The Changing Faces of ESG and POS Finance
As environmental social governance (ESG) grows higher on the agenda for many organizations, fulfilling a moral obligation to consumers is fast becoming a necessity for brand success. And with greenwashing accusations now commonplace, businesses’ ESG programs must go beyond simply ensuring ethical supply chains and using sustainable materials.
To avoid irreversible damage to reputation and consumer trust, retailers need to ensure their sustainability programs are embedded throughout their company — with their choice of finance partner being no exception.
The Potential of POS Finance
The social and environmental impacts of financial products and institutions still often suffer from a negative public perception. In fact, according to our recent consumer insights survey, only 29 percent of young people trust financial institutions to act ethically, and only 39 percent of young people would be surprised if they found out that a financial institution they held a product with was found to be acting unethically. In addition, 93 percent of young people are more likely to choose a financial institution that invested in ethical programs.
With growing demand from customers for socially responsible and ethical ways of doing business, it’s clear that point-of-sale (POS) finance companies that only pay lip service to ESG will likely suffer loss of customers, revenues and partnerships. To meet this demand and prove their credentials to potential merchant partners, I believe that POS finance companies need to be more vocal on their attitudes towards environmental and social issues as well as the positive changes that they're implementing.
I believe that POS finance providers can play a vital role in supporting ethically conscious buying habits, and that retailers shouldn't ignore the benefits of choosing the right POS finance partner when it comes to implementing ESG programs.
Embedding ESG in Retail
On the other side of the retail exchange, there are many nonconsumer-facing changes that merchants can make to demonstrate a strong, ethical and responsible culture to their customers.
From a supply chain perspective, it's important that merchants choose to work with suppliers and manufacturers that can guarantee sustainably sourced materials and environmentally responsible production processes. Internally, investments should be made into education programs at all levels of the organization to ensure senior-level employees can lead by example and junior-level employees can be proactive with their sustainability efforts. This can be implemented by setting sales targets and individual performance goals that align with the company’s overall ESG program.
There are also many new technologies that can facilitate communication, information sharing and awareness raising between suppliers, retailers and consumers. Internet of Things (IoT) technology can collect data that provides valuable insights for customer communications, artificial intelligence can analyze supply chain information to improve transparency and optimize decision making, while machine learning algorithms can be used to predict trends and upcoming issues.
To encompass ESG and stand out from competitors, not only do retailers need to care about sustainable packaging, green supply chains, ethically sourced raw materials, and social governance around manufacturing, they also need to honestly promote sustainable practices, integrate new services that promote their ESG goals, and partner with companies that are also committed to making a positive difference.
Robert Schuijff is the CEO of etika, a company that delivers fair and flexible financial products, in a socially responsible way, to customers and retailers.
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Robert Schuijff is a renowned tech leader with a mission to make a positive difference in the world of finance. With operations in Australia and the UK, fairer finance provider etika is improving access to affordable lending with its unique business model of being both a platform provider and a finance provider. Under Robert’s leadership, etika has become a stand-out POS finance pioneer, striking the right balance between agile tech innovation and people-focused ethical lending principles.