Finance – like every other sector – has a role to play in climate action, and more and more financial companies are adopting climate-friendly practices. We meet a Swedish start-up that is attempting to make climate action as simple and impactful as possible.

It is hardly surprising that finance plays a huge role in climate action, and how we spend – and invest – our money can make a big difference in helping protect our planet. Everyday actions (not just financial ones) drive long-term changes and so it is encouraging to see a number of new entrants to the banking sphere combining tech and climate action to enable us all to make the right choices. One of these companies is Doconomy, a Swedish fintech firm set up in 2018 with a simple, but profound aim: to tackle climate change by altering our relationship with money.

Doconomy has launched a number of products, including the DO credit card which helps customers track and measure their C02 emissions; a climate footprint calculator, which helps consumers, manufacturers, and brands understand the climate impact of consumer goods; and Åland Index Solutions, a collaboration with Ålandsbanken [a bank] to create an index of transaction-level climate data. We spoke to Johanna Landberg, Doconomy’s Head of Impact Banking, about the challenges and opportunities companies face in taking climate action.

What is the idea behind Doconomy?

We were searching for a way to introduce climate action into consumers’ everyday habits. Climate change is one of the biggest threats we face, and it is something we have known about for decades. In some ways we are similar to the frog in the pot, slowly being boiled alive without even noticing it, and so ultimately, we want to future-proof life on this planet. Our vision is to help create a sustainable lifestyle for all, while also providing a global standard for consumer climate footprints. We also want to create tools that aid the behavioural changes we need so desperately to make.

Above: Doconomy's founders, Johan Pihl and Mathias Wikström. Main image: Doconomy's Head of Impact Banking, Johanna Landberg. 

Tell us about the DO credit card.

The DO card (in partnership with MasterCard) tracks CO2 emissions generated from the customer’s transactions and displays those numbers on our app. It connects the purchase price of a product with its effect on the planet (measured in Kg CO2e) and then recommends the amount to offset. This way we can empower our customers to make a tangible difference on behalf of the planet.  

You also launched DO Black, which is the world’s first credit card with a carbon limit. Are consumers ready for it? 

We hope they are! A lot of traditional bankers said we were idiots to develop a credit card with a carbon limit, a card which ‘freezes’ if that limit is crossed. The carbon limit is linked to the specific per-country carbon budgets set out by the Paris Agreement. So, the DO Black card limit is based on this, broken down per capita for the country the customer lives in. Once the customer’s monthly ‘per capita’ limit is reached, all transactions are blocked. The user can unblock this limit to allow for a short-term purchase. We wanted to introduce the idea of ‘carbon as a currency’ to let customers know that there is another budget they haven’t taken into account, but it is the budget they need to prioritise over all other budgets. When you think of it that way, a carbon limit on a credit card doesn’t sound so crazy. We are still looking for partner banks that are brave enough to bring this card to their customers, and if we don’t find them, we will probably bring it to market ourselves. 

Why do you think people are ready for these products?

I think Nordic countries are quite sensitive to all trends – not just trends around climate change. The markets here are relatively small and fast-moving, and so new things can be tried out. There is also a big trust in institutions and a belief that things could and should be done in the right way. I come from a background working with big institutions and institutional clients, where I saw that product development in sustainable finance was driven by institutional clients rather than retail customers. For example, the Swedish Church is one of the country’s biggest institutional investors, and they have been very strict around the sustainability criteria of their investments. In Sweden there have been many discussions about big companies such as Ikea and H&M, and the public has demanded to know how they are conducting business in other countries.

What can we learn from the start-up world when it comes to climate action?

We always say that the perfect can’t be the enemy of the good, particularly as pervasive and irreversible climate change effects are closing up on us at a fast pace right now. So it is crucial that when it comes to innovation in climate fintech, we “stick our chins out” and take risks. I think that is something the discourse around climate change needs to adapt to, as we have been a bit too slow. I have full respect for academics and researchers, but at the moment, time is against us and too many of us have to do many things to reach the goal. The tech world can teach us how to be more innovative and how to create engagement around new products quickly.

What steps can be taken to help entrepreneurs in the climate action space?

We believe it is crucial for governments to signal that this is a top priority. It is also vital – especially in the wake of the pandemic – that the direction of capital flows is green, and that economic growth is decoupled from emissions, which we can only achieve by redirecting capital. Yes, companies like ours are vital to enable bottom-up capital redirection on a consumer level, but governments need to meet us in the middle and act from a top down-perspective on what they promised back in 2015. All trajectories leading to the 1.5 Degrees goal [of the Paris Agreement] stipulate that major changes need to happen, and shifts need to occur in multiple industries: agriculture, power production, land use, as well as with regards to innovation in carbon sinks, so we need proper legislation and incentives to complement nudging initiatives. In order to crack this nut and restore the health of our ecosystem, we need to come together.

Are you optimistic about the future?

While working in this field can be very tough, we don’t have a choice but to be optimistic. All else would be too paralyzing. We have seen in the past that humanity is capable of amazing achievements, and I am constantly in awe of the brilliant minds working in this field. I have seen a lot happening in the past ten years, particularly around areas such as sustainable finance, so I have to stay in the positive.

What climate action can people take right now?

They can talk to their banks, and ask them to show them the impact from their financial transactions, as that is one of the biggest challenges right now: redirecting cash flows to more sustainable investments and businesses that are transforming our societies. So banks are going to need to show consumers what they are doing with their money. In that way, asking your bank how they are investing your money is a simple, effective way of doing something positive right now.