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| Revolut is addressing the global dissatisfaction with traditional banks by offering a digital banking alternative that caters to both consumers and businesses. A comprehensive survey involving 9,000 bank customers across nine countries unveiled a staggering 77% global dissatisfaction rate among customers towards their existing banks.
| | Consumers and businesses worldwide are being underserved by expensive banks with dated technology. A survey of 9,000 bank customers in nine countries revealed that 77% of customers globally are unsatisfied with their bank. |
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| Revolut's innovative approach aims to create a financial environment where money flows seamlessly and at the individual's preferred pace, regardless of geographical location. Facilitating this vision, Revolut offers the swift setup of a current account within just 60 seconds. This account enables users to conveniently hold and exchange more than 30 different currencies at the interbank exchange rate. Moreover, Revolut allows for the effortless execution of international money transfers to any bank worldwide, free of charge. This global accessibility extends to spending as well, with a contactless MasterCard that permits fee-free transactions on a global scale.
| | We're creating a world where money moves freely at your pace, wherever you are. Revolut is a digital banking alternative designed for a global lifestyle. You can set up a current account in 60 seconds, hold and exchange 30+ currencies at the interbank exchange rate, make free international money transfers to any bank in the world and spend fee-free globally with a contactless MasterCard. In just two years, Revolut has acquired more than 750,000 customers who have transacted over $4.2 billion. |
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| The company has experienced rapid growth, amassing a customer base exceeding 750,000 individuals who have collectively transacted over $4.2 billion in just two years. Beyond serving individuals, Revolut has expanded its services to the corporate realm. The introduction of a business platform empowers companies to manage various financial aspects, including the ability to hold, exchange, and transfer more than 30 currencies at interbank rates. Additionally, the platform enables the issuance of corporate cards, facilitating free spending on a global scale. | | The fast-moving Fintech has also launched a business platform that enables companies to hold, exchange and transfer 30+ currencies at interbank rates and issue corporate cards for global fee-free spending<ref>[https://blog.revolut.com/a/how-to-exchange-currencies-with-revolut/#:~:text=With%20Revolut%2C%20you%20can%20exchange,rate%20with%20no%20admin%20fee. https://blog.revolut.com/a/how-to-exchange-currencies-with-revolut/#:~:text=With%20Revolut%2C%20you%20can%20exchange,rate%20with%20no%20admin%20fee.]</ref>. 12,000 global companies and scaling start-ups. |
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| Revolut's reach continues to expand, as it caters to over 12,000 global companies and scaling start-ups. With its dynamic and forward-moving stance within the fintech industry, Revolut is reshaping the financial landscape and offering a compelling alternative to outdated banking models.
| | == Operations<ref name=":0" /> == |
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| == The idea, mission and values<ref name=":0" /> == | |
| Revolut was launched in July 2015 by ex-finance professionals who have a distinctive ambition to build the future of money beyond banking. The idea came from a common frustration with exchange rate mark-ups, foreign transaction fees and a lack of technological innovation from the big banks. | | Revolut was launched in July 2015 by ex-finance professionals who have a distinctive ambition to build the future of money beyond banking. The idea came from a common frustration with exchange rate mark-ups, foreign transaction fees and a lack of technological innovation from the big banks. |
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| Revolut will also use the funds raised to accelerate product development for its consumer and business products. Currently some of Revolut’s services are made available in the Revolut app via partnerships with licensed third-parties. The funds raised will enable Revolut to apply for licences to provide these products in-house, which should in-turn increase profit. | | Revolut will also use the funds raised to accelerate product development for its consumer and business products. Currently some of Revolut’s services are made available in the Revolut app via partnerships with licensed third-parties. The funds raised will enable Revolut to apply for licences to provide these products in-house, which should in-turn increase profit. |
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| == Projects <sup>[1]</sup> ==
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| As a rapidly growing fintech company operating in over 35 countries, Revolut acknowledges the significance of fostering strong relationships with its diverse stakeholders. With a user base exceeding 25 million and a workforce of over 5,000, Revolut's stakeholder network encompasses customers, regulators, investors, partners, suppliers, and employees, among others. Revolut considers stakeholder engagement a pivotal factor in achieving its long-term success, aligning with its responsibilities under section 172of the Companies Act 2006.
