How financial institutions revalue credit cards through green banking

The rise of conscious consumerism has placed a spotlight on sustainable choices like never before. People are increasingly adopting sustainable lifestyles, showing heightened awareness of their impact on the environment. This shift is influencing decisions across the board, from everyday choices such as clothing to more significant ones like financial matters. Bain & Company's report indicates that sustainability is becoming increasingly important in India, with 49% of consumers prioritizing their health and 20% focusing on social and environmental issues.

In the light of mounting environmental concerns, governments, investors, and corporations throughout the world are beginning to take action and the banking industry is no exception. The financial sector has experienced a significant transformation with the incorporation of environmental considerations, giving rise to the concept of green banking. 

Encouraging environmentally friendly operations while minimizing carbon footprints is the new addition to the banking sector, what we call as 'green banking'. It seeks to encourage eco-friendly behavior through the use of green financing, which includes, green bonds, green loans, and green credit cards, amongst others. Now, banking consumers have the ability to monitor their daily CO2 footprint, enabling them to make informed decisions that positively impact the environment.

As India strives to attain net zero by 2070, the banking industry will play a critical role in guiding the financial services ecosystem towards green financial alternatives.

Green financing: Key types

Green loans: These are specifically  designed to fund eco-friendly initiatives. They offer attractive terms like extended repayment periods or lower interest rates to incentivize individuals and businesses to engage in environmentally sustainable projects.

Eco-friendly bonds: Eco-friendly bonds are debt securities that are specially issued to raise money for environmentally beneficial initiatives. The earnings from these bonds are utilized to fund projects like renewable energy development, energy efficiency improvements, and sustainable infrastructure.

Green credit cards: Designed to reduce the environmental impact of standard credit cards, green credit cards are made from sustainable materials such as recycled plastic, plastic recovered from ocean, biodegradable materials, complemented with digital tools for tracking and offsetting carbon footprints.

Green credit cards: A revolutionary addition to the banking sector

The banking industry is undergoing a radical change towards green practices as part of the global quest for sustainability. Among these developments, the introduction of green credit cards is a noteworthy addition, representing a real commitment on the part of financial institutions to support eco-friendly decisions.

Currently, most credit cards are crafted from PVC plastic, a synthetic polymer derived from salt and, more significantly, crude oil—a fossil fuel burned for energy. 

Further, PVC is not biodegradable, which means that it never fully decomposes and contributes to environmental pollution. In contrast to conventional credit cards, green credit cards have a smaller environmental impact because they are made of materials like recycled plastic or renewable alternatives. These cards encourage ethical consumption, and help reduce plastic waste by using eco-friendly materials.

Green credit cards constitute a crucial component of a larger movement towards responsible finance. Made of natural fibers, these cards serve as a symbol of change to remind us all to better take care of our environments. 

It is certainly true that credit card adoption is on the rise. And statistics from the Reserve Bank of India validates this, showing that the number of credit cards in India increased from 7.5 crore (75 million) in April 2022 to over 8.6 crore (86 million) in April 2023. This represents a 15% increase. By early 2024, this figure could surpass the 10-crore (100 million) mark. As the adoption of credit cards tends to grow, green credit cards emerge as a viable option, encouraging responsible consumption while lowering the amount of plastic consumption.

Green banking is pivotal for fostering sustainable financial ecosystems and meeting ESG objectives. These practices encourage individuals to make environmentally conscious decisions, contributing to the fight against climate change. Green credit cards, a key green financing option, embody this commitment by integrating sustainability into daily choices.

In the face of environmental challenges, incorporating green finance into our lives is a responsible step towards a sustainable financial future. G+D, is a pioneer in sustainable payment solutions, empowers financial institutions to adopt green banking through innovative technologies, the company pledges to end the use of virgin plastic in payment cards by 2030.

-- Naresh Rao , VP & Sales Head Issuance Products, Giesecke & Devrient India Pvt Ltd.