Commerce Bancshares of Kansas City, Mo., has found its customers want to save the planet but don't want to put in too much effort, so the issuer partnered with Sustain:Green for cards that offset carbon emissions.
The Sustain:Green MasterCard is biodegradable, reduces a user's carbon footprint and helps fund a coalition to save rain forests in Brazil.
Sustain:Green "wanted to put together a card to let people address their carbon footprint and do something about global climate change," said Arthur Newman, chief executive at Sustain:Green.
While purchasing carbon offsets is a regular practice for corporations, consumers find the process cumbersome, said Newman. Carbon offsets are financial instruments in which an individual does some work to eliminate CO2 or an equivalent greenhouse gas, but instead of taking the credit for the work, they bundle the project, have it registered and then sell it to a business to offset their carbon emissions. This creates a beneficial cycle of funding green projects, Newman said.
Every time a customer of the $23.7 billion-asset Commerce uses the card, the loyalty points the customer would have accumulated are instead given to Sustain:Green to purchase and retire a carbon offset. Money is also donated to Mata no Peito, a coalition that supports the replanting of forests throughout Brazil.
For every dollar spent, two pounds of carbon offsets are retired. Commerce Bank funds an additional 5,000 pounds of carbon offsets when customers make their first purchase within 90 days of signing up for the card. Plus there are quarterly benefits as well; if customers spend at least $1,250 in a quarter, Commerce Bank will fund an additional 2,500 pounds.
Before the recession, Commerce Bank sold carbon offsets to customers through a rewards vendor, said Chad Doza, the bank's senior vice president of consumer credit cards. The program was successful but lost momentum over the course of the recession; as customers started changing their spending behavior, the carbon offsets became a less popular way to redeem rewards, he said.
So the bank sought customers' feedback and found that they preferred a green program that worked seamlessly in the background.
Commerce and Sustain:Green commercially launched the card in February. Commerce Bank issues cards to customers that specifically request it through the Sustain:Green website. So far only a small number of cards have been issued, Newman said.
To raise awareness of the product, this month Sustain:Green began promoting it in partnership with the Carbon Trade Exchange, a spot exchange for multiple global environmental commodity markets, including carbon, water and renewable energy certificates (RECs).
But the Sustain:Green program is on track with Commerce Bank's goals, Doza said. In the co-brand space, the bank looks to partner with programs that can produce 2,500 accounts over the first couple of years, he added.
The companies are following a trend that is also playing out in other consumer-facing industries.
"Twenty years ago, people thought Whole Foods was a ridiculous idea but people want natural products and to support local farmers and they want to help the environment," Newman said. Plus, "consumers are more attracted to companies that have incorporated social issues into their mission." This is especially important for the younger demographic, he added.
Commerce Bank's product is mag-stripe-only. Sustain:Green has started working with another issuer to develop biodegradable EMV-chip cards, although the chip itself will not be biodegradable.
Other companies are making similar efforts. Gemalto has developed a biodegradable EMV card made mostly of corn, starch and sugar, instead of the typical petroleum-based plastic cards.
"Roughly 500 million credit and debit cards are disposed of each year," Newman said. Usually "if you have something that's plastic, you would recycle it, but people don't recycle their cards because it's a security issue."
The Sustain:Green cards are guaranteed to last three years, the same as normal plastic cards. The eco-friendly cards start to degrade when they come into contact with soil bacteria.
Commerce Bank has been a trend-setter in enviro-friendly business practices. For instance, the financial institution has 11 branches with solar technologies. Companywide it's reduced its energy consumption by 26% since 2007 and its paper consumption by more than 40% since 2008.
"We do a lot to educate consumers and we want to walk that same walk," Doza said. Being environmentally friendly is just "ingrained in our community focus."
Commerce Bank has retail branches across Missouri, Kansas, Illinois, Oklahoma and Colorado. The bank sends direct mailers on its credit products to consumers in 25 states and has co-brand and affinity partners nationwide.