Environmental, Social, & Governance (ESG) — How These Evolving Standards Are Shaping The Financial Sector
Environmental, Social, & Governance, or ESG, encompasses a set of standards and practices aimed at incentivizing financial institutions to improve in each of those areas. Mounting pressure from investors, consumers, and other stakeholders have been the catalyst for this movement, which prioritizes practices such as lowering emissions, increasing company diversity, and capping executive pay.
On the surface, ESG can appear fairly simplistic; save the world, help and be fair to all people, don’t be greedy. But the layers upon layers of ESG go deeper than most can imagine, and peeling them back reveals so much about what the world is literally clamoring for, especially over the past couple of years. After a sweltering summer, an uptick in awareness regarding social justice efforts, and insane inflation that’s left even solidly-employed people struggling, the time to adhere to ESG standards and practices is long overdue — but better late than never! While institutions won’t be able to flip the switch overnight, starting the process is the most important step.
Diving Into ESG
The bottom line is that environmentally and socially-conscious investors of all calibers are tired of their hard-earned money being used to fund enterprises that don’t align with their values. They don’t want their investments used for environmentally-irresponsible practices; they don’t want to invest in companies that don’t prioritize equality in the workplace; they don’t want their investments filling the pockets of CEOs while lower-level employees struggle to pay rent. This growing group of passionate investors wants to put their money toward organizations that are doing genuine good.
Spotlighting An ESG Stand-Out — American Express
One financial institution that is doing a particularly great job of implementing ESG standards and practices across the board is American Express (Amex, a top partner of Zogo). The internationally-known bank launched its ESG program initiative in 2021 with a focus on three core tenets: Promoting Diversity, Equality, & Inclusion, Build Financial Confidence, & Advance Climate Solutions. In Amex’s 2021-2022 ESG Report, Zogo was prominently featured as an example of their partnerships with “innovative startups.”
According to the report, “In 2021, we partnered with Zogo on a pilot program to offer custom-tailored content and additional incentives embedded within the app’s gamified experience. This joint effort provided Gen Z users with an opportunity to gain valuable financial literacy skills toward their financial well-being.” The entire Zogo team is thrilled to be working with Amex and honored that our contribution to their ESG work was prominent enough to be featured in this way.
The overview of Amex’s ESG strategy (below) provides more detailed information on their ventures. It also provides a roadmap for other financial institutions as they embark on their ESG adherence journeys (spoiler: Zogo can really help!).
Promoting Diversity, Equality, & Inclusion
Support a diverse, equitable, and inclusive workforce, marketplace, and society.
This initiative fits into the ‘social’ box of ESG, focusing on a handful of the major social concerns within the financial sector and the world at large. This section of Amex’s ESG program includes such provisions as “Provide access to capital and financial education to at least 250,000 underrepresented-owned small- and medium-sized businesses in the US from late 2020 through 2024” and “Develop more inclusive marketing initiatives, as well as design and build product experiences and programs that better meet the needs of underrepresented consumer and business customers.” As a financial literacy education company, Zogo has been a crucial cog in the wheel of this section of Amex’s ESG plan, helping to provide education to Amex’s members and beyond.
Build Financial Confidence
Provide responsible, secure, and transparent products and services to help people and businesses build financial resilience.
This section of Amex’s ESG strategy, described as a “core pillar,” also fits into the social category and includes provisions such as “Invest $500 million to build more resilient and equitable communities from 2021 through 2025” and “Provide at least 5 million individuals with tools, resources, and educational content to improve financial well-being from 2021 through 2025.” The partnership with Zogo is a key element in achieving aspects of those goals; with our financial education capabilities and Amex’s resources and presence, we’re on a mission to bring financial literacy to millions of people.
Advance Climate Solutions
Enhance our operations and capabilities to meet customer and community needs in the transition to a low-carbon future.
This initiative clearly fits within the environmental section of ESG and is a huge step in the right direction toward fighting the mounting climate crisis. Large corporations are often targeted by climate activists and everyday people for being the top contributors to climate change and the degradation of natural resources. This section includes provisions such as “Commit to net-zero emissions by 2035 in alignment with the Science Based Targets initiative (SBTi)” and “Provide at least $10 million to support initiatives, partnerships, and programs that address the adverse effects of climate change and pollution on communities from 2021 through 2025.”
ESG — More Than A Trend
The fact of the matter is that if your institution hopes to continue attracting valuable investors, ESG is an indispensable aspect of making that happen. Additionally, if you hope to successfully engage the up-and-coming Generation Z, ESG should be one of your top three priorities. Despite their relatively young ages (Gen Zers are currently 10 to 25 years old), Gen Z is known for their high levels of interest and involvement in social justice, climate activism, and promoting equality, to name just a few of their deeply rooted values. They most often choose to spend (and store) their money — and are statistically likely to be willing to spend more money — at businesses that share their interests in those areas. To attract their business and build true loyalty with Generation Z, ESG standards and practices are paramount.
Zogo helps credit unions educate, engage and attract young people. Backed by behavioral science research at Duke University, its gamified financial literacy app teaches sound financial fundamentals and rewards users for learning. Their mission is to make personal finance fun, simple, and social. Founded by Gen Zers, Zogo understands what it takes to reach the younger generation.