Alex Farsan on Neobank Klarna’s AI4CR Programme

What do we mean when we say ‘climate resilience’?  First, we have to talk about climate change.

Dinner table conversation to some (and conspiracy chatter to others), the climate conversation revolves around science-backed change to our planet and society.

Some examples include freak weather events, rising sea levels, biodiversity loss, the displacement of vulnerable populations and reduced food and water security, according to the World Wildlife Fund (WWF). 

What are global superpowers doing about it?

One suggestion as a wall of defence is to invest more in climate resilience programmes.

Previously having worked as a Global Lead for Science Based Targets at WWF, Alex Farsan craved something a little more fast-paced – and is now Head of Climate and Environment at global neobank Klarna, where he has been for the last three years.  

In an exclusive interview with Finance Chief, Alex spoke about how Klarna is taking action in the climate debate through its recently-launched AI for Climate Resilience programme. 

To Alex, Klarna presented itself as an opportunity to advance global progress in aiding communities to adapt through climate resilience. 

Creating an annual budget for climate projects in 2021, Klarna started its journey by looking inward, measuring “our own impact, our own carbon footprint; with targets to reduce them,” says Alex.

The budget translates to what is now known as the Climate Transformation Fund, and is meant to aid the global net zero process by funding projects which support local communities to adapt to climate resilience.

The conversation around AI can sometimes be daunting when in contrast with climate reality. Klarna is looking to change that by investing in projects that actively use AI to “tackle climate change”, it says.

Alex explains that Klarna’s aim is to make sure that high-impact and long-term climate projects are supported with “financial resources, with mentoring and tech support”.

It was launched in collaboration with MilkyWire, an impact firm dedicated to supporting environmental projects.

Alex stresses that these three pillars “really need” to happen: “We need to decarbonise the economy, we need to protect biogenic carbon stocks in nature and we need to actually remove some of the carbon. That's the net in net zero, right?” 

The process works by selecting the project that has the highest impact. Current projects span a global range, with a strong variety of uses of AI in the fight against climate change effects. 

One such example is the work being done by Acres of Ice, which relieves water scarcity by using AI to turn excess ice into man-made glaciers.

Similarly, Nigeria’s Geotek Water Solutions uses AI to identify and monitor hidden water sources, demonstrating the power of AI for drought-prone areas. 

Over in Latin America, GainForest e.V. aids Indigenous forest guardians to monitor and map biodiversity in a push for conservation.

India boasts two winners of funding; SEEDS, which uses AI in combination with satellite data to verify disaster losses at speed.

The second is the Self-Employed Women’s Association & IFPRI, which empowers female workers with an AI-powered advisor loaded with local weather insights, leading climate resilience in their communities. 

Lastly, Klarna has provided funding to the SakaWarga Foundation in Indonesia, which trains villages in disaster preparedness through an AI resilience coach, accessible via mobile through local-language chats.

The bigger, pinker picture 

Klarna poses as a “pretty unique” programme, according to Alex. It prefers to think of itself as not just a funding programme, but as “a partner, not a buyer” he explains.

“We really feel like we're trying to have a catalytic impact there because we might not be as big as some of the other big tech buyers, but I think we're seeing ourselves more as a partner than purely a buyer. We're often the first buyers for these organisations”. 

So far, Klarna has funded over 40 startups that are working toward removing carbon from the air.

The company also focuses on nature protection and restoration projects, including supporting  Indigenous communities in getting land tenure to protect the forests that they live off and live on, something Alex is particularly proud of. 

Klarna places stress on supporting a range of solutions to tackle climate resilience.

Focusing externally does not mean that the giant that made its name in the  buy-now-pay-later space has left its internal goals to a later date.

With over 1 million partners in the retail realm, the fintech behemoth is aware of the potentially massive impact each company could have. Alex notes that “using that network is almost where we think we have the highest potential impact.” 

The company also focuses on nature protection and restoration projects, including supporting Indigenous communities in getting land tenure to protect the forests that they live off and live on, something Alex is particularly proud of. 

Klarna places stress on supporting a range of solutions to tackle climate resilience.

Focusing externally does not mean that the giant that made its name in the  buy-now-pay-later space has left its internal goals to a later date.

With over 1 million partners in the retail realm, the fintech behemoth is aware of the potentially massive impact each company could have. Alex notes that “using that network is almost where we think we have the highest potential impact.” 

Klarna’s 119 million customers are also at the forefront of this mindset.

This is where innovations such as the resale feature on the Klarna app come in handy. Alex explains that Klarna tries to “empower the consumers at every step of their product journey with [Klarna] to make more sustainable decisions.”

The app showcases and prioritises products that have a third-party accreditation. Second-hand items get a new lease of life as they appear naturally beside new products, placing more weight on the reselling community. 

Alex says it is one of the features the brand is most proud of, as it not only extends the lifecycle of the product, but also, as Alex explains it, “puts money back into [consumer’s] pockets”.

The secret to the company’s drive? It’s not a casual event. “Working at Klarna, I can really say that this is like an everyday sort of thing for us,” Alex says.

“We try to understand ‘where can we have the best impact, where can we add value for customers, where we can add value internally’”.

The company also released its carbon footprint tracker shortly after the pandemic, which alerts shoppers to their carbon footprint for every purchase made using Klarna’s payment methods. 

The secret to the company’s drive? It’s not a casual event. “Working at Klarna, I can really say that this is like an everyday sort of thing for us,” Alex says.

“We try to understand ‘where can we have the best impact, where can we add value for customers, where we can add value internally’”.

The company also released its carbon footprint tracker shortly after the pandemic, which alerts shoppers to their carbon footprint for every purchase made using Klarna’s payment methods. 

The tracker is another way it actively engages its customers – another key to the sustainability push.

The Klarna app currently is positioned to push information out to the consumer, with the goal of simply allowing for an informed decision to be made. “This is not us prescribing to consumers what they should be purchasing,” Alex explains.

“This is, for us, surfacing information about things that potentially have a higher sustainability rating.”

An evidently successful initiative, the resell feature in the app saw a 75% increase in listings over the last 13 months, the company noted earlier this year.

The success mirrors the advice from the multi-national giant. He concludes: “Figure out what your unique strengths as an organisation are and then build your strategy around those unique strengths. 

“Don't just copy something or blindly adopt the framework, figure out what your organisation can bring to these global problems and then double down on that rather than trying to do everything.”