Fintech company Aspiration operates on the idea that a bank can be financially successful without harming the environment—and even end up benefiting it. While major global banks have funneled billions of dollars into the fossil fuel industry, Aspiration instead offers programs to offset the effects of every gallon of gas a member pays for, and to round up purchases to use the change to plant trees. It’s a bet on the idea that profitability and sustainability can go hand in hand, rather than be opposing forces, and it’s now a bet Aspiration is taking to the public market.
Aspiration is going public through a merger with Interprivate III Financial Partners Inc., a special purpose acquisition company (SPAC). Aspiration announced the definitive merger agreement today, and when that transaction is closed, the combined company will be named Aspiration, Inc., and will be valued at $2.3 billion and listed on the New York Stock Exchange.
Aspiration is also a certified B Corporation, which means it meets certain standards of balancing both profits and purpose. While other B Corps and companies that implement ESG (environment, social, and governance) values have gone public, Aspiration’s move makes it one of the first consumer financial services institution to be publicly listed that is also a Public Benefit Corporation, which means it’s legally obligated to stakeholders (such as the planet and its employees) as well as its shareholders. (An ETF from Humankind, another Public Benefit Corporation, was listed publicly in February 2021).
“For decades or for centuries, the financial industry has been run in a certain way, and the day that we go public, we’re showing there is another choice, there is another option,” says Aspiration cofounder and CEO Andrei Cherny. Cherny calls Aspiration a “sustainability-as-a-service company”: Along with its consumer financial work of enabling customers to take environmentally-friendly actions through their purchases, Aspiration helps businesses assess and offset their carbon footprints as well.
Aspiration, which currently has more than 5 million Americans signed up as members of its bank, has been able to take bold steps as a private company, like enacting a $25 minimum wage for its employees. Even though the stock market has still at times reacted negatively to similar moves from public companies—when Walmart pledged to raise its minimum wage to $15 an hour in February 2021, its shares fell 6%—Cherny is confident his company will keep its long-term focus, without making concessions to the short-term demands of the market.
“Stock prices can fluctuate on a daily or weekly or monthly basis—and they will—but while we’re thinking in the long-term, the opportunity and the need to address the climate crisis is now,” he says. “It’s no longer what we’re going to do 5 years from now, 10 years from now. That’s the big change that we’ve seen over the past few years, is people waking up to what’s going on and an intense desire for them to take action. We’ve seen our number of members more than double over the past year.”
Aspiration chose to go public via a SPAC rather than a traditional IPO because it’s growing so fast and demand is so high, the company says, and it wanted to get into the public market quickly to meet that demand and reach more customers. It’s attracted members because of its mission, Cherny says, and if Aspiration were to deviate from that mission while being public, it would hurt its business.
The decision to go public now is as much about the company’s financial position as it is about the public market being ready for an ESG-focused bank. The way a company handles environmental and social initiatives has become more intricately intertwined with how successful they are for their shareholders. “A few years ago, a lot of investors thought that if a company was focusing on its environment practices and employee practices, that would be detracting from its profitability and value,” Cherny says. “Now, the conversations are really ones where most investors get that the better a company does on how it treats its employees, how it treats the planet, the better it does on its financial progress. And that’s been refreshing.”
Going public will be a big test for Cherny’s vision of Aspiration—and for the ESG sector. If successful, going public could help investors more quickly see the “dramatic moment we’re in right now,” as Cherny puts it, and that ESG companies as a category are worth backing. “What we’re doing everyday is showing you can build a successful business based not on cutting down trees and endangering the planet, but on planting trees and saving the planet,” he says. “If we’re able to continue to convince the investor world of that, that’s going to be a really valuable measure of our progress.”
Correction: We’ve updated this article to note that Aspiration is not the the first consumer financial services institution to be publicly listed that is also a Public Benefit Corporation.
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