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| Customers: Revolut's customer-centric approach differentiates it within the industry. Through initiatives such as the "Deliver WOW" project, Revolut prioritizes positive customer interactions and has introduced a team of Customer Experience Managers. This team actively collaborates with product and service departments to enhance the customer journey and address feedback.
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| Partners and Suppliers: Given the complexity of the FinTech sector, partnerships play a vital role. Revolut engages in rigorous due diligence to cultivate beneficial partnerships that mitigate risks and provide opportunities for future growth and collaboration.
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| Investors: Revolut's investors have played an integral role in its growth journey. Revolut maintains open communication channels, providing regular updates on financial performance, strategy, and developments. The successful Series E funding round in 2021, raising $800 million and valuing the company at $33 billion, exemplifies the trust investors have in its mission and prospects.
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| Fraud Prevention and Customer Safety: Combatting fraud is a shared priority. Revolut actively engages with industry, law enforcement, regulators, and government bodies to address fraud collectively. Revolut's commitment to advanced machine learning technologies and education campaigns underscores its dedication to safeguarding customers' interests.
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| Employees: Revolut's employees are central to its success. Revolut fosters an inclusive and supportive work environment, offering wellbeing days and embracing flexible working. Its diversity and inclusion program reflects its commitment to global representation.
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| Donations and Community Engagement: Revolut is engaged in philanthropic efforts through its Donations platform. It enables customers to contribute to various charitable causes and partners with organizations such as the Royal British Legion, the RTÉ Toy Show appeal, and disaster relief initiatives.
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| Environmental Responsibility: Sustainability is paramount. Revolut actively manages its environmental impact, partnering with Watershed to assess its carbon footprint and implement strategies to reduce emissions. Its sustainable business travel policy and support for renewable energy sources underscore its commitment to environmental responsibility.
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| Maintaining High Standards: Revolut upholds high standards of business conduct. It prioritizes customer trust, invests in compliance training for its staff, engages in anti-bribery and corruption initiatives, and ensures transparency in its dealings with third parties. Its commitment to transparency, integrity, and providing exceptional service guides its interactions with all stakeholders.
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| Revolut's approach to projects and stakeholder engagement is underpinned by a commitment to excellence, transparency, and mutual benefit. By nurturing positive relationships with its stakeholders, Revolut not only builds trust but also enhances its ability to navigate challenges, capitalize on opportunities, and achieve sustainable growth. Through ongoing collaboration, Revolut remains dedicated to delivering value to all its stakeholders and shaping a positive impact on the global financial landscape.
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| == Business and Operational Risks == | | == Business and Operational Risks == |
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| |Excellent customer service, attractive “Marketplace” | | |Excellent customer service, attractive “Marketplace” |
| |} | | |} |
| Examining the competitive landscape surrounding Revolut highlights its impressive global footprint, encompassing millions of users across numerous countries. A notable attribute of Revolut is its diverse suite of products, extending beyond conventional banking services. These offerings encompass multi-currency accounts, international fund transfers, cryptocurrency and stock trading, insurance provisions, and savings options. This varied array of services positions Revolut as a comprehensive financial services provider for its wide-ranging user base.
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| Revolut's competitive strength is also accentuated by its robust international expansion strategy. Unlike some peers with more localized focuses, Revolut has extended its operations to multiple markets worldwide, thereby establishing a significant global presence. This expansion has been facilitated by its technology-driven approach and innovative services that cater to evolving financial demands.
