Featured Guest: Aaron McCreary

Aaron McCreary is the co-author of two Climate Fintech reports – the first by New Energy Nexus, and the second by F10 Incubator & Accelerator, and has dedicated his career to supporting these digital financial technologies which enable decarbonization. He’s now in-house at a Climate Fintech himself, leading North American growth for Doconomy – a provider for transaction-level carbon and water accounting, with more than 160 million active users. Aaron’s diverse background in crowdfunding, asset management, and climate finance open innovation lends a unique view to how these digital technologies play a role in activating more eco-conscious consumption, while also mobilizing capital for real world climate tech solutions.

Episode Transcript

0:00 – [MUSIC PLAYING]

0:01 – Aaron McCreary

I think what’s great is that this whole suite of financial services that is offered today is starting to embed environmental and social considerations into the technology, into the data and to the natural process of decision making and then in turn it’s scalability.

0:22 – [MUSIC PLAYING]

0:26 – David Reiling

Welcome to the NextGen Banker podcast where we explore what’s next in banking and talk with the innovators responsible for creating positive change in the financial sector. I’m your host, David Reiling, and I’m very excited to welcome Aaron McCreary today. Aaron, thanks for being on the NextGen Banker podcast.

0:43 – Aaron McCreary

Thanks for having me David.

0:44 – David Reiling

So, Aaron, before we get started, just a quick reminder to our audience that we have a musical feature at the end of each episode. The NextGen Banker showcases a new artists from somewhere around the world. So, check it out at the end of our session today. And now just a little background in regard to Aaron, and Aaron, you’re the director of business development at Doconomy’s North American division, which is an impact service providing data services to educate, engage, and reduce environmental impact.

1:16 – David Reiling

You’re also a climate fintech advisor for F10– an incubator and accelerator, that is essentially a global innovation ecosystem, and you are the lead author for the Climate Fintech report. I’m talking about the role of fintechs and climate change and something I’d love to dive into a little deeper. And for our audience, the late breaking news is you have a new gig, a new job. And so, we’ll give the audience a tease on that one, and we’ll talk about that in just a little bit.

1:48 – David Reiling

But Aaron, I’d love to tease out a little bit because you’re at the intersection of climate and financial product innovation. So, you’re kind of in your deep in the fintech climate world. And if I understand your background you did some crowdfunding you did some asset management, what got you to where you are today and where is that passion from?

2:08 – Aaron McCreary

Thanks, David. Yeah, it’s a good question, and it definitely hasn’t been sort of the traditional pathway. Especially so many folks that work in finance and they do four years there and then six years there. I’ve definitely hopped around, and I am grateful to have a number of different diverse experiences in my professional career. I guess first and foremost, I’ll give a shout out to Berkeley, California, where I grew up. It’s a quirky, progressive town and folks who grew up here have a tendency to be educated around climate, and our environment, and the importance of preserving it. And so, I came up in that environment.

3:00 – Aaron McCreary

And I also give a shout out to my parents who are both environmentalists in their own ways. And so those are sort of the seeds that grew into a plant and my career has sort of evolved from there. I started working in crowdfunding, early 2013 when the JOBS Act was passed allowing for that type of syndication where small tidbits of money were put together to finance a larger project and that opportunity was with RealtyMogul, which is a platform that’s still around today.

3:46 – Aaron McCreary

So, I give them a lot of credit for teaching me about debt and equity structures. But I was always frustrated that the projects that we were putting together didn’t have a whole lot of environmental or social considerations. And I think that motivated me further to explore how impact and finance go together. I also maybe feel like it’s worth mentioning just sort of a personal note, is that at that same time I was in a really bad car accident and almost died, had 20 surgeries, four months in the hospital, kind of thing.

4:30 – Aaron McCreary

And when you come out of something like that, it really makes you reevaluate your values, and your direction, and what you want to do in life. And so, I think all of those things combined got me excited to pursuing this work.

