The announcement of Visa (NYSE:V) reaching its goal of 100% renewable electricity may go under the radar this week. The company has just made the acquisition of fintech unicorn Plaid for $5.3 billion, however, I feel this initiative may actually have longer-lasting effects for the company.
Visa set itself the goal back in 2018 and has drawn a line in the sand for other financial institutions to follow suit. Utilizing solar and wind power, the company has successfully offset the emissions from its 131 offices and 4 processing centers across the world. In a statement yesterday, CEO Al Kelly announced: “At Visa, we see both a responsibility and an opportunity to make broad shifts toward a sustainable and inclusive future”.
The shift towards more sustainable energy sources is a growing and welcome trend in Wall Street, with societal and employee pressure pushing companies to become more climate-conscious. Amazon (NASDAQ:AMZN) has committed to meeting the standards set out by the Paris Climate Agreement a decade early, Pepsi (NASDAQ:PEP) will start using 100% renewable electricity in the U.S. this year and Coca-Cola (NYSE:KO), the world’s largest polluter of plastics, has taken steps to achieve 100% renewable electricity across its European operations. While this is far from a pat on the back for these companies, it is reassuring to see steps being made in the right direction.
How does Visa benefit from being sustainable?
Aside from the obvious social responsibility to its stakeholders, the general public and the planet we live on, there may be more in this move to sustainability than meets the eye. Visa maintains a responsibility to its shareholders to protect the value of their investments. In making a push towards becoming more socially responsible, it makes itself a more attractive prospect for ESG-focused investors. It’s a member of the Dow Jones Sustainability North American Index and a FTSE4Good Index Member amongst others. In a statement on Tuesday, Blackrock (NYSE:BLK) CEO Larry Fink announced that climate change is going to be at the center of its investment strategy. The hedge fund is planning to double the number of sustainable ETFs in its portfolio, as well as putting pressure on index providers to create sustainable versions of their flagship indexes. The financial benefit to Visa of being classified as a sustainable company is glaringly obvious.
In a week that has seen the financial industry come under scrutiny as the banks kick off earnings season, Visa has garnered its fair share of the headlines. The acquisition of Plaid, and now this announcement both coming within the same week as Citigroup (NYSE:C), Wells Fargo (NYSE:WFC), Bank of America (NYSE:BOC) and JP Morgan Chase (NYSE:JPM) announcing their performance for the quarter is no coincidence. Many investors in the financial sector see Visa and Mastercard (NYSE:MA) as a more attractive place for their money than banks. They enjoy the benefits of providing financial services without actually lending money. No cash reserves, no loan losses, and less regulation mean the credit card companies have a greater upside for your investment than America’s big banks. Is Visa’s sustainability just one more reason for investors to trust them with their money?
If you want to read more about sustainability in the stock market, check out these articles from the MyWallSt team:
- Is Renewable Energy the Economy’s Most Important Sector?
- Tesla’s Competitors
- NIO Beats Expectations, Stock Soars
MyWallSt operates a full disclosure policy. MyWallSt staff currently holds long positions in Mastercard. Read our full disclosure policy here.
Content Manager at MyWallSt
Michael's first and favorite stock is Square, which he sees becoming a massive player in the payments industry and a leader in the war on cash.