Online retailers are highly likely to express interest in working with a payments provider that demonstrates a commitment to ESG (environmental, social, and governance) principles. For these merchants, ESG has a much more practical meaning compared to its broader interpretation by investors and other corporate entities. Environmental and sustainability issues are viewed less as political concerns—and thus less subject to changing political moods—than as economic ones.
According to research commissioned by global payments platform Ecommpay, 61% of e-commerce merchants stated they would definitely choose a payment provider based on its commitment to ESG. An additional 38% said they might consider doing so, indicating that nearly the entire Ecommpay respondent base places value on furthering ESG efforts.
For these merchants, ESG initiatives are directly tied to their bottom line. For example, many organizations are exploring ways to eliminate paper checks from their payment processes. This shift not only benefits the environment but also reduces costs. The American Business Awards recently recognized an entity for its ESG efforts in minimizing paper check usage.
Similarly, credit and debit cards made from sustainable materials continue are gaining popularity. Paper-based cards are particularly cost-effective for single-use purposes, such as gift cards, while also being eco-friendly.
“Consumers are increasingly environmentally conscious of the products that they’re using and the providers that they buy from,” said Elisa Tavilla, Director of Debit Payments at Javelin Strategy & Research. She noted a Javelin survey in which 26% of consumers said that when they apply for a new credit card, having a card made of sustainable material is an important factor.
A Political Football
While ESG efforts remain a top priority for many, they have faced growing scrutiny in recent years as a corporate strategy. The Harvard Business Journal noted that several major U.S. companies are scaling back their commitments to ESG and sustainability initiatives, including Walmart, John Deere, Jack Daniels, and Black & Decker.
HBJ also notes an increase in “greenhushing,” a practice where companies downplay or remain quiet about their sustainability efforts to avoid sparking a political backlash. One CEO told the Journal: “We’re still committed to our sustainability goals, but we’re not going to stick our chin out.”
However, sustainability efforts become harder to ignore when they deliver significant financial savings, as is increasingly the case in the payments landscape. As long as these efforts continue to pare costs, they are likely to remain popular.
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