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| In comparison to Monzo, which primarily concentrates on the UK market, and N26, which has primarily targeted select European markets, Revolut's strategy is characterized by a broader geographical scope. Similarly, while Starling Bank operates within the UK and shows an inclination for international expansion, Revolut's expansive user base and comprehensive financial service offerings distinguish it within this competitive landscape.
| | == Ownership Structure == |
| As of 31st December, 2021, there were 59,144,624 ordinary shares of Revolut.<ref>https://my.pitchbook.com/profile/104383-72/company/profile#private-ownership</ref> | | As of 31st December, 2021, there were 59,144,624 ordinary shares of Revolut.<ref>https://my.pitchbook.com/profile/104383-72/company/profile#private-ownership</ref> |
| [[File:Revolut Shares.png|left|thumb|696x696px|''source: https://assets.revolut.com/pdf/Revolut_Ltd_YE_2021_Annual%20Report.pdf''<ref>https://assets.revolut.com/pdf/Revolut_Ltd_YE_2021_Annual%20Report.pdf</ref>]] | | [[File:Revolut Shares.png|left|thumb|696x696px|''source: https://assets.revolut.com/pdf/Revolut_Ltd_YE_2021_Annual%20Report.pdf''<ref>https://assets.revolut.com/pdf/Revolut_Ltd_YE_2021_Annual%20Report.pdf</ref>]] |
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| [[File:Chief Risk Officer.png|left|thumb|Pierre Decote, Group Chief Risk Officer, ''source: https://www.revolut.com/leadership-and-governance/'']] | | [[File:Chief Risk Officer.png|left|thumb|Pierre Decote, Group Chief Risk Officer, ''source: https://www.revolut.com/leadership-and-governance/'']] |
| [[File:Chief Banking Officer.png|left|thumb|Sid Jajodia, Chief Banking Officer, ''source: https://www.revolut.com/leadership-and-governance/'']] | | [[File:Chief Banking Officer.png|left|thumb|Sid Jajodia, Chief Banking Officer, ''source: https://www.revolut.com/leadership-and-governance/'']] |
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| == Corporate strategy ==
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| Revolut has been consistently pursuing a strategic path that encompasses both innovation and global expansion, positioning itself as a leading player in the fintech industry. This strategy is evident in a series of significant milestones and decisions the company has made in recent years:
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| # '''Market Leadership and Valuation:''' In September 2021, Revolut achieved a significant milestone by raising $800 million in a funding round, resulting in a valuation of $33 billion. This accomplishment not only solidified Revolut's status as the most valuable fintech startup in the UK but also underscored its strategic focus on establishing itself as a key player in the global financial technology landscape.
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| # '''Global Expansion:''' Revolut's strategic intent to expand its services internationally was evident in its expansion into India and other international markets in August 2021. By enabling customers in India to access its digital banking and financial services, Revolut demonstrated its commitment to capturing new markets and enhancing its global footprint.
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| # '''Cryptocurrency Innovation:''' Recognizing the growing demand for cryptocurrencies, Revolut responded promptly to customer preferences. In July 2021, the company expanded its cryptocurrency offering by adding Dogecoin to its list of supported cryptocurrencies. This strategic move aligns with Revolut's goal of providing innovative financial products and staying relevant in the evolving landscape of digital assets.
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| # '''Navigating Regulatory Challenges:''' Demonstrating its adaptability and commitment to regulatory compliance, Revolut's response to regulatory scrutiny in Lithuania showcased its strategic capability to address compliance and regulatory concerns effectively. By collaborating with authorities and addressing issues, the company displayed its dedication to maintaining a strong regulatory standing in its operational markets.
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| # '''Open Banking and Customer-Centricity:''' In May 2021, Revolut introduced Open Banking features in select markets. This strategic initiative aimed to enhance customer experience by allowing them to connect external bank accounts and manage their finances seamlessly from a single platform. This customer-centric approach aligns with Revolut's commitment to providing holistic financial solutions.
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| # '''Resilience and Growth Amidst Challenges:''' Even in the face of the global COVID-19 pandemic, Revolut exhibited a strong strategic response. Despite the challenges posed by the pandemic, the company reported robust revenue growth for the fiscal year 2020, showcasing its resilience and ability to adapt to changing market conditions.
