Finastra has partnered with forestry company EcoTree to create an initiative to provide its customers with carbon offsetting for the cost of starting up and maintaining their technology solutions.
Along with targeting banks, financial software firm Finasta will also use the service to help reach its goal of hitting net-zero emissions by 2030.
Customers of Finastra’s solutions opting for this service will get a green partnership which enables them to be allocated trees from Finastra’s ‘forest’ to remove any emissions associated with both the implementation and running of Finastra’s software. EcoTree’s approach provides a nature-based carbon removal program. The companies explain that the business rationale of the model is tied up in the natural growth of a tree as a physical asset, which also creates a safe home for forest animals and captures carbon along the way.
Jay Mukhey, Senior Director, ESG, Finastra, states: “We are delighted to announce this news around Earth Day [22 April], which this year is focused on investing in our planet – a fitting call to action that aligns so closely with the environmental value we endeavour to create through our ESG strategy and green partnerships.”
Carbon offsetting is a broad term for any action taken by a CO2 producer (such as a bank or an oil company) to compensate for the carbon footprint created by their business activities.
In the UK, carbon offsetting has become a popular method for reducing a company’s carbon footprint in the wake of the government’s Net Zero Strategy, where it hopes to bring the nation’s carbon emissions to a net zero by 2050.
Last year’s United Nations Climate Change Conference (COP26) further boosted the practice’s prominence as company’s scrambled to, if nothing else, project the image of doing something about climate change as more and more of their customers start feeling its effects with time. Methods of carbon offsetting include supporting the generation of clean energy like solar or wind and improving energy efficiency in order to reduce future carbon emissions.
Carbon offsetting is attractive to firms like Finastra because it can allow them to, in theory, contribute to the fight against climate change without making any drastic decisions that could harm their business. Carbon offsetting does have tangible benefits, including improved air quality and ecosystem health. As more companies hop on this offsetting bandwagon, more money will (hopefully) go to the clean energy sector, creating more jobs and helping expand its influence and ability to affect change to more parts of the world.
Unfortunately, there are two issues with Finastra’s initiative as it stands now. The first is with the method of carbon offsetting used. EcoTree, specialises in sequestration, or the planting of trees to store future carbon emissions in, specifically in Europe in EcoTree’s case. Trees and forests are some of the most potent natural carbon sinks the planet has, and as deforestation efforts continue to remove more and more trees from the Earth’s surface, we will need efforts like these to ensure those carbon sinks are still potentially useful.
However, sequestration is, on the whole, one of the least effective methods of carbon offsetting available. It can take years, in some cases decades, for a planted tree to effectively offset the emissions it was meant to offset. There is also the chance the planted tree will be cut down or destroyed by wildfires, droughts, or disease before it has a chance to offset enough emissions. Unless EcoTree can ensure the trees planted for its sequestration initiatives stick around long enough to meaningfully capture carbon, the whole thing isn’t worth much.
The second issue with Finastra’s initiative is that it’s, as of this writing, dedicated to hitting net zero emissions, meaning they don’t add to the problem, but they don’t subtract from the problem either. Carbon offsetting can be a legitimately effective way to combat climate change but only when it’s both permanent and reduces more carbon emissions than the thing it’s offsetting adds. A net zero goal should not be the end game for any organisation serious about halting climate change, and ultimately, the reduction of emissions will more effectively fight climate change than offsetting will.
That said, this doesn’t mean Finastra’s initiative is altogether hollow or ineffective. If EcoTree can ensure the safety of any trees planted as part of the program, it can still benefit the world at-large, and to be fair to EcoTree, it does seem to be making efforts to maintain biodiversity and ecosystem health in the forests they plant in. Ultimately, sequestration is a long-term method of combating climate change, and this initiative’s impact will only be meaningfully seen years down the line.
Green matters have captured the interest of many firms and banks in the UK. Recent examples at eWeek UK include Peak Technologies’ carbon reduction initiative and NatWest unveiling a carbon tracker app for SMEs.