Lummi Anton
AcrossLimits
GreenFintech, also known as sustainable finance, is a rapidly growing sector within the financial technology industry that focuses on incorporating environmental sustainability into financial products and services. The history of GreenFintech can be traced back to the early 2000s, when the concept of sustainable investing started gaining momentum.
In early 2005, the then United Nations Secretary-General Kofi Annan invited a group of the world’s largest institutional investors to join a process for developing the Principles for Responsible Investment (PRI), which aimed to promote sustainable investing practices among institutional investors.
This marked a significant milestone in the development of green finance, as it brought global attention to the importance of incorporating environmental, social, and governance (ESG) factors into investment decision-making.
Over the following years, a growing number of financial institutions and Fintech companies began to integrate sustainability principles into their products and services.
As the Paris Agreement was signed in 2015, more financial institutions and Fintech companies started integrating sustainability principles into their offerings. GreenFintech has since expanded to include green bonds and sustainable banking services, allowing investors to support environmentally friendly projects and socially responsible companies.
Technological advancements have made it easier to access and analyze ESG data, leading to more responsible investment practices. The future of GreenFintech looks promising, with continued growth as investors and consumers seek sustainable financial options to address climate change and promote a more sustainable financial system.
The integration of ESG (Environmental, Social, and Governance) principles into corporate governance is emerging as an essential aspect of Fintech strategy.
As highlighted in a recent study conducted by Kearney, 25% of respondents are willing to switch banks if their current institution does not prioritize ESG issues. There is a growing demand for sustainable banking practices, with 40% of respondents expressing the desire for their savings to be invested in environmentally responsible companies.
Deloitte analysts emphasize that the pressure from customers, investors, and employees to prioritize ESG effectiveness is on the rise. Simply having an informal ESG strategy is no longer adequate, as stakeholders expect companies in the financial sector to implement robust management frameworks, materiality assessments, and key performance indicators.
Fintech companies need to take ESG seriously to meet these evolving expectations and start to adopt eco-friendly practices by measuring and monitoring their carbon footprint.
The new implementation supporting ESG also fosters customer engagement, with over 80% of bankers recognizing its value.
Meniga, a digital services provider in the financial industry, offers banks the Carbon Insight tool to help users track their carbon dioxide emissions through transaction data. This index is calculated based on transaction data. This product is useful in implementing the ESG strategy. More than 80% of bankers believe that it will increase customer engagement, and will encourage banks themselves to become responsible for popularizing the idea of tracking its carbon footprint.
Additionally, companies can offset their emissions by investing in initiatives such as reforestation.
This is exactly what the Dutch “green” neobank bunq does together with its customers: if auser signs up for the Easy Green tariff, the company will plant atree in either Kenya or Madagascar for every €100 spent.
The results? The Impact? Since launching the program in 2019, bunq has planted 13 million trees. This demonstrates how Fintech companies can leverage sustainable initiatives to align with ESG goals and drive positive social and environmental impact and also creates job opportunities with fair wages in those regions.
These are just a few examples of how the Fintech Ecosystem can leverage sustainable initiatives to align with ESG goals and drive positive social and environmental impact. Each of these successful cases has enabled new strategies and innovations to bring new tools, activities, causes and ways to improve our environment.
As the Fintech industry continues to grow and evolve, more companies are likely to follow suit and adopt eco-friendly practices.
When banking is more than just about making money – it should also be about making a difference
The emergence of GreenFintech is a clear indicator of the power of innovation and the capacity for industries to adapt in response to global challenges.
Looking at Time’s statement behind the Fintech Manifesto we can see the startups that chose to invest in creating a sustainable foundation, are earning the trust of their customers instead of simply making a monetary deposit.
Some notable examples include:
Aspiration (California, United States)
Aspiration is a green fintech pioneer that offers sustainable banking and investment products with a focus on ESG criteria. Their innovative strategy includes a commitment to carbon-neutral operations and investing in renewable energy projects. Aspiration empowers individuals to make more sustainable financial decisions.
Clim8Invest (England, United Kingdom)
Clim8Invest is at the forefront of the investment sector, guiding clients in growing their savings while also benefiting the environment. By providing easy access to ESG-focused investment opportunities. Clim8Invest are aligned with the targets outlined in the UN Paris Climate Agreement
Helios (France)
French sustainable neobank Helios is an Ecobank, a new committed and transparent banking model that directs its users’ money towards environmentally friendly investment projects.
Flowe (Italy)
Flowe is a digital bank, a Benefit, BCorp and Carbon Neutral company part of the Mediolanum Banking Group, which aims to educate young people in terms of humanovability (a combination of the words ‘innovation’, ‘sustainability’ and ‘human centricity’). Flowe wants to give young people all the methods and tools to develop their potential and live better. For this reason, Flowe created an app that empowers them to move forward, take control of their life and their finances, and build a happier future.
Greenly (France)
Greenly makes carbon accounting and management precise and intuitive for your company, allowing you to fast-track your transition towards the net-zero-carbon economy. The platform enables your company to measure, monitor, reduce and offset your carbon footprint in line with international carbon accounting standards such as the GHG Protocol.
Tomorrow (Germany)
Tomorrow Bank is a neobank that is dedicated to empowering a better tomorrow for its customers. They offer a range of innovative and user-friendly banking services designed to make managing finances easier and more accessible. With a focus on social responsibility and sustainability, Tomorrow Bank is committed to making a positive impact on the world while providing top-notch banking solutions for its customers.
These companies are just a few examples of the many green FinTech pioneers that are prioritizing ESG strategies in their business models. By driving innovation, promoting sustainability, and encouraging responsible financial practices, these companies are setting new standards for the industry and shaping the future of finance in a more sustainable direction.
You can find more info about the most innovative ESG 100 Fintechs in the world by following this link.
Investing in Future: Aligning Values with Investments
Investors are increasingly prioritizing Environmental, Social, and Governance (ESG) factors when making investment decisions. This shift is driven by a growing recognition of the impact that companies’ actions can have on society and the environment, as well as a desire to align their portfolios with their values.
In addition to financial considerations, investors are also increasingly motivated by ethical and moral considerations when evaluating companies. They want to ensure that their investments are aligned with their values, and that they support companies that are making a positive impact on society and the environment. By incorporating ESG criteria into their investment decisions, investors can help drive positive change and hold companies accountable for their actions.
One of the main reasons why ESG initiatives are important is their role in promoting responsible business practices. By integrating ESG factors into decision-making processes, companies can better manage risks, improve long-term performance, and enhance their reputation among stakeholders. This, in turn, can lead to increased investor interest and support, as more and more investors are looking to align their investments with their values and beliefs.
Looking to the Future of Green
In a world where climate change is increasingly urgent, the significance of GreenFintech for the future is paramount.
GreenFintech, which utilizes technology to support sustainable and eco-friendly financial practices, is essential for mitigating the effects of climate change and fostering a more resilient and inclusive economy.
One of the key advantages of GreenFintech is its capacity to enable the transition to a low-carbon economy. Through offering innovative financial products and services that bolster renewable energy, sustainable agriculture, and green infrastructure projects, GreenFintech can help decrease carbon emissions and expedite the movement towards a more sustainable energy system.
The continuous growth and advancement over the time unequivocally indicate that Green fintech is more than just a passing trend, hype or tendency; it represents the future of the financial sector
The importance of GreenFintech for the future cannot be underestimated. By leveraging technology’s potential to support sustainability, financial inclusion and accountability, GreenFintech has the ability to drive positive change and underpin the new principles of a sustainable and fairer future for all.
