SCOTTSDALE, Ariz.–A new study from Cornerstone Advisors and Meniga demonstrates “there is a significant opportunity for banks to gain a competitive advantage by serving climate-conscious consumers,” according to the company.
Writing on Forbes.com, Cornerstone Advisors’ Director of Research Ron Shevlin, who authored the report, said banks “aren’t oblivious to the concerns” regarding climate change.
He pointed to a recent Accenture study that found that 71% of U.S. banks can monitor and assess their carbon footprint and two-thirds are prepared to direct capital away from the energy sector to assist in the transition to a low-carbon economy.
“Banks’ climate-related activities are internal policy actions, however—they don’t directly impact consumers or have any impact on consumers’ climate-related needs,” stated Shevlin.
Consumer Action on Climate Change? Not Much
Shevlin noted that according to Cornerstone’s own survey of 3,150 US adults, nearly one-in-four Americans consider climate change to be the most important social challenge facing the country. No other challenge was cited by that many respondents, he said.
The survey further found that of consumers who didn’t mention climate change as the most important challenge, 44% still said they consider climate change to be a very important issue.
“So, overall, nearly six in 10 Americans are very concerned about climate change,” Shevlin observed, before adding, “What they’re doing about it is another story.”
Despite the strong concern for climate change, few consumers track their carbon footprint. The big reason? According to Shevlin, “They don’t know how.”
“You would expect consumers who consider climate change to be the most important social challenge to take action to reduce their carbon footprint, right?” Shevlin asked. “Wrong. Only half of them have done so. And among the rest of Americans, only 31% said they have taken some form of action to reduce their carbon footprint.”
Consumers Want Help
The good news, according to Shevlin, is that many consumers want to do something about climate change, and the “(potentially) surprising news is that many—in particular, Gen Zers and Millennials—want help from the banks and credit unions they do business with.”
But consumers “want more than just a climate tracker from their bank, however,” Shevlin stated, adding at least a third of all consumers are very interested in checking accounts that offer:
- Rewards for purchases made from environmental-friends
- Debit cards made from renewable or upcycled materials
- Policies that prevent deposits from funding fossil fuel exploration or production
- An option to plant a tree with every roundup
The Climate Change Opportunity
According to the research, the 23% of consumers who consider climate change to be the most important social challenge hold roughly $788 billion in deposits—about 35% of all bank deposits. Their average checking account balance is nearly $14,000, 50% higher than the national average.
“In addition, about one in five of them have taken out at least one loan over the past three years. These climate-conscious consumers account for 34% of the total funds borrowed, averaging nearly $110,000 per loan—roughly double the average loan size of other borrowers,” said Shevlin. “The climate change opportunity in banking isn’t limited to the 23% of consumers who are climate-conscious, however.
“There’s another segment of the market: climate-aware consumers,” he continued. “They don’t consider climate change to be the most important social challenge, but they do consider it to be very important.”
Demographically, climate-aware consumers—who comprise 34% of all consumers—aren’t as affluent as the climate-conscious group, but they’re just as interested in tracking their carbon footprint and using climate-friendly financial products as the climate-conscious consumers are.
To download a copy of the report Going Green: The Climate Change Opportunity in Banking, click here.