Would You Use an Eco-Friendly Credit Card? - OZY

If you’re feeling climate-anxious but unwilling to cut your consumption … behold, the eco-friendly credit card.

Today, credit card consumers can put points earned toward frequent flier miles or, if they’re feeling altruistic, channel them toward philanthropic causes. What if a points-based card automatically offsets the carbon footprint of all your purchases? This could be the card for people who spend money and love to jet-set but feel ashamed about it. (There’s even a Swedish word for that: flygskam).

An eco-friendly card might appeal to two camps: Those looking to reduce their carbon footprint (but either don’t know how or are unlikely to make serious lifestyle changes), and those looking to use it as a social signaling device (they have the money to spend and want to appear eco-savvy).

The benefit of a card that exclusively allows green redemption would require rigorous thought to be done responsibly.

But the card’s planet-friendly mission could be compelling enough to draw new customers, particularly as public consciousness of climate change rises. The climate-induced mental health crisis has evolved to become an accepted phenomena: solastalgia, eco-anxiety, eco-paralysis, tierratrauma (acute environmental change leading to acute trauma) and global dread (the anticipation of a totally bleak future) are just a few terms to describe the genuine fear many are grappling with as humanity observes the destructive impacts of climate change firsthand, from severe droughts to blazing wildfires.

That said, those with the means to travel have not been slowing down. Airline passenger numbers more than doubled between 2003 and 2017, according to the International Air Transport Association. Meanwhile, the greenhouse gas effect of a single flight is sobering: The per-passenger carbon emissions of a round-trip flight from San Francisco to New York, for example, results in the loss of roughly 5 square meters (roughly 54 square feet) of Arctic ice, according to Shame Plane, an online tool that quantifies the impact of air travel. It’s worth noting, however, that the aviation industry produces just 2 percent of global greenhouse gas emissions.

New research suggests travelers may be willing to pay more for airline tickets if they believe the money will be used to offset carbon emissions, according to research published in the Journal of Environmental Psychology. Eighty-one countries have agreed to participate in a 2021 pilot program through Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA) as of July 2019, and many major airlines already have an offset program for customers.

An eco-inclined credit card would be another extension of this “consume with consciousness” brand. Another option? Design the card so points automatically fund institutions that drive climate change research.

This would be a tough move for a company driven only by their bottom line — some proclivity toward public impact would be required to ensure success. Credit card rewards operate via a shared subsidy: If the credit card company pays $1, the beneficiary company pays the other $1 for every $2 in benefits a customer receives, says Jake Yormak, a partner at Story Ventures, an early-stage venture fund. But with an eco-friendly card, the “green” recipient for whom the benefits are meant to serve wouldn’t be putting up their $1. This means either a greater financial burden would fall on the credit card company, another company would have to subsidize the cause or points would accrue at a slower pace. But the scheme could be profitable if mission-driven branding and marketing appeal are strong enough to draw and convert sufficient new customers, Yormak says.

He argues that a card with a carbon footprint calculator, which compiles customers’ spending data, could create more meaningful impact than a points-based model with offsets. There’s demand for comprehensive tracking, but people hesitate to provide data about their spending to third-party apps and platforms, so credit credit companies that already have data are well-positioned, he says.

No doubt, there’s something morally incongruous about a quid pro quo where people spend money to appease their conscience. This bartering sounds vaguely reminiscent of purchasing indulgences through the Catholic Church to wipe one’s sins clean to barrel their way to heaven (Martin Luther probably wouldn’t have endorsed this card). One must ask: Do people sin more when they know they’ll have a moral do-over?

Still, others could argue that a card that locks spenders into all-green cash actions — a commitment device without chances to deviate toward more alluring personal perks — is a net positive so long as it doesn’t spur people to travel, buy and emit more than they did before. This concept taps into behavioral biases that affect decision-making — the concept of nudges, popularized by psychologists and economists like Daniel Kahneman, Amos Tversky and Richard Thaler — says Deepak Rajagopal, an associate professor at UCLA’s Institute of the Environment and Sustainability.

The benefit of a card that exclusively allows green redemption would require rigorous thought to be done responsibly but does have its merits, says Rajagopal. Back-end work would be needed to determine which vendors qualify because “when it comes to offsets, not all offsets are equal,” he says. Options could include redeeming for public transit tickets, in organic stores, for charging electric vehicles or in future ride-share electric cars with Lyft or Uber, he suggests. Given that all methods aren’t equally green, creating a reliable ranking or report card across categories like transport or groceries would be useful.

The larger question of whether it’s morally permissible to jet off and see the world as it deteriorates still looms. In the meantime, travelers could keep this card on hand as they say “bon voyage.”

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December 13, 2019 at 12:05PM
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Would You Use an Eco-Friendly Credit Card? - OZY
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