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| # '''Financial Performance and Margin Improvement:''' Revolut's corporate strategy is underscored by impressive financial achievements. Notably, the company's revenue tripled from £220 million in 2020 to £636 million in 2021. Additionally, the gross margin improved significantly from 33% in 2020 to an impressive 70% in 2021, reflecting the company's strategic focus on optimizing financial performance.
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| # '''Continued Growth Trajectory:''' Revolut's strategy is forward-looking, as evidenced by its projection for 2022. The anticipated revenue growth of over 30%, resulting in revenues exceeding £850 million ($1 billion+), reflects the company's ongoing commitment to sustainable expansion and financial success.
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| In summary, Revolut's corporate strategy is marked by its commitment to innovation, global expansion, customer-centricity, regulatory compliance, and financial performance. By effectively combining these elements, Revolut aims to position itself as a trailblazer in the fintech industry, capturing new markets and enhancing its status as a leader in the digital banking and financial services landscape.
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| == Financials == | | == Financials == |
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| |0.29% | | |0.29% |
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| Return on Equity (ROE) of 6.29%: Revolut's ROE indicates that the company generated a profit of approximately 6.29 cents for every dollar of shareholder equity invested. This suggests a moderate level of profitability in relation to the equity invested by shareholders.
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| Return on Assets (ROA) of 0.29%: The ROA of 0.29% indicates that Revolut generated a profit of around 0.29 cents for every dollar of assets. This figure implies a relatively low efficiency in generating profit from its total assets.
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| {| class="wikitable" | | {| class="wikitable" |
| |+Prudential Ratios: | | |+Prudential Ratios: |
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| |1008.80% | | |1008.80% |
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| Capital Adequacy of 23.48%: Revolut's high capital adequacy ratio indicates that the company has a significant capital buffer to absorb potential losses and risks. This reflects the company's strong financial position and ability to withstand adverse economic conditions.
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| Liquidity Coverage of 1008.80%: The very high liquidity coverage ratio indicates that Revolut holds more than enough high-quality liquid assets to cover its short-term obligations. This signifies a robust liquidity position, which is important for maintaining operational stability and meeting immediate financial needs.
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| '''Statement of financial position:''' | | '''Statement of financial position:''' |
| {| class="wikitable" | | {| class="wikitable" |
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| == Valuation == | | == Valuation == |
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| === Overview ===
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| Revolut's valuation has been subject to fluctuations in recent years. In 2021, the company achieved a valuation of $33 billion following an $800 million funding round. This valuation has since become a benchmark for assessing the company's performance.
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| Molten Ventures, a tech-focused investment firm, has marked down its stake in Revolut by 40%. This reduction is based on its internal valuation of Revolut in both March 2022 and March 2023. Molten Ventures, which owns less than 5% of Revolut, valued its stake at £91.3 million in March 2022. However, the most recent valuation in March 2023 places the value of the stake at £54.5 million. This valuation shift indicates the challenges faced by Revolut in maintaining its valuation amid regulatory uncertainties and concerns about revenue transparency.
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| === What's the Current Value of Revolut === | | === What's the Current Value of Revolut === |
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| * '''Crypto Offering''': In 2021, crypto trading accounted for 30% of Revolut's revenues, but this dropped to around 5% in 2022 as the crypto boom ended.<ref name=":1" /> With the loss of high-margin revenues from crypto and trading, it is imperative for Revolut to find other strong recurrring revenues streams to shore up profits, however, the Stockhub user believes that would be tough especially as they do not have a UK banking license yet. | | * '''Crypto Offering''': In 2021, crypto trading accounted for 30% of Revolut's revenues, but this dropped to around 5% in 2022 as the crypto boom ended.<ref name=":1" /> With the loss of high-margin revenues from crypto and trading, it is imperative for Revolut to find other strong recurrring revenues streams to shore up profits, however, the Stockhub user believes that would be tough especially as they do not have a UK banking license yet. |
| From the points listed above, it is obvious that investors might have been paying a tech premium for Revolut. It's smooth interface, brand, ability to launch products fast and higher-margin revenue streams like crypto were its unique selling point over a traditional bank. It remains what happens with the UK banking license and other revenue streams that Revolut will be able to spring up. However, given the need to hold on to current valuations and make even more revenues, the Stockhub user is less bullish on an investment in Revolut till some of the issues outlined above are addressed. | | From the points listed above, it is obvious that investors might have been paying a tech premium for Revolut. It's smooth interface, brand, ability to launch products fast and higher-margin revenue streams like crypto were its unique selling point over a traditional bank. It remains what happens with the UK banking license and other revenue streams that Revolut will be able to spring up. However, given the need to hold on to current valuations and make even more revenues, the Stockhub user is less bullish on an investment in Revolut till some of the issues outlined above are addressed. |
| [[File:Valuation multiplier.png|thumb|963x963px|Valuation multiplier including comparable companies to Revolut]]
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| Utilising a valuation multiple derived from the average multiple of comparable companies to Revolut also offers a means of valuation. In this instance the valuation multiple (21.3700462) applied to Revolut's 2021 revenue (£636,205,000) provides a valuation of 13.6 billion.