4:44 – David Reiling

Well that’s fantastic. And I’m sorry to hear about the accident. But sometimes those events in life you wonder why they happen to you. But in some ways, they happen for you, in terms of the clarity of purpose in your life. And so, well one of the things that I know you from is the Climate Fintech Report and if I’m not mistaken, New Energy Nexus was somewhat of the holder of that in terms of producing that report. And maybe you could just tell us a little bit about New Energy Nexus and what it does, and then a little bit about the climate report just to start with, and then we’ll dive in maybe just a little deeper.

5:26 – Aaron McCreary

Sure, so New Energy Nexus actually formerly was known as the California Clean Energy Fund. And they’ve evolved to become a global accelerator, incubator, network, and funder for clean energy entrepreneurs. They do great work all around the world. They run thematic programs, so electric vehicle battery challenge, Lithium Valley in California, they co-run Third Derivative with the Rocky Mountain Institute, just a lot of great programs.

6:01 – Aaron McCreary

And under their umbrella, I was empowered by the Hewlett Foundation and huge shout out to Marilyn Waite in her support of the early stages of this climate fintech work. But it really began as a research effort during COVID. Everyone was hunkered down and I was researching, and writing, and doing interviews. And what came out of it was the Climate Fintech Report. And it’s funny. I didn’t really think anyone was going to read it, but it was published a couple of weeks after Biden was elected, and there was this newfound energy domestically here in the US at least around decarbonization.

6:45 – Aaron McCreary

And a lot of people started to read the report. And I think it served as a useful tool to just lay out in very simple terms what the landscape looks like, what is climate fintech. I think that’s maybe a good question to ask myself here. And I tell people that it’s digital financial technology that enables decarbonization. So very sort of general, can cast a wide net there. But it includes things like crowdfunding projects that have climate tech elements to them. It can include geospatial risk mitigation. It can involve ESG Data analysis using artificial intelligence. It can be carbon calculators. It could be carbon offsetting platforms.

7:44 – Aaron McCreary

So, there’s a whole host of technologies that fall under the umbrella, and these technologies are becoming more and more prevalent today. And so, I think we all thought as an organization that it would help to organize people’s minds around this very quickly evolving space.

8:06 – David Reiling

Yeah, very cool. And thank you for that answer. And maybe we went through a lot of buzzwords and acronyms there. But let’s try to boil it down a little bit. Well, let me dive into the report here real quick. So, the report, I believe it had eight verticals to it. Maybe you can just kind of touch on the framework of that. And then I believe one of those frameworks or one of those verticals was around retail consumer payments or something like that. So just give us an idea of the sketch. What was the main thrust of the report, and kind of its framework, and then maybe an example?

8:42 – Aaron McCreary

Sure, so we’re going back in time now because there’s been a lot of iterations and evolutions to the structure. But that Nexus report had categories like investing, lending, banking, insurance, so terms that are climate agnostic. But then once you apply a climate lens to them, you’re able to see more specifically what the solutions are. And so, I think that structure really helped people who worked in the wider financial services industry who didn’t realize that some of these things were happening and available, and sort of just laid it out in general terms.

9:30 – Aaron McCreary

As is common with quickly growing or changing spaces, there’s now a lot more taxonomy around green fintech. The Green Digital Finance Alliance is an organization which is supported by the United Nations. And they put out their own green fintech taxonomy this year. So, I’ve sort of tried to adhere to their more peer reviewed work and structure as I think about this space today. But I think there’s lots of ways to think about it, and there is no right answer, so whatever helps people as they organize these technologies in their mind.

10:18 – David Reiling

Yeah, very cool. And so what I start to think of, and when I read the report and think of it from a practitioner standpoint, if I was to take my role, let’s say as a banker or a lender, if one of these innovations allows me to plug in– let’s say I’m going to finance a commercial real estate project and I can plug in all the various elements of it– its size, its location, et cetera, its HVAC, and come out with what is its carbon emission. And I have targets from my company or whatever that I meet certain thresholds. It really gives me then the power along with the client to say we need to do something else, or your project really is an example of what we should be doing in commercial real estate in terms of carbon or decarbonization, and so it gives me those tools.

