Green Fintech - A Match Made in Sustainability Heaven

ESG is the talk of the town. Most National Government and corporate budgets now have ESG as top of their agenda...but what is it? And what role can Green fintech play?

Environmental, Social and Governance (ESG) refers to a set of standards against which socially aware investors screen potential investments in sustainability initiatives. Scrutiny is placed on a company's activities on the environment, its relationships with various stakeholders and society in general, its governance, and overall management practices.

According to research conducted by Morgan Stanley Institute for Sustainable investing. interest in sustainable investing among millennial investors had gone up to 95% in 2019 from 84% in 2015.

How does Green Fintech come in?

Fintechs now form part of nearly everyone's daily life. From P2P consumer transfers to Asset Trading Platforms at a touch of a fingertips, fintech has, and will continue shaping, the financial services industry for the foreseeable future.

Considering Fintech is having such a tremendous impact on financial services, and society at large, the obvious question is what role fintech will take in achieving sustainable finance? Fintech is not just banking and insurance. The following all play an important role in enabling sustainable finance:

Payments	Banking	InsurTech
Cashless Payments	Paperless Banking	Crop Insurance
2. Mobile Payments	2. Branchless Banking	2. GeoSpatial Mapping
3. Sustainable e-commerce	3. Microsavings	3. Weather Damage Insurance
Crowdfunding	WealthTech	Lending
P2P Lending	ESG Investing	Microfinance
2. Crowdlending	2. SRI Portfolios	2. Renewable Project Financing
3. Renewable Project Financing	3. Green Bonds	3. Pay-per-Use Microgrids
	4. Carbon Footprint Tracking	4. Subsidized Financing for the use of Renewable energy
	5. Carbon Offset Trading
	6. Digitized Community Savings

There are plenty of successful examples happening across the globe, most noticeable examples:

ASPIRATION plants a tree for every dollar rounded-up. It also assures its customers that their deposits will not fund fossil fuel projects. Likewise, GOODMONEY, a digital banking platform, also pledged that none of its customer deposits will be used in fossil fuels, private prisons, defence contractors, mining or rainforest destruction. TREECARD went all the way and launched the world's first wooden debit card to help reduce plastic usage.

These neo-banks are paving the way for sustainable financing, also fuelled by the very nature of these neo-banks not having physical branches, and having mostly online process, thus reducing drastically paper use, putting them a step ahead of traditional banks in terms of energy saving and cost-efficiency.

And there's plenty more start-ups actively leaving their mark in this space; CLOVERLY operates a marketplace that enables consumers and enterprises to offset emissions. It offers an API It to calculate the carbon footprint of common activities such as e-commerce shipments as well as vehicle fleets and deliveries. It provides transparency on how much of the payment is actually contributed to a project.

MOSS is a digital platform that offers transactions involving carbon credits to individuals and businesses seeking to offset their emissions and anybody who wishes to hold carbon credits for compensation. Recently, MOSS announced the tokenization of carbon credits via the issuance of MCO2 Tokens; these tokens increase the security of carbon credit transactions and their trackability by integrating blockchain technology. MCO2 Tokens are available for sale and are already listed on FlowBTC crypto exchange.

TERRAPASS is a startup that provides a marketplace for connecting consumers and businesses. It claims to support carbon offset standards and requires offsets to be permanent, quantifiable, and verified.

PACHAMA, founded in 2018, has established a marketplace for high-quality reforestation projects for enterprises to offset carbon emissions. The company uses machine learning on a combination of satellite, drone, and lidar images to calculate the size and volume of trees and then estimates how much carbon those trees store.

In 2019, Stripe, a major online payments platform, announced that it would invest in technologies that aim to capture planet-warming gases from the air and store them in the ground. It will allocate at least $1 million each year on negative emissions technology by purchasing tons of carbon dioxide, which have been taken out of the atmosphere. The company expressed interest in initiatives that would improve natural carbon sinks such as forests and soil.

The Alipay Ant Forest project, which was launched on the company’s mobile app, rewards its users with ‘green energy points’ each time they take a step to reduce their emissions, such as by cycling to work, going paperless, and buying sustainable products. It has so far analysed 550,000 Chinese users’ actions, and those users have been rewarded for their ‘green behaviour’ with points proportional to the carbon footprint avoided by low-carbon activities. This ‘green energy’ is visualized as virtual trees on the gamified Alipay app.

The fintech space is a contributor to trying to make a difference to the society at large. The far reaching effects on vastly available financial services needs to feature in the responsibilities that these Fintech companies carry in the overall improvement of our world at large, which needs to be facilitated by all the stakeholders, especially national and supra-national governments.

The world needs change. It's time for Fintech to play its part.

#fintech #greenfintech #ESG #payments #banking #insurtech #crowdfunding #wealtech #lending