A San Diego fintech that has already disrupted the world of sustainable banking now has its sights on doing something similar to the insurance industry by steering investments away from fossil fuels.
That fintech company, Ando, launched in early 2021 with a mission to fund clean energy, sustainable agriculture, and other climate focused initiatives. As previously reported by The Business Download, Ando was the first mobile and online banking provider that allocates 100% of customer deposits to sustainable financing.
In June, the Certified B Corporation launched a new insurance program with a similar goal: ensuring that none of the customers’ premiums will be used to invest in fossil fuels. The program will let Ando customers purchase new auto, homeowners, renters, pet, and umbrella policies through its insurance partners — including industry giants Nationwide, Allstate, and Travelers — or transfer existing policies to Ando to serve as their agent. Ando will also plant 100 trees for every policy opened through the program.
Moving toward a more sustainable model is a high priority in the insurance industry. As Ando shared this summer, U.S. insurance companies have used customers’ premiums to invest $582 billion in fossil fuels, according to a report by S&P Global. These investments allow gas, oil, coal, and other fossil fuel companies to keep building new extraction infrastructure that delays the adoption of renewable energy.
“Ando was founded on the understanding that the best way to fight climate change is by making sure our money isn’t going to the fossil fuel industry,” said Ando President and CEO JP McNeill.
“We’ve tackled this issue with our banking services, and now we are breaking entirely new ground by opening the door to clean insurance. With this program, our customers have the opportunity to be active participants in pushing for historic change in how the insurance industry does business.”
McNeill started Ando as a way to provide alternatives to customers who don’t want to bank with companies that depend on the fossil fuel industry for a large part of their profits – and there are many of those around.
A 2022 Fossil Fuel Finance Report published by the Rainforest Action Network in partnership with other environmental groups found that fossil fuel financing from the world’s 60 largest banks reached $4.6 trillion in the six years since the adoption of the Paris Agreement. Banks provided $742 billion in fossil fuel financing in 2021 alone.
Ando’s business model is based on partnering with community banks to fund solar installations and other clean energy initiatives, with plans to expand into other types of sustainable loans.
“We partner with banks who want to grow their green-lending programs or want to start a green lending program,” McNeill told The Business Download last year. “Community banks serve a broad number of businesses and consumers, and our aim is to partner with as many community banks as we can to help expand their green-lending programs across the country.”
In contrast, Ando’s foray into insurance has it partnering with some of the industry’s biggest players. In many respects, banking and insurance are very similar, McNeill told Forbes in a recent interview.
“We hand over our money in the form of a car or homeowner insurance payment, and the insurance industry is free to use that money however they want,” he said. “There are 200 million automobile insurance policies and 100 million homeowner insurance policies in the United States. We’re pouring about half a billion dollars into the insurance industry each year, with no transparency into where that money is being invested.”
About 75% of the money that goes to the insurance industry is invested, McNeill added – and many of those investments go toward the fossil fuel industry, pesticides, and the like.
“The same type of transparency we’ve brought to banking should also be applied to insurance,” he said.