The key role that banks play in improving carbon literacy
We can all agree that climate change is a problem. In fact, a report from the Office for National Statistics recently found that three-quarters of adults in Great Britain are worried about climate change and its impacts. However, when faced with a problem and seemingly no easy solution, must people shy away. This is presenting a huge risk to our chances of tackling the climate crisis, from the bottom up. Our research shows that only 43% of UK mobile banking users think that the way they choose to spend their money impacts the environment – they’re not carbon literate. In research we undertook earlier this year with 2,007 UK mobile-banking app users, while 88% thought of the environment when making purchases, we found there is a sizable gap between wanting to go green and actually doing it.
The good news is that most people are only too willing to get involved, with the right help. Our same research found that 8 in 10 UK mobile banking customers want to know more about the environmental impact of their spending. With banks being so closely tied to the wealth of the nation, they play an influential role in how it’s used. In short, the financial sector can help change how the world thinks about money and climate change.
That doesn’t mean we don’t have a large task on our hands. Here are some of the ways banks can best help their customers to improve their understanding of their personal carbon impact.
Through mobile banking apps, financial institutions can provide purchasing feedback quickly and efficiently. This direct feedback gives banks the power to break carbon emissions down into terms customers can understand and, subsequently, act on. Banks can also give customers ongoing encouragement, so they continue to feel motivated to maintain lifestyle changes.
Carbon literacy and confidence are key blockers to us all making those small everyday changes that ladder up to real progress. In Cogo’s recent research on the intention-action gap of consumers, we discovered that carbon emissions — usually expressed in kg — are too abstract for people to understand. The current language around climate change is confusing. Plain English is key.
Show the impacts
In the same study, we saw a positive relationship between people’s level of carbon literacy and the likelihood that they would find out their carbon footprint. In other words, once you understand it, you’ll take action.
This is why our design team created a visual carbon spectrum, based on a traffic-light coloured scale, to formulate a clear picture for users of the carbon impact of different actions. We tested this spectrum on 1,003 UK participants and found that after using the carbon spectrum, users' recognition of positive behaviours increased 8%. That is to say, by using some (on the face of it) simple colour coding, we improved people’s understanding of their carbon footprint and how they can best reduce it.
Banks already make complex financial information more digestible for customers, a skill that can be transferred to helping customers understand other types of complex data too. This expertise in building engaging user experiences ideally positions banks to help customers participate in the conversation around carbon footprints and stay committed to reducing their impact.
Lead by example with eco-friendly investments
Influencing carbon footprints is a good way to help drive collective, meaningful change. But it can’t be done without authenticity. Banks too, need to go through this carbon literacy journey. Those that lead by example; reducing their environmental impact and investing in environmentally friendly businesses; have a better chance at engaging their customer base. Our research shows that 73% of customers want to see their banks invest in businesses with low environmental impact and 76% want their bank to take real action in reducing its own environmental impact.
A real opportunity
As the number of environmentally conscious banking customers rise, banks stand to gain a lot by providing these customers with green banking options. Although switching banks has increased in the UK over the past decade, most customers still remain loyal to their banking provider for many years. Offering the best in green banking features is therefore a way for banks to ensure they have the right services and products for this increasing customer segment, who will be less inclined to support businesses that aren’t making the effort to be more sustainable.
Banks are in a unique position to empower consumers to better understand their carbon footprint. By identifying and utilising the touchpoints that almost everybody in the world engages with, we have a better chance of bridging the carbon literacy gap and moving us all towards more sustainable consumption and low-carbon living.