11:13 – David Reiling

So those types of calculators and innovations, I think are those practical things that I start to think of as a banker. Now, one of the things that I would hope as a consumer and one who loves climate fintech would be is when I’m walking through a store, I can either scan a QR code or my phone automatically reads an RFID code and says, this product versus this one, this is its carbon footprint. And then I have the power to choose. Are those types of things kind of reality and practicality as to what some of these innovations might be?

11:51 – Aaron McCreary

Well, I’m excited to say that it’s becoming more and more of a reality every day. You think about your nutritional facts and labels on food. It’s a near-term future where you’re going to get carbon labeling on those products as well. But I appreciate your question too because it gives me a chance to speak a little bit about Doconomy, where I currently work, and the work that we’re doing around showing transaction level, carbon dioxide, and water accounting data.

12:27 – Aaron McCreary

And that’s really important as a first step to measure, because when you measure you can then educate people on those measurements. And when you educate people on those measurements, once they start to understand what they mean at a very base level, the natural next step is that they’re motivated to take action in some form, whether that’s through reducing, changing their lifestyle, or by contributing to offsetting projects, or shopping within a sustainable brand environment.

13:03 – Aaron McCreary

So Doconomy now today actually has over 160 million active users. More than 35 banks around the world use this technology. And I’m really excited to help grow this type of solution here in the United States because it’s such a large market, and we tend to be a little bit behind places like Europe around our consumer engagement with sustainability. So really exciting next 12 to 24 months to see where these trends take us.

13:41 – David Reiling

Yeah very cool. And I guess with that so what’s let the teaser come out now the new job, the new role, is it Doconomy or is it something else?

13:54 – Aaron McCreary

No, it is Doconomy.

13:55 – David Reiling

It is Doconomy? OK.

13:58 – Aaron McCreary

Yeah, I started at Doconomy six, eight weeks ago. So, I’m still familiarizing myself with the technology, and the depth of it, and all the things that it can do. But it’s great to see such uptake from some of the largest banking institutions in the world. We’re working with Standard Chartered, and BNP Paribas. We’re also working with fintechs who didn’t normally have or start out with a climate element to their core business model, such as Klarna. We’re now helping anyone who uses Klarna to see what the footprint is of their consumption activity, their shopping activity, and that’s a really powerful tool.

14:45 – Aaron McCreary

And now, I can’t say names, but we’re speaking with the largest banking institutions in the United States. And with tens of millions of people in question here, if you’re able to flip on the switch and start to show them their carbon footprint, show them their fresh water footprint, and then motivate a certain percentage of them to action– it has an enormous impact on emissions globally.

15:18 – David Reiling

Very cool. It’s so motivating and inspiring to hear that there’s momentum, and that the largest of the banks in my world, particularly, are engaging. It just seems like it’s taken forever in my mind. But once those initiatives get started, and funded, and they become a part of that culture, if you will, it really starts to grow. And they move markets and industries, quite frankly, which is very cool.

15:48 – David Reiling

I was going to ask you about the water metric. That one to me, fresh water metric, can you just tell me a little bit about that? Because that’s a new one. And obviously, we’re looking at weather events on a regular basis, unfortunately, of flooding as well as drought. Can you give me a little background on the fresh water metric?

16:10 – Aaron McCreary

Yeah. I think we’re so used to seeing carbon calculations as a norm, and so we have sort of strived to enhance our offering and synthesize data from S&P who is our data provider. And we’re able to distill, much like you would distill emissions factors, a fresh water expenditure equivalent for every transaction. And those are tied back to merchant category codes. I wish that I had a more technical explanation for you. But I think in three or four weeks I will, so I’ll share those resources for you.

16:55 – Aaron McCreary

But as we all know, and as we see the droughts and the floods around the world, water is an extremely important thing to consider in our daily consumption habits. And so, we believe at Doconomy that not only can we empower changes that reduce our greenhouse gas emissions, but also to conserve this very valuable fresh water.

17:19 – David Reiling

Fantastic, I love it. So, Aaron, with the work that you’re doing out there, what are some climate fintechs that you’re working with? What are some examples?