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| However, this method also bears notable limitations that should be acknowledged. One of the primary weaknesses is the assumption that valuation multiples from comparable companies are uniformly applicable to Revolut. In reality, various factors influence valuation multiples, such as growth prospects, risk factors, market sentiment, and qualitative aspects unique to each company. The small data set of comparable companies used in your analysis might not capture the full diversity of the fintech landscape, potentially leading to skewed results.
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| Furthermore, relying solely on valuation multiples and historical data overlooks the complex web of factors that contribute to a company's valuation. Elements such as profit margins, growth rates, competitive advantages, and macroeconomic conditions play a significant role in determining a company's worth. By excluding these factors, the estimation may lack a comprehensive understanding of Revolut's true valuation potential. Additionally, the method doesn't account for fluctuations in market sentiment and investor perceptions, which can have a substantial impact on valuation multiples.
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| An important aspect often disregarded is the forward-looking nature of valuation. Companies are valued based on their future growth potential and strategic direction, elements that are difficult to capture through historical data alone. Your method also runs the risk of being influenced by outliers within the comparable set, potentially skewing the calculated average. Overall, while your approach provides a starting point for valuation estimation, it's essential to recognize its limitations and consider incorporating a more comprehensive analysis that accounts for the multifaceted dynamics impacting a company's valuation.
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| Another valuation for Revolut is derived from the median valuation of the comparable companies which would value Revolut at £3.7 billion. The choice to use the median valuation as an estimation tool carries certain merits. Notably, the median is less sensitive to outliers than the mean, making it a robust option when dealing with a small data set where extreme values could disproportionately affect results. This resistance to outliers ensures that the calculated median is more reflective of the central tendency of the data, providing a reliable point of reference for valuation.
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| However, this method also brings with it a set of limitations that warrant consideration. One of the most significant drawbacks lies in its lack of contextualization. By relying solely on the median valuation of the comparable companies, this approach fails to account for the unique attributes, growth prospects, risk profiles, and competitive advantages that differentiate each fintech entity. Consequently, it may oversimplify Revolut's valuation by overlooking the intricate factors that contribute to its worth.
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| Furthermore, the median valuation approach assumes a static snapshot of valuations, disregarding the dynamic nature of market sentiment, regulatory changes, economic conditions, and company-specific developments that can impact valuations over time.
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| In conclusion, while the median valuation approach offers certain advantages, such as its resilience to outliers and ease of use, it falls short in providing a comprehensive and accurate estimation of Revolut's true valuation. To enhance the reliability of your valuation analysis, a more comprehensive approach that considers a broader range of factors is recommended. This ensures a more nuanced understanding of Revolut's position within the fintech landscape and its corresponding market value.
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| == Environmental, social, and governance <sup>[1]</sup> ==
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| Revolut has shown commitment to addressing the global climate crisis and promoting sustainability through their Tech Zero initiative. Their focus on Environmental, Social, and Governance (ESG) factors highlights their dedication to creating a positive impact on the world while promoting accountability, transparency, and progress.
