an opportunity to believe that their relationship with their bank doesn’t have to ultimately be a deal with the devil.

JOSEPH SANBERG: I share Ben’s passion about justice on all fronts.

One of the observations Ben and I both have is that so many people want to help. They look around the world, they see so much in disrepair, and they want to pitch in, but they don’t know what to do. We’re in a moment in time where people are looking, but don’t have the easy answers on how they could contribute to positive change.

That’s an opportunity for companies like Aspiration to deliver automated social-impact features. I think one of the primary contributions that Aspiration can make to the development of what I call a good economy — and by good economy, I mean an economy where businesses and consumers are organizing their choices around that which will have the most positive impact on people and planet while still getting done that basic commerce that is necessary in the modern economy — Aspiration can be the operating system that gives individuals and organizations these automated tools to create positive social impact.

We’ve seen time and again, over the last 20 years of tech-driven innovation, that when you can deliver automation to people, you can unlock latent demand and engage big new audiences with behaviors that they might have wanted to do, but didn’t know how to do. And so we look at things like Aspiration’s Plant your Change feature, or its Aspiration Plus program that allows people to automatically have their gasoline purchases carbon-neutral through Aspiration’s monitoring and carbon credit program.

Theoretically those are things you could do on your own. The tools exist in disparate ways on the internet to do them, but people don’t engage in them because people have busy lives. And then when you allow these things to be done connected to something that as a person you have to do anyways — you have to have a banking account, you have to have a debit or credit card, you use to buy goods and services — you can get lots of new people to engage with positive social change.

Going back to Ben’s point about how visceral some of these problems are, can things like helping me neutralize my gasoline purchases really add up and fix the deep-rooted, huge problem of climate injustice?

JEALOUS: Yes, when done in conjunction with other, deeper strategies. What ultimately attracted me to Aspiration, joining the board, supporting the work, is the bank’s commitment that not only will none of its deposits be used to finance the destruction of the planet, to finance projects like the Keystone Pipeline, none of its bank partners, where the deposits are actually placed, will either.

Every one of those community banks that accepts our funds signs an agreement that they will not loan any of their deposits to the oil-and-gas industry. That’s ultimately the most powerful thing that Aspiration members are part of: a movement to take our money back and take it out of circulation for those companies that are doing the most to destroy our planet.

Years ago, NAACP and Oxfam took the U.N. social vulnerability index — the index that measures poverty and minority status — and we mapped it out geographically across the United States. And then we overlaid the communities most at risk for climate change disasters, and it was hand in glove.

I was standing with members of Native American tribes in Louisiana after Katrina, and listening to them weep and rage because they are so connected to those coastal lands which were ravaged and destroyed by the massive saltwater intrusion.

I was sitting with the manager of a McDonald’s in Tuscaloosa, Ala., right after 55 tornadoes unleashed pure hell on that town, which was a mile and a half wide at its base. And yet, somehow the areas that were most devastated included all of the areas where the McDonald’s workers worked, and the manager’s chief concern when the town is flattened is that he was convinced that it would rebuild as it has in a way that excludes the people who work for him disproportionately, but then he would have to recruit workers from further and further outside of Tuscaloosa.

There’s no reason for any of us to take solace that maybe we live on higher ground or in a wealthier part of town. Our less-well-off neighbors are merely the canaries in the coal mine. And so that’s the urgency that attracted me to Aspiration’s board. Planting trees is powerful and important. My son and I were reading yesterday about a very tiny animal that is disappearing because of the deforestation in Madagascar. And I was really proud to tell him that Aspiration is planting a lot of trees in Madagascar and it absolutely matters. But again, the biggest thing that we do is we take millions upon millions of dollars out of circulation from the oil-and-gas industry, so that they may not use our dollars to finance their destruction of the planet.

SANBERG: One of the most resonant questions that Aspiration poses to the world is, do you know what your money is doing while you’re asleep? If your money is at one of a number of the biggest financial institutions in the country, it’s being used to finance the climate crisis. I think that we can rally around the uncontroversial notion that as a consumer, you should know that and be able to choose. And we hope that you’re going to choose to place your money with an institution that never lets your money touch fossil fuel. And in fact, when you scan the entire country, you find that a supermajority of people don’t want their money at institutions that are using it to fund fossil-fuel extraction. But very few people actually know that in fact their money is being used for that end.

Some banks try to reduce their carbon footprint, donate to organizations focused on climate change, and have [environmental, social, governance] units that help their clients invest in environmentally conscious organizations.

JEALOUS: That’s right. It’s one thing if you’re a high-net-worth individual and you’re choosing your investments. What we’re talking about is the average account holder, where that person’s money is swept and how it’s used overnight.

What makes Aspiration different, and leading environmentalists have said this to me, is the fact that we actually are part of the movement to remove ultimately billions of dollars from circulation for the oil-and-gas industry. And that’s the bar that we’ve exceeded, but virtually nobody else in the space has.