Fintech is one of the fastest-growing tech sectors. Sustainability is one of the most urgent challenges of modern times. Are the two related? Should they be?
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BX3 recently spoke with Pete Blackshaw, CEO of Cintrifuse, about how Fintech will be shaped by climate change. Cintrifuse, a startup hub with more than $90 million in venture capital invested and more than 600 startups in its pipeline aims to make Greater Cincinnati the top tech startup hub in the midwest and among the most attractive innovation hubs in the nation.
For Blackshaw, the question of Fintech’s role in mitigating climate change has been top of mind for him recently especially as next month Cintrifuse is hosting a FinTech pitch competition featuring over $75,000 in prizes to showcase the most innovative FinTech startups of tomorrow, including those focused on environmental impact.
He has come to the conclusion that the greening of Fintech will be among one of the most important transitions the industry will face over the next decade.
Companies are prioritizing Environmental, Social and Governance (ESG) more than ever before. Consider the data: Bank of America reports ESG assets swelled to a record $329 billion in July, more than doubling year over year. Bloomberg Intelligence predicts Global ESG assets will exceed $53 trillion by 2025.
And recently, financial services leader Mastercard announced the launch of a Sustainability Innovation Lab, which will spearhead the further development of the company’s portfolio of environmentally conscious digital products and solutions.
“Fostering innovative solutions with practical applications is urgently needed to achieve global climate change goals,” said Kristina Kloberdanz, Chief Sustainability Officer, Mastercard, in a press release.
The Lab will focus on ways to empower businesses and consumers to transform how they produce, distribute and purchase products and services, ensuring both people and the planet can thrive as the global economy rapidly digitizes.
Other major banks like Barclays are setting bold “net zero” ambitions, putting aside over $100 billion of financing for green activity that supports low-carbon transition, including for renewables, energy efficiency and sustainable transport.
“Amidst this global urgency to address climate change, what bold territory might FinTech entrepreneurs tackle with so-called “Green Fintech” — the intersection of climate, finance, and digital technology?” asked Blackshaw.
Green Fintech is a huge tent in which to drive solutions in both B2B and B2C environments. The possibilities are manifold, and exciting to think about; including:
- Consumer-facing shopper apps that measure the carbon footprint of products
- Blockchain applications in sustainability to drive radical transparency
- Gamification of transactions, green incentives, and green habits
- B2B carbon measurements and analytics
- Green digital wallets and mobile payments
- Carbon credits for sustainable behavior
- Home energy bills translated into habit-shifting behavior
- Insurance products that reward or decrease premiums based on personal carbon footprints
- A wave of “Green Trust marks for online shopping”
- Sustainable eCommerce Transactions and Connections
Blockchain - The Mother of All Green Tech
We can’t talk about Green Fintech without also mentioning the mother of all green fintech technologies: blockchain.
“I received my first exposure to this while at Nestle when we used blockchain to vet supply chain sustainability standards,” says Blackshaw. Blockchain is a vital enabler in tracking the connected world of carbon emissions and energy consumption and overall supply chain.
One interesting example of a blockchain-based company in the ESG space is YvesBlue, which has created a platform for investors that pulls together the disparate and growing number of ESG data sources, and presents a consolidated view of the impact characteristics of the companies in a portfolio.
The company's platform offers sector-specific metrics, streamlined onboarding, consolidated dashboard, tailored reporting, carbon budget insights, and news-based analysis, providing investment companies and institutions with a clear picture of their portfolio health and associated risks.
Another, Topl.co, which is part of the Cintrifuse Fund Network, helps businesses prove their ethical and sustainable practices, billing itself as ‘The World's First Blockchain Built to be a Global Impact Monetization Engine’. The company's technology offers a novel blockchain that empowers businesses to prove and monetize ethical and sustainable practices, enabling businesses to transform the impact into an asset.
Measurements & Reporting
2020 is also a historic year both for the energy transition and for the flow of capital which finances decarbonization. Nossa Data, an alumnus of the 2021 New York Barclays Accelerator, powered by Techstars is streamlining the ESG world for corporations, simplifying all parts of their long and complex reporting journey. Nossa Data provides companies with a platform with simple ESG reporting templates, data collection, workflow optimization, and robust peer and investor analytics.
Patch is using the smart application of APIs to help digital banks calculate carbon footprints and identify offset projects to programmatically remove carbon from their operations.
Growing Momentum for Green FinTech
While the upcoming Cintrifuse Pitch competition is looking for Green Fintech ideas (among many other Fintech topics such as Data & Privacy, Supply Chain, and Increasing Access) other events are 100 percent dedicated to the issue.
Just recently, New Energy Nexus announced a Climate Fintech: Cards & Payments Challenge (C&P Challenge) to catalyze innovation across the financial sector to address climate change. The program is supported by Barclays US Consumer Bank; Rise, created by Barclays; Mastercard; Doconomy; and Patch.
The evidence is clear: the financial technology sector has an opportunity to enable radical changes in business and society at large that can immediately make an impact on carbon emissions and contribute to the health of our planet. The movement is underway, and we’ll only continue to see the greening of Fintech, as the sector grows more and more focused on ESG.
“Tackling climate change is an essential component of the global sustainability agenda and one in which financial services can make an important contribution,” says Blackshaw.
Additional Resources and Articles:
- What is Climate Tech by New Energy Nexus
- Climate FinTech by Barclay's Rise
- Doconomy Impact Calculator by Doconomy