fintech scope 3

Fintech’s Scope Three Opportunity

The race to reduce carbon emissions is on, and the target year for reaching net zero looms ever closer.  

The EU’s attempts at legislating mandatory emissions disclosure are ongoing. With three major legislations in consultation, over the course of the decade, there is a provisional plan to cast the net of mandatory disclosure ever further until it encapsulates even the smallest registered SMEs. 

However, with many of the deadlines still years in the making, some believe the action to be lacking the speed necessary to make a difference. 

With a growing public appetite for sustainable practices, many businesses are taking it upon themselves to reduce carbon emissions. The fintech sector’s approach to engaging with their own scope three emissions could result in a significant impact on the wider economy. 

RELATED: Fintech sparking the global Net-Zero revolution

The challenge of Scope Three

When approaching the subject of sustainability in fintech, discussion of the scope of emissions is critical. While many can reduce their scope one and two emissions with ease, scope three seems to be a sticking point. 

Scope one and two emissions refer to those which are directly produced by the business itself. On large, the fintech sector is digitally native, made up of apps and APIs, and minimal physical production. The classic sources of carbon footprints made up of physical outlets, product manufacture, and delivery trucks are negated by web-based systems and online employees. 

Michelle You, CEO, and founder of Supercritical
Michelle You, CEO, and founder of Supercritical

Scope three refers to the indirect production of carbon emissions linked to the business, applying to every step of the value chain. 

“Scope three is the lion’s share of any Fintech emissions,” said Michelle You, CEO, and founder of Supercritical, at Innovate Finance’s Fintech for Good Forum. 

“About 90%+ of your emissions will be in scope three. That is everything upstream in your value chain, your suppliers, what they do, your share of the emissions you use while using those suppliers. And then downstream in the use of the product.”

A black hole of possibilities

A tangled web surrounds each fintech, stretching into every nook of the company’s impact on the outside world, all of which require investigation in order to calculate scope three emissions. 

“It is incredibly expensive. It’s really hard to get your head around,” continued You. “Some examples of maybe counterintuitive scope three emissions are your online advertising spend. So every time you buy $1, on Facebook or Google, what’s the share of emissions related to serving that ad and consumers looking at it on their phone?” 

“Those are really gnarly things, especially for fintechs when it comes down to finance commissions. For example in your lending, how much of the emissions are you responsible for the use of that money?” 

Emissions tracking can be as far-reaching as employee expenditure and monitoring the end usage of loans. Understandably, the scale of calculating these emissions in such depth is offputting for some. Many have resigned themselves to avoid disclosure all together. 

However, fintech is starting to be seen as a driving force for reaching net zero objectives. To that end, ever more pressure is being put on companies to take ownership of their scope three emissions and disclose the full range of their environmental impact. 

Setting an example in scope three

In many instances, fintech is leading the way in reducing consumer and business emissions. The combination of data and finance has morphed into hundreds of solutions. Products now range from ESG APIs to carbon footprint trackers, helping consumers and businesses alike assess decisions based on their environmental impact.

Their pivotal role could mark a need to go one step further, providing an example of good environmental business practices. 

Matt Bullivant, Director of ESG Strategy at OakNorth
Matt Bullivant, Director of ESG Strategy at OakNorth

“It’s a philosophical point,” said Matt Bullivant, Director of ESG Strategy at OakNorth. “If you’re trying to have some influence, and always point the finger at your customers and clients and say something needs to be done about carbon emissions, if you haven’t got your own house in order with your own scope one and scope two and supply chain, step three, it doesn’t really matter how material it is…it’s about sending the right message.” 

He believes it is essential for fintechs to take their scope three emissions seriously, bringing with it far-reaching effects. 

A collaborative approach could be impactful to the border community. 

Engaging with stakeholders makes up a large part of starting to approach the task of reducing fintechs’ scope three emissions. With it, benefits could be brought to the wider community. 

“I think overall, it is that collaborative approach,” said Ben Knight, Head of Environmental Sustainability at GoCardless. “We’ve all got to work together, because we’re all interconnected, whether that’s our customers, or our employees. And we’re all part of the same society, community, and economy.”

Made up of an interconnected chain of suppliers, employees, and customers, engagement could result in a collection of carbon data reaching extensively into other sectors.  

“Banks are sitting on a huge amount of data that just simply isn’t being used from a carbon point of view,”  said Bullivant. 

“I think sometimes there’s a misconception that banks and finance providers just provide the money. I think the reality is that we can also provide quite a lot of knowledge and a lot of awareness and a lot of guidance.”

Fintechs, created on a bedrock of data analysis, could be the glue to bring a positive impact to carbon emissions as a whole. Through efforts to understand their own scope three emissions, new connections and solutions could be birthed to benefit the reduction of others. 

He explained that through their stakeholder engagement, OakNorth had gathered data and knowledge which could be used to the benefit of all their clients. In this way, the emissions could be reduced across the chain.  

“There’s a multiplier effect there, which is very valuable”


  • Isabelle Castro Margaroli

    Isabelle is a journalist for Fintech Nexus News and leads the Fintech Coffee Break podcast.

    Isabelle's interest in fintech comes from a yearning to understand society's rapid digitalization and its potential, a topic she has often addressed during her academic pursuits and journalistic career.