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We like stocks which have a compelling business case for environmental finance, and it is always good to see companies outside the energy sector embracing the green revolution. Mogo Finance Technology (NASADAQ: MOGO), which we have been following since November, has shown that it also has green finance credentials with the launch of the first Canadian prepaid Visa card which is going to offset the carbon footprints of spenders.

Mogo is listed on the Toronto Stock Exchange (TSX) and NASDAQ and is backed by Michael Wekerle, a former investor on Canada’s version of Dragon’s Den. The company specialises in a new approach to lending and debt management, espousing an app-based management of personal finances which appeals to younger borrowers.

The new MogoSpend account is designed to off-set one pound of CO2 for every dollar a consumer spends on the card.

Carbon dioxide emissions linked to consumption

The concept has been inspired by research from the UK’s own University of Surrey, which demonstrated that 72% of carbon dioxide emissions can be linked to consumption. Taking Canada as an example, Mogo has been able to estimate that Canadians are leaving a third of a pound of CO2 or other greenhouse gases for every dollar they spend.

So how is the carbon-offset being achieved in practice? Mogo is working with Offsetter, the leading provider of sustainability and carbon management solutions in Canada, to help finance clean energy solutions, like wind farms or solar energy.

Carbon neutral spending is building momentum

The idea has also been taking hold in Europe and the UK. While UK banks got the ball rolling with more environmentally friendly card manufacturing in 2006, with Barclays‘ carbon neutral credit card, the concept of green spending has been gathering steam more recently. Sweden’s Doconomy has launched its DO Black credit card which links purchases to their impact on the environment. It uses the Aland Index to help users to manage their spending impact on the environment and indeed to limit purchases.

It is this link between consumption and climate impact that Mogo has now zeroed in on. While the Doconomy offering is focusing on helping consumers to limit their climate impact, Mogo is using a more active offsetting approach, and with a prepaid card that studies have shown is less likely to make consumers want to spend than credit cards. Services like this are likely to gain ground as the state of the environment remains high on the news agenda throughout 2020.

All this goes back to one of Mogo’s key mission imperatives – making consumers more mindful of their spending habits. This includes how that spending affects the environment.

As a business is seeking to capitalise on the shift in thinking among younger consumers of financial services from traditional brands and the same old way of doing things. It is the leading non-bank financial app in Canada and is seeking to disrupt traditional banking relationships in the Canadian market.

Younger consumers are aware of some of the damage banks are already doing to the environment and want to have a finance relationship with new brands that bring with them more of a focus on critical issues like the planet and mindfulness when it comes to spending and consuming.

In a market where other financial institutions are still struggling to get to grips with the concerns of the younger borrower – which include the state of the planet – the introduction of this new card looks like a sound move.

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Please note this article does not constitute investment advice. Investors are encouraged to do their own research beforehand or consult a professional advisor.

Stuart Fieldhouse

Stuart Fieldhouse

Stuart Fieldhouse has spent 25 years in journalism and marketing, including as a wealth management editor for the Financial Times group, covering capital markets and international private banking, and as an investment banking correspondent for Euromoney in Hong Kong. He was the founder editor of The Hedge Fund Journal.

Stuart has worked at CMC Markets, supporting the re-launch of its global financial spread betting and CFD trading platforms. He is also the author of two books on trading, published by Financial Times Pearson. Based in The Armchair Trader’s London office, Stuart continues to advise fund managers, private banks, family offices and other financial institutions.

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