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| '''Environmental Initiatives:'''
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| Carbon Footprint Measurement and Reduction: Revolut is actively monitoring and reducing their carbon footprint. Partnering with Watershed, they measure emissions in real-time, following industry standards like the Greenhouse Gas Protocol. In 2021, the net corporate emissions were 16,833 metric tons of CO2e, a reduction of 8.61% from 2020.
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| Emissions Breakdown and Reduction Strategies: They are transparent about emissions sources, dividing them into categories such as Goods & Services, Products, Offices, Employees, and Cloud. Moreover, they are committed to reducing their carbon footprint per £1 million revenue. In 2021, their carbon footprint per revenue dropped by over 68% compared to 2020.
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| Renewable Energy and Energy Efficiency: Revolut are driving sustainability through 100% renewable energy usage at the London and Vilnius offices. They have also adopted energy-efficient practices, such as closing one floor of the London headquarters to reduce energy consumption.
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| Sustainable Travel and Transportation: Revolut's sustainable business travel policy has been formulated to effectively mitigate emissions associated with travel, while concurrently encouraging employees based in the UK to actively engage in the Cycle to Work scheme, promoting eco-friendly modes of transportation.
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| '''Social Initiatives:'''
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| Employee Engagement: Revolut places emphasis on empowering its employees to play a pivotal role in advancing sustainability endeavors. This is facilitated through options like remote work or adopting environmentally conscious commuting alternatives. The company has taken dedicated strides to curtail the ecological impact stemming from remote work and daily commutes.
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| Partnerships and Donations: Collaboration is at the heart of Revolut's approach. The company actively aligns with non-governmental organizations (NGOs) and collectives that center their efforts on critical issues such as climate change, sustainability, equitable refugee support, and fundamental rights. Noteworthy is the Revolut Donations platform which has enabled customers to generously contribute over £1 million to initiatives dedicated to environmental conservation and climate-conscious causes.
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| Sustainable Business Practices: A cornerstone of Revolut's operations resides in adhering to stringent waste management protocols, specifically addressing electronic waste (e-waste). By practicing responsible waste disposal, efficient recycling procedures, and refurbishment initiatives, the company ensures a conscientious approach to its ecological footprint. Special emphasis is directed towards the efficient management of e-waste to tangibly reduce the technological impact.
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| '''Governance Initiatives:'''
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| Tech Zero Commitment - Revolut proudly stands as a member of the Tech Zero coalition, committing itself to ambitious objectives concerning the measurement and reduction of scope 1-3 emissions. The company has set forth a resolute target of halving its emissions by 2030, with a subsequent overarching aim to achieve carbon neutrality by 2050.
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| Accountability and Reporting: The bedrock of Revolut's operational ethos is the steadfast dedication to transparency and accountability. This is evidently underscored by the annual disclosure of comprehensive reports. These reports offer intricate insights into the company's carbon footprint, strategies for emission reduction, and commendable progress towards the overarching ambition of attaining net zero emissions. The annual presentation of these reports to the Board, alongside their public accessibility on the official Revolut website, attests to the company's unwavering commitment to this endeavor.
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| Executive Responsibility: To ensure the unequivocal prioritization of sustainability objectives within the organizational hierarchy, Revolut has judiciously appointed a distinguished member of its executive team. This designated executive shoulders the responsibility of driving the company's net zero targets, symbolizing the senior leadership's unequivocal dedication to the cause.
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| Overall, Revolut's multifaceted ESG initiatives substantiate its resolute commitment towards effecting tangible and measurable positive impacts across the spheres of environment, society, and governance. The enthusiastic alignment with Tech Zero manifests as a testament to the company's resolute stance in the face of ambitious yet feasible sustainability objectives. The transparent disclosure, meticulous measurement methodologies, and proactive reduction strategies collectively underscore the company's determined efforts in combatting climate change while simultaneously championing judicious business practices. As Revolut continues its evolutionary journey, its unswerving commitment to a sustainable future remains resolute and unwavering.
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| == Appendix == | | == Appendix == |
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