• sspiterimim2022

How the Climate Crisis is Steering the Journey of a Nordic Fintech

By Chinmaya Gajaria and Sebastian Spiteri

Recently, this blog published the article Why Fintech will (Quite Literally) Save the World! discussing how fintechs were enabling consumers to tackle the climate crisis. Soon thereafter, Enfuce — a Finnish start-up offering banks the ability to provide carbon footprint calculation tools to its customers — raised €7M in a Series B led by Tencent.


We caught up with Monika Liikamaa, Co-founder and Group CEO at Enfuce, to discuss her journey, what inspired her to set up Enfuce, and crucially how she envisions the future of carbon footprint calculation technologies.


At the outset, it’s important to mention that Enfuce is primarily a payment services provider to banks and financial institutions. This company caught our attention thanks to it’s My Carbon Action technology — a carbon footprint calculator offered to banks, merchants, and financial service providers who want to help their customers identify the ecological impact of their spends.


ORIGINS

After 20+ years' experience in telecoms, banking, and payments, Monika told us that she wanted to develop a company with a purpose, one that she could be proud of. She co-founded Helsinki-based Enfuce in 2016 with her two co-founders - Denise Johansson, and Niklas Apellund. The payments platform grew quickly and today boasts ~10M end-users!


Enfuce's payments success, coupled with the fact that 70% of CO2 emissions can be traced to consumers, led the team to introspect: "how can we utilise our payment capabilities for our core value of sustainability?" With inputs from carbon and material footprint calculation specialists D-mat, My Carbon Action was launched as a new service offering in 2019.


UNDER THE HOOD


My Carbon Action has two components — (1) a lifestyle questionnaire, and (2) a carbon footprint calculator. The questionnaire ensures that accurate, country-specific datasets and lifestyle choices are identified.


My Carbon Action uses Open Banking payment data of customers and the answers to their lifestyle questionnaire to seamlessly calculate the CO2 emissions associated with every purchase. The beauty of this technology is that since the calculation is based on country-specific data, users have access to a more accurate computation and direct feedback to help adjust their footprint on the basis of their consumption. For example, the average Finn emits 10.4 tons of CO2 annually whereas the average French emits 6.9 tons of CO2 (according to Monika, the delta is explained by French reliance on nuclear energy for power generation vs Finland’s reliance on coal). Hence, a utility bill payment made to a Finnish power company will necessarily generate a larger carbon footprint than one made to a French one. My Carbon Action accounts for these geographic and country-specific differences to present a more reliable dataset.


My Carbon Action is offered as a turnkey service that banks, fintechs, and even merchants can integrate into their existing user experience. And, of course, this technology was also of interest to Enfuce’s Series B investors. As Monika mentioned: “…[Tencent is] interested in the impact [Enfuce] can make through My Carbon Action…”


CURRENT APPLICATION — PARTNERSHIP WITH RABOBANK


Rabobank (one of the top three banks in the Netherlands) approached Enfuce. Based on customer interviews, Rabobank found that while its customers were keen on a more sustainable lifestyle, they needed guidance on what impact their current lifestyles were having on the planet as well as recommendations to improve such lifestyles.


Enfuce’s first offering for Rabobank involved 21 lifestyle questions. The Enfuce team felt this was cumbersome so it was discontinued. However, in the absence of such questionnaire, Rabobank customers did not engage with My Carbon Action as expected. Therefore, the lifestyle questionnaire was reintroduced, shortened, and personalised. This worked better as 90%+ of new users in the onboarding flow answered lifestyle questions, and 30% of users reported that My Carbon Action had a positive effect on their lives. Some choice quotes from Rabobank customers included:


I had no idea that eating meat and fish had consequences. 50 grams of beef, 1 kg of CO2. That surprises me the most.


I have recently started eating less meat, and try to buy as few products as possible with plastic packaging.


Unsurprisingly, My Carbon Action picked up a high commendation at the Banking Tech Awards 2020 and was even mentioned in The Economist article titled “What if technology tracked all carbon emissions?”


An interesting insight that Enfuce gleaned from this partnership with Rabobank was the importance of relative comparisons - end customers were far more concerned whether their individual emissions were higher or lower than the national average of per capita emissions. This is both discouraging and encouraging. Discouraging as once an end customer's individual emissions go lower than the average, the active effort towards reducing individual carbon footprints could potentially decrease. Encouraging because in the long term, if enough people's emissions go lower than the average, the size of the national average footprint itself decreases thereby further incentivising efforts to decrease individual level emissions.


THE FUTURE


When we queried whether Enfuce will provide carbon offsetting services in the future to complement the carbon footprint calculation, Monika was more circumspect. She believes that as a start-up, Enfuce does not currently have the resources to offer and audit quality offsetting projects. Moreover, she is of the view that her customers — banks, fintechs, and merchants — are far better equipped to provide offsetting options and validate such projects.


Monika believes that carbon footprint calculation services will soon become table stakes for banks, merchants, and fintech providers. In her own words: “If we continue living the way we have, climate change will accelerate — people will be forced to wake up!” We are already seeing evidence of Monika’s prediction —Klarna recently tied up with Doconomy (a Swedish start-up providing carbon footprint calculation tools) to provide CO2 emission insights for all shopping purchases completed using the Klarna app. Monika welcomes such developments: “it’s our collective duty to do something to fight humankind’s biggest challenges!”


Perhaps the high point of our interview was learning about Monika’s ambitions for My Carbon Action. With Tencent’s investment, Dr. Ling Ge, Chief European Representative and General Manager at Tencent joins Enfuce’s board. Monika’s thinking is clear on the way forward: “imagine if we can embed My Carbon Action within WeChat. Carbon footprint tracking for 1.2 billion people!” 1.2 billion people aware of, and consciously working towards lowering, their respective carbon footprints! We have no doubt that this is the kind of change — at scale — that would make Monika very proud of her company indeed!


BOOK RECOMMENDATION

Monika recommended “How to Avoid a Climate Disaster” by Bill Gates.



Chinmaya Gajaria is an MBA Candidate at London Business School. Previously, Chinmaya worked in the investments team of a growth equity fund in India investing in private businesses. Prior to that, he was a corporate lawyer at India's pre-eminent law firm. Chinmaya received a law degree from Government Law College, University of Mumbai.


Sebastian Spiteri is an MiM Candidate at London Business School. Currently, Sebastian consults on the energy transition at Trove Research and previously supported the Climate Compatible Growth programme funded by the UK’s FCDO. Prior to that, he worked at Deutsche Bank in London and at a Berlin-based venture capital firm where he covered the climate technology sector.