Our previous post on Buy Now Pay Later’s (BNPL’s) focussed on the possible transparency issues that can arise when utilising them, particularly regarding the silent accumulation of debt that has become increasingly concerning. The use of BNPL’s can further fuel a culture in which ‘fast fashion’ and excess consumption are viewed as both advantageous and desirable, at times encouraging consumers, especially their younger audience, to purchase items they cannot afford and which go beyond their means. The pandemic, along with a subsequent move to shop online, has also bolstered the use and growth of BNPL’s. ‘US-based company Affirm (AFRM) for example, founded by PayPal (PYPL) alum Max Levchin, nearly doubled its revenue last year from $264.4 million in 2019 to $509.5 million in 2020.’
Today we highlight the possibility of BNPL’s to effect positive change and how they could contribute to a sustainable future. Though the risks related to unaffordable borrowing and increasing debt are alarming and still present, BNPL providers do have the potential to transform sustainability efforts worldwide. They could, for example, raise awareness around issues like overconsumption, perhaps by supporting retailers to help ensure a demand for more sustainable choices. If BNPL providers do not begin to conceptualise measures like these, they will continuously be held responsible for contributing to large swathes of consumer debt.
Companies like Klarna are now pledging to help with issues that may improve sustainability and drive global growth. Klarna issued its first ever Climate Report in 2019, which outlines the company’s global carbon footprint and the purchasing of carbon credits to make up for their 2019 emissions. More recently, on the 1st of March, the brand announced that ‘1% of the 1billion in equity it recently raised will be invested in global sustainability issues.’ This initiative will officially launch on the 22nd of April, on World Earth Day. CEO Sebastian Siemiatkowski said:
“… it is time for us, with our culture of change, disruption and innovation, to focus on tackling bigger, more complex issues. I believe our industry has a responsibility to help in some way solve global sustainability issues and I hope others will join Klarna in our ambition.”
Though it is promising that the Climate Report has been issued and the company have announced its plans to support sustainability efforts, there is no explicit mentioning of what exactly Klarna will do to ensure it is being globally sustainable, although this may be elaborated on shortly. It is also worth noting that companies like Klarna may be contributing to these sustainability problems in the first place. Whilst it is encouraging that Klarna is taking steps to tackle such concerns, we will have to wait and see the outcome, along with exact measures put in place to advocate for a more sustainable future.