17:29 – Aaron McCreary

Oh man there’s too many to name. It’s actually amazing how many have popped up over the last couple of years. We had a count earlier this year around 400. And then I saw another count come out last month that was over 600. And frankly, there’s probably 1,000 out there today. But just to maybe name a few that come to top of mind, one is Banyan Infrastructure. They’re a project finance platform that simplifies, optimizes the financing of sustainable infrastructure projects, and does workflows and life cycles. Raise Green is a clean tech crowdfunding platform out there, so sort of democratizing access to clean tech investments, crowdfunding, and building a community around those investments.

18:32 – Aaron McCreary

Another is Enduring Planet, a really cool solution out there. They do revenue-based non-dilutive financing for climate techs out there that are looking for an alternative to venture funding. Carbon Collective, they offer an alternative to your 401(k) indices, where they’ve built very climate aligned portfolios that you can shift your retirement money into, and feel a lot better about what you’ve invested in.

19:13 – Aaron McCreary

Atmos Financial, they have a high yielding savings account, and the deposits only go to financing renewable energy. So that’s just a short list. There’s a lot of them out there, a lot of people doing really great work and we’re seeing a lot of these scale, so it’s really exciting to see.

19:37 – David Reiling

Well, it’s great to hear that, A, there are so many and expanding, and that they’re covering that wide range of the financial ecosystem from actual product to the financing and the infrastructure components. So that is really exciting, and I think, quite frankly, healthy when it comes to making progress towards a decarbonized world for the future.

20:00 – Aaron McCreary

Absolutely.

20:01 – David Reiling

So, Aaron, the last question that I have for you is the NextGen Banker question. So, from your seat to the world in Berkeley, California, and you have to think about what’s the next generation of banker going to look like in which to help us in terms of climate.

20:19 – Aaron McCreary

So, I think what’s great is that this whole suite of financial services that is offered today is starting to embed environmental and social considerations into the technology, into the data, into the natural process of decision making, and then in turn it’s saleability. And so, for sort of the next generation banker, I really see them being aware of these elements in every financial product that they market and that they distribute.

20:56 – Aaron McCreary

And that base level awareness that it’s not just about your financial return, or your spread, or your derivative potency. It’s also about how this is going to impact societies, communities that are near to you and far from you. And I think that bankers who are aware of these elements and can speak eloquently about them, are going to be far more successful in their jobs.

21:28 – Aaron McCreary

And I think that their customers are going to be more satisfied and engaged. And so, it really behooves bankers to start looking for these types of more holistic solutions, more holistic financial products, because that’s where the future is going, whether they like it or not. And they should be proponents of this future that we’re all working towards.

21:58 – David Reiling

Well, Aaron, that is fantastic. That is a great answer and a great description of what the future bankers should look like. It’s so interesting to me as I reflect on what you were saying. When I was a trainee, we’re taught cash flows and that’s about it. Now, the math has expanded to both the carbon side or the environmental side, as well as the social impact. And so, you really introduce to new forms of sets of metrics along with a sustainable project from a financial standpoint to really get that holistic lens. And I think you’re absolutely right. That is the next generation banker in terms of that holistic view on things and taking into account absolute costs or total costs.

22:46 – David Reiling

Well, Aaron, it is fantastic to talk with you. Thank you so much for your time, and the important work that you’re doing around climate, and changing the world’s financial system for the better. It is greatly appreciated. And to our audience, thanks for listening to the NextGen Banker podcast. We’ll see you soon.

23:04 – Aaron McCreary

Thanks so much, David.

23:04 – [MUSIC PLAYING]

23:07 – Becca Hoeft

For this episode’s musical feature, we’re showcasing PRIZM. PRIZM is a Fort Worth based synth pop duo comprised of Kris Love and Danni James. The project is a love letter to the sounds of past decades, blending nostalgic influences with the modern era through colorful synth melodies and memorable vocal hooks, for a sound that captures the best of the past and the present.

23:33  – Becca Hoeft

Here is Lovestruck by PRIZM.

23:36 – [MUSIC PLAYING]

24:45  – Becca Hoeft

That was Lovestruck by PRIZM. Find more PRIZM’s music on Spotify. If you would like your music featured on the NextGen Banker podcast, just email david@nextgen-banker.com with a link to your music and website. Thanks for listening to the NextGen Banker podcast. We’ll see you next time.