Doconomy announces US expansion to meet FIs’ growing demand for climate solutions
- With FIs taking their climate impact more seriously than ever before, there is increasing demand for solutions that help bring operations to net zero.
- Doconomy, a Swedish carbon data company, has announced its expansion into the US market. Globally, the firm counts BNP Paribas, Standard Chartered, and Klarna as clients.
Doconomy – a Swedish carbon data company that helps brands and consumers measure, understand, and reduce their carbon footprint – is expanding into the US market.
In order to meet the increasing demand from banks for carbon emissions monitoring tools, the company is setting up shop in New York City.
Doconomy uses a range of data and assessment methodologies to analyze consumer and corporate actions and determine their impact on the climate.
The firm's expansion into the US is being powered by investments from Clearvision Ventures, a venture capital firm with a focus on software and sustainability, and existing investors including Citi Ventures and Mastercard.
In addition to being an investor, Mastercard has collaborated with Doconomy on multiple projects aimed at assisting cardholders to reduce their carbon footprint since 2019.
Doconomy has used its new funds to invest in talent to run its US operations. Their new team has a cumulative experience of 50 years working for notable firms in the industry including Capital One and New Energy Nexus. Together, they bring expertise from banks, sustainable finance, and climate policy organizations.
The firm has also already partnered with Plaid. Under this partnership, Plaid customers will be able to provide carbon impact services to their end users. Doconomy's technology will provide Plaid customers with data on the impact per transaction in CO2e and H2O.
The growing demand from FIs for climate solutions
Companies across most sectors are taking carbon emissions more seriously, and firms like Doconomy are using the opportunity to build and distribute the tech needed to do so. It remains, however, a long game.
Financial institutions are key players in the fight against climate change due to the impact of their credit portfolios and the sort of consumption they’re powering. Hence, for the financial services sector, Doconomy’s services go deep into analyzing each and every transaction.
“In 2016, we developed the world’s first methodology to put the carbon intensity to each and every transaction made using your payment card or credit card,” said Mathias Wikström, the CEO of Doconomy, in a Tearsheet podcast earlier this year. “And since then, that has developed into a diverse set of tools and impact methodologies, aiming to engage users in everyday climate action, but also to make use of the efficiencies within the financial services system, making banks the hub for actionable insights with regards to climate impact for every user.”
According to a report by the Center for American Progress and the Sierra Club, the 18 largest U.S. banks and asset managers alone financed the equivalent of 1.96 billion tons of carbon dioxide in 2020. To contextualize that, if the U.S. financial sector was a country, it would rank as the 5th biggest emitter in the world – just shy of Russia.
Another big challenge within the financial sector when it comes to climate action is reporting. The existing technologies employed by financial institutions are not sufficient to accurately measure the carbon footprint of their operations. Furthermore, inconsistencies between regulations also have translated into banks having the luxury to report only the information they wish to.
This is against the backdrop of banks facing increasing pressures from stakeholders to reduce emissions, especially in their loan portfolios. So while several banks have committed to net-zero financed emissions by 2050, with interim results in 2030, reporting has been limited to a few carbon-intensive industries like coal, oil & gas, and energy.
A Bain & Company analysis found that of the 45 biggest banks across Europe, Asia-Pacific, and North America, only about half have disclosed their financed emissions, and only partially. For example, ING is measuring emissions intensity for seven industries and absolute emissions on 90% of its portfolio, and ABN AMRO on just 65% of its portfolio.
However, with growing pressure from consumers, advocacy groups, and regulators, data reporting is set to improve. With more complete and comparable data, sustainability and decarbonization strategies will also become more effective.
“I think the accessibility to comparable data is going to increase the courage in the financial sector, because it’s risk-averse to begin with. And that’s something we pay for them to be. So we shouldn’t expect anything less,” Wikström said.
At Tearsheet’s Banking on the Planet conference, Wikström emphasized that the financial sector sits at the core of the transition to net zero. Using their existing financial data to gather carbon-related insights, banks can contribute meaningfully to the cause.
“We have such tremendous efficiencies within the financial system. If we’re going to get it done within the 2030 and 2050 deadlines, as stated by the IPCC and many other leading science reports, we need to make use of what we already have in place,” he said.