Mapping ESG Priorities Per Region: Payment Platforms

How do Online Payment Platforms integrate Sustainability into their company strategy and operations? ?

In 2021, retail e-commerce sales reached 5.2 trillion US dollars worldwide, in comparison to 3.4 trillion U.S. dollars in 2019. According to the European Commission, approximately 20.3% of the world′s emissions are from the transportation sector. This implies a significant indirect environmental footprint for the Payment Platforms. At the same time, online payments bring positive ESG impact by democratizing access to doing business online and growing welfare, especially for the small business owners and consumers in the emerging economies.

Let’s look at the Annual Reports, Sustainability Reports, and ESG agendas of several Payment Platform providers and see where their priorities are. To make the comparison more insightful, I intentionally selected three companies with different regulatory headquarters locations and market focus:

• Adyen, with €767.5 billion in processed volume in 2022, active in 42 countries and the HQ in the Netherlands. Key market focus has been the EU and the US, the footprint is expanding further into UAE, Brazil, Australia and so on.
• Paypal, with $1.36 Trillion processed volume in 2022, available in 200 countries, and headquartered in the US.
• TPAY Mobile, serving 24 markets across the Middle East, Türkiye, and Africa with integrated mobile payments solutions, headquartered in Dubai and having processed cumulative $50 billion by 2020.

What are the key differences in ECG priorities across these companies?

Let’s start with TPAY Mobile, who operate in the region where 63% of the adult population (1 billion people) are unbanked. At the same time, the smartphone penetration is growing apace. According to the 2022 Afrobarometer data, the rate of cell phone ownership in Africa has reached 84%, with 45% internet access rate. In the MENA region, the number of mobile internet users exceeded 300 million in 2021 and is forecasted to grow to 350 million in 2025.

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What does this mean for the ESG priorities? The Social Impact and Financial Inclusion clearly make the most difference for the TPAY customers. The company social impact blog describes how their services enable 14 million active monthly users to purchase goods and services inaccessible without traditional bank accounts, and access educational content and healthcare services that might not be otherwise available. Social impact is at the core of the company strategy. There are several volunteering and charitable projects described on the website, but otherwise the company does not offer a separate Impact Report with quantified measurements.

This is not a publicly listed business, so there are no regulatory requirements to deliver Impact reports. An open question is how the lack of such external reporting might affect the businesses’ ability to fundraise, especially from the US or EU based investors where regulatory requirements related to Sustainable Finance are increasingly stringent.

Adyen Social Responsibility portal presents a different approach. First, the European Corporate Sustainability Reporting Directive applies. The portal reports the Scope 1, 2, and 3 emissions of Adyen and highlights the priority of building an ethical business, enabling charitable giving and investment into Vietstar Waste Treatment project. For those who enjoyed the “tons of CO2 per euro revenue” benchmarks from the previous posts, Adyen’s footprint of 57,993 tCO2e and revenues of €1.3 billion in 2022 translate into a negligible direct environmental impact per euro earned.

When it comes to tangible sustainability actions, Adyen announced a decision in 2022 to annually dedicate 1% of their net revenue to initiatives that support the United Nations Sustainable Development Goals (UN SDGs). In practice, this translated into introducing Governance focus within the company. The 2022 Annual Report describes the creation of Adyen’s ESG Working Group, reporting to the company CFO. The objectives of the ESG Working Group are two-fold: to increase understanding and raise awareness of the three dimensions of ESG across the organization, and to establish a unified approach to reporting on Adyen’s ESG strategy.

Unlike the companies like Vinted or Vestiaire Collective whose on-the-ground operational priorities like shipping and packaging reflected measurable sustainability priorities, Adyen’s role as a payments facilitator translates into more generic priorities like committed impact investing.

Finally, PayPal, who is subject to the US SEC ESG disclosure requirements, shows the most detailed and mature approach towards the ESG reporting and translating it into specific actions. PayPal has been publishing its Annual Global Impact Reports since 2017, and the five years of progress are clearly visible in the scope and continuity of measurements. The 2022 PayPal Annual Global Impact Report has a telling subline: Transforming digital payments to create economic opportunity. At the same time, what makes PayPal different from the other two companies reviewed here is its explicit emphasis on Governance both from the internal (corporate governance) and the external (data privacy, cybersecurity) perspective.

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Cybersecurity, Data Privacy, and Corporate Governance are the most represented category in the top-right quadrant of PayPal’s ESG Significance Map. Financial inclusion, empowering entrepreneurs, and employee engagement also have made it to the top, reflecting the general themes around Payment Platforms’ missions and Tech industry priorities. However, actionable Governance topics are significantly more present in the PayPal report than in those of other companies I have reviewed.

The excellent 52-page PayPal Impact Report goes into depth on all four categories of impact, switching between highly quantifiable metrics like $20+ billion in funds donated through PayPal or a 79 Employee Engagement Score and the statements of intent, such as Committing to Responsible AI Practices or Setting Strong Business Resiliency Practices.

Is this a reflection of general US ESG priorities, maturity of PayPal ESG approach, or idiosyncratic company priorities? Stay tuned and subscribe to the #PathtoProfitability newsletter. In the next writeups, I will compare US companies across different industries to find out!

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