Everything about Aspiration seems designed to inspire - but is it too good to be true? The company portrays its services as good for people and the planet, and as a counterpoint to typical practices of big banks and the financial industry as it stands. Much of this branding appears reflective of a true commitment to sustainability and contributing to communities - and yet, some of the environmental impact it claims to produce for its customers is overstated.
Aspiration is moving towards socially and environmentally responsible financial services and many big banks would do well to follow its lead. That said, Aspiration’s emphasis on carbon offsets of customer purchases won’t get us to net zero any time soon, and its claims of “100% fossil fuel-free investing” are questionable. As such, I believe Aspiration deserves an overall score of 1.25 planets.
Aspiration is a “green” financial services firm that brands itself as a facilitator of socially and environmentally responsible alternatives to traditional (big bank) investing and banking. From accessibility and economic justice perspectives, Aspiration’s option to choose your own monthly maintenance fee and $10 minimum investment help it stand out from the crowd. Additionally, ten percent of the fees paid on Spend & Save accounts are also donated to “worthy causes,” and $100,000 was provided in Climate Action Grants to grassroots environmental organizations in November, 2021. These are positive, if not relatively small, contributions to communities. However, taking a closer look at some of Aspiration’s “green” guarantees muddies the waters.
Aspiration’s key promise to customers is that their savings and debit card purchases will never be used to fund the oil or coal industries. They differentiate themselves from big banks (specifically, the four biggest banks in the United States) on this point, claiming that every $1,000 transferred from a big bank to Aspiration is the equivalent of the average car driving 6,000 fewer miles. The Aspiration Redwood Fund (a mutual fund reviewed here) also claims to be fossil fuel- and firearm-free. Concerningly, however, the share of the portfolio made up of Southwest Airlines stock is greater than the share made up of sustainable energy stocks - a choice that makes me question their commitment to sustainability. The fund is also managed by UBS’ asset management arm, suggesting a closer relationship to the big banks it positions itself against than it might like consumers to think.
Another major sell is that Aspiration incentivizes sustainable shopping. The Spend and Save account offers cash back rewards for purchases from “ethical” companies from Aspiration’s Conscience Coalition (CC) program. Most (but not all) of the companies on this list are certified B Corporations. It includes companies such as Reformation, TOMS, Blue Apron, and Imperfect Food. While this strategy incentivizes “ethical” and “sustainable” purchasing, it disadvantages small, local sellers who are not included in Aspiration’s CC program. Such sellers could potentially benefit from high Aspiration Impact Measurement (“AIM”) scores, and if so would also earn varying levels of cash back. Among the AIM “Nice List” in 2018, however? Delta Airlines, Apple, and Costco - not companies typically lauded for their environmentally-friendly business practices. Furthermore, the fact remains that Aspiration, like all financial services companies, profits off of consumer spending - and in doing so contributes in part to a culture of over-consumption.
Finally, the majority of Aspiration’s revenues actually come from the Sustainable Impact Services it offers to enterprises. These services include measuring companies’ Scope 1, 2, and 3 emissions, offering access to nature-based carbon removal through a private reforestation program, and creating a tailored sustainability program for that company. I appreciate that its business model prioritizes drawing the rest of the private sector into more sustainable practices, but would encourage Aspiration to be more transparent about the criteria that drives its recommendations.
Aspiration, Inc is a certified B Corporation, indicating that it is legally mandated to be responsible to all stakeholders and maintain a high level of social and environmental performance. It partners with several sustainability-focused organizations, including Project Drawdown, 1% for the Planet, the Crypto Climate Accord, the UN Decade of Ecosystem Restoration, and 1t.org.
Much of Aspiration’s ESG model is driven by reforestation and carbon offsetting. Customers who agree to round up to the nearest dollar are guaranteed that a tree will be planted for every swipe of their card - though this means Aspiration profits from many of those roundups, spending about ten cents to plant one tree and pocketing anything leftover for overhead costs, as highlighted by Pro Publica reporting. Aspiration also claims to automatically offset the carbon dioxide that would be emitted for every gallon of gas purchased using the Aspiration Plus debit card. While reforestation is an important initiative and carbon offsetting of customer purchases a step in the right direction, planting trees which take decades to grow (and which Aspiration does not necessarily ensure survive over this timespan) does little to push us towards net zero in the short timescale we have available - i.e. to achieve a 45% reduction of emissions in less than a decade.
What is more, questions have been raised about whether Aspiration is transparent about the number of trees planted as a result of its programs. Aspiration’s carbon offset amounts are calculated based on the EPA Greenhouse calculator, Federal Reserve Consumer Payments Reports, and Arbor Day Tree Facts. While the specific calculation is proprietary, posing challenges to anyone interested in checking this number, Aspiration states that all of the data on which it is based is publicly available.
Furthermore, Aspiration operates entirely online, with no physical banking locations. As it is technically not a chartered bank, customer deposits are held at FDIC-insured banks that don’t lend to fossil fuel projects, most of which are small community banks. Aspiration also allows customers free withdrawals from Allpoint ATMs and uses recycled debit cards from Mastercard.
Andrei Cherny, Aspiration’s CEO, is a former financial fraud prosecutor who worked with Elizabeth Warren to start the Consumer Financial Protection Bureau. He also worked on economic and environmental opportunity at the Gates Foundation. Cherny’s co-founder, Joe Sanberg, is a millionaire entrepreneur who worked on Wall Street before shifting to invest in startups (including Blue Apron, which is also a member of Aspiration’s Conscious Coalition).
Assessing the backgrounds of Aspiration’s Board of Directors is challenging, given that much of Aspiration’s website is inaccessible without an account. However, the details that are easily available indicate that much of Aspiration’s leadership has experience at other banks, insurance companies, and major corporations. Insights from Mia Warren’s review of Aspiration’s leadership point to the mixed sustainability records of several of its investors.
In 2019, Aspiration merged with InterPrivate III Financial Partners Inc, a special purpose acquisition company, to become a publicly-traded company. It also has a range of celebrity backers, including Leonardo DiCaprio, Drake, and Robert Downey Jr. Unsurprisingly, this has come alongside copious media attention, accolades, and some searing criticisms (by NYU Professor Scott Galloway, for example).