Tapping the network effect for a sustainable future
Mastercard is putting this strategy into practice by activating its global network of customers
Singapore
AMONG the many lessons that came out of the pandemic, perhaps the most sobering is how interconnected the world really is.
As economies recover, this global connectivity presents an opportunity to tackle shared sustainability challenges - a complex task that requires a mutual understanding that businesses are stronger as a connected whole than as isolated actors.
This is what Mastercard dubs the "network effect", a strategy the payments giant is putting into practice by activating its global network of nearly 3 billion cardholders and over 70 million merchants, through more than 20,000 customers and financial institution partners.
"We're collaborating with these partners globally to bring environmental solutions with practical applications to market," said Ari Sarker, Mastercard co-president for Asia-Pacific.
The Priceless Planet Coalition programme, for example, was introduced in 2020 to bring together climate science and forest restoration experts, cities, financial institutions, merchants and consumers in the restoration of 100 million trees by 2025.
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Mastercard's new sustainability innovation lab, launched this September, will lead the development of eco-conscious digital solutions such as the "carbon calculator", which enables banks to equip consumers with carbon footprint data to help them make better consumption decisions.
In an age of rapid digitalisation, Sarker pointed out that financial inclusion is inextricably connected to sustainable finance.
The widening digital divide is putting a dent on sustainable development and financial inclusion progress; businesses and communities that are slow to change are now more vulnerable than before.
According to the World Economic Forum, Covid-19 had worsened the digital divide for about 55 per cent of the world's population that remains unconnected. "Only by narrowing this gap can societies boost financial inclusion so that as many people as possible can access anything from basic payments to savings and investments," said Sarker.
Mastercard has a fresh target to bring 1 billion people and 50 million micro and small businesses into the digital economy by 2025, including 25 million women entrepreneurs. The firm had met its earlier goal to reach 500 million people in 2020.
Its inclusive efforts are centered on three areas: financial security, small business growth, and data science for social impact.
The firm believes that private-public partnerships are most effective for pursuing sustainable development. "Working in silos will only slow progress," said Sarker.
In partnership with the Indonesian government, for example, Mastercard launched an academy to provide digital know-how to students, young adults, entrepreneurs and mid-career professionals. The academy had engaged more than 35,000 Indonesians in 2020.
Like individuals, small businesses also face barriers when accessing products, services and skills needed to stay resilient and thrive in the digital economy.
These challenges have become more dire amid lockdowns, social-distancing restrictions, shifts in consumer behaviour, and disruptions to supply chains and financial systems, said Sarker.
Micro and small enterprises are important contributors to job creation and global economic development, representing about 90 per cent of businesses and more than 50 per cent of employment worldwide.
To that end, Mastercard had recently launched Strive, a global initiative to strengthen the financial resilience of small businesses and to support their recovery and growth. With an initial investment of US$25 million, it will help more than 5 million micro and small businesses access the resources they need to digitise.
"Our efforts focus on digitising small businesses and the ecosystem that supports them. This includes community-based lenders, micro finance institutions and service providers," said Sarker.
In the face of climate and social challenges, sustainability has never been higher on the agenda for many organisations. Yet, the lack of quality data for impact measurement remains the biggest barrier to action.
"When civic organisations become more data-science driven, they can more effectively scale their resources to tackle complex social challenges like inequality, global health and climate change," said Sarker.
Mastercard had in 2019 partnered with the Rockefeller Foundation to invest US$50 million over 5 years to help advance the field of data science for social impact.
A US$10 million challenge was also organised to tap into the expertise and ingenuity from around the world to identify ways in which data science can contribute to tools and platforms with positive social impact.
Ultimately, the impact of the global health crisis, coupled with increasing sophistication and convergence of emerging technologies, now present a unique opportunity to build a more resilient and ethical post-pandemic world, said Sarker.
Pursuing a green and inclusive recovery will strengthen societal resilience in the face of future shocks, giving the world additional impetus to build back more sustainably than before, he added.
This requires businesses to take a future-oriented, macro view that looks beyond quarterly earnings and their own corporate interest.
The public and private sectors must also jointly acknowledge that a sustainable future can only be realised when businesses prioritise the development of sustainable products, services, and supply chains; and consumers are empowered to widely adopt environmentally-friendly behaviours, said Sarker.
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