By Andrew Mathieson
As environmental issues go mainstream, consumers now have the option to reduce greenhouse gases with every purchase. Americans are expected to increase their holiday spending to an average of $923 per person this year, according to the National Retail Federation (NRF), and this statistic may overwhelm the “green” consumer in more places than just the wallet. Fuel-consuming trips to the mall, and the use of wrapping paper, packaging and holiday decorations provoke uneasiness for eco-conscious consumers who are concerned about their impact on climate change.
One solution to this psychological impact offers benefits to consumers, financial institutions, and the environment during the holidays and throughout the year. A new, eco-conscious rewards credit card is helping consumers, as well as businesses, offset their carbon dioxide (CO2) emissions by purchasing carbon credits for each dollar spent using the card. The new GreenPaySM MasterCard® from Fintura Corp. is available to financial institutions as a way to create loyalty with the growing number of green consumers while improving profitability and their own sustainability status.
According to the Environmental Protection Agency (EPA), the average United States family-of-four household annually produces over 35,000 lbs of CO2, which is the greenhouse gas widely held as a contributor to global warming. The impact human activities have on the environment in terms of direct or indirect greenhouse gas production is called a “carbon footprint.”
Direct emissions – or primary carbon footprints – of CO2 come from domestic energy consumption such as using electricity, natural gas and coal to cool and heat buildings, and gasoline and diesel fuel to power transportation. Indirect CO2 emissions – or secondary carbon footprints – are calculated from measuring the CO2 generated throughout a product’s lifecycle, from manufacture to the eventual breakdown.
To help eco-conscious consumers reduce their environmental impact, new credit cards are issuing rewards in the form of carbon offsets. Carbon offsetting entails investment of funds in sequestration or energy-efficiency projects that absorb or prevent release of CO2 into the atmosphere. These environmentally-friendly cards differ in several ways, including how rewards points are applied, who is recognized for the offsets and where offsets are purchased.
For example, in contrast to other eco-conscious cards that use cardholder reward points to offset the issuing company’s carbon footprint, the GreenPay MasterCard offers consumers a way to offset their personal carbon footprint. Furthermore, 100 percent of purchases made with this card earn rewards, as opposed to just a percentage.
With the GreenPay Rewards program, 10 pounds of CO2 are retired for each dollar spent on gas and household utilities, as well as five pounds of CO2 for each dollar spent on other purchases. Based on the NRF’s holiday spending prediction, a consumer could offset their carbon footprint by 4,615 pounds on purchases alone, not to mention gas or fuel use. As an additional incentive, cardholders earn 10,000 pounds of CO2 offsets (the EPA’s estimate for average annual CO2 emissions from a car in the U.S) as an activation bonus upon their first card purchase.
Carbon offsets are acquired on behalf of GreenPay cardholders through a variety of sources, including direct purchases from the Chicago Climate Exchange (CCX). CCX is North America’s only voluntary, legally binding rules-based greenhouse gas emission reduction and trading system. Its sanctioned and independently-verified carbon offset programs range from agricultural, landfill and coal mine methane projects to soil carbon management and renewable energy projects.
A quick Internet search yields a variety of calculators to aid consumers in estimating their personal carbon footprint and setting offset goals. For example, the GreenPay MasterCard Web site (www.greenpay.com) has a carbon calculator that adjusts variables to correspond with a cardholder’s lifestyle factors. The site also features a CO2 offset calculator, which automatically calculates how many pounds of CO2 are offset for a consumer who uses the GreenPay MasterCard for everyday consumer spending activities. When the number of pounds of CO2 that are offset equals or exceeds the pounds of CO2 emitted, the consumer is deemed “carbon neutral.”
Courting Eco Loyalty
If 1,000 new card holders put $1,000 to $2,000 of holiday purchases on a card such as the GreenPay MasterCard, it would equate to an additional 4.6 million to 9.2 million pounds of carbon offsets before year end. In addition to offering a 2.9 percent annual percentage rate, the GreenPay MasterCard has obvious benefits for the environment and appeals to the eco-consumer’s psyche. So, what advantages will financial institutions gain in courting loyalty from this particular consumer segment?
For one, research now shows that green issues are no longer marginalized to fanatical environmentalists and celebrities with deep pockets. Also, green products are no longer held as low-quality, brown items and have become luxury buys in many instances. From purchases of hybrid cars to organic foods, energy-efficient appliances and more, spending associated with reduced environmental impact has gone both upscale and mainstream.
The 2007 ImagePower Green Brands Study, conducted by Landor Assoc.; Penn, Schoen & Berland; and Cohn and Wolfe, showed that U.S. consumers expect to double their spending on green products and services in the next year, totaling an estimated $500 billion annually. The survey also found that 40 percent of Americans feel the leading issue driving concern around the environment is global warming.
More than 75 percent of consumers have at least one loyalty card, says Jupiter Research, and one-third of shoppers have two or more. As attitudes change and the impacts of global warming become more apparent, an eco-conscious rewards credit card offers a financial institution increased profits by providing a unique and environmentally effective appeal to a growing consumer group. Also, simply by offering the card, an institution positions itself as eco-conscious and actively concerned about its own carbon footprint, which is a critical factor in building and retaining customer loyalty, according to the Green Brands survey.
Andrew Mathieson is CEO and founder of Atlanta-based Fintura Corp. (www.fintura.com), an account origination and portfolio management company that develops and implements turnkey programs for credit cards, student loans and home equity product lines.