Since we’ve entered the 2020s, our financial markets and the wider world have already been hit by dramatic developments.
From the arrival of the Covid-19 pandemic to the huge fires in Australia, it’s clear our planet will leave the decade looking very different to how it entered.
But, if the Paris Agreement and the UN’s Sustainable Development Goals are adhered to, then the world could be in a far healthier state. The natural disasters and challenges we’ve faced may force not only society but corporate companies and financial services into taking much needed action to address the needs of the climate.
We agree with the approach of the Global Commission on the Economy and Climate and their view that bold climate action to meet these aims is an overlooked and significant opportunity for inclusive growth. Specifically it can provide “… new jobs, economic savings, competitiveness and market opportunities, and improved well-being for people worldwide”.
Technologies such as Blockchain, Artificial Intelligence (AI), Internet of Things and RegTech all offer further opportunities to not only unlock green investments but bring about positive benefits to society and meet the demands of the climate emergency.
In future blogs, we will explore in more detail how these innovations can support our endeavours to embrace a greener future. We’ve also launched a call for entrepreneurs to connect with us to explore these new opportunities. Here are some examples of the work fintech companies are undertaking to implement new sustainable ways of living.
Data and Artificial Intelligence
One of the key challenges facing the investment industry is sourcing reliable reporting on the environmental, social and governance (ESG) aspects of investment funds and portfolios. At the heart of this is a need for clean and accurate data to provide a comprehensive overview of the green credentials of a fund or investment.
Truvalue Labs is a fintech company with its roots in analytics around ESG reporting. The firm’s products use AI to analyze and interpret massive amounts of unstructured data to help investors make more informed decisions across their portfolio.
OWL Analytics is a financial data and index firm utilising alternative and diverse data sources to improve the standard of reporting ESG investments. Their index takes data from a range of sources to give investors confidence in the green credential of the areas where they deploy their money.
Artificial Intelligence applied to Wealth Management
Tumelo is a UK investment app for responsible investing. It provides investors with a unique dashboard to enable greater transparency and engagement over businesses they have shares in as well as increasing the depth and quality of client conversations. It also provides investors with a better overview of opportunities across various sectors and industries.
The Coigach Community wind turbine funded by Triodos
Peer-to-peer lending is the practice of lending money to individuals or businesses via online services that match lenders and borrowers. Since 2005, Zopa has been one of the key fintech players in this space, lending over £4 billion to almost half a million borrowers and generating £250 million interest for investors.
Banks are responding to the needs of consumers with Barclays launching a Multi Impact Growth Fund. This investment vehicle offers access to impact managers and direct investments in a ready-made investment product that reports any environmental impacts it’s generated.
Triodos is arguably one of the world’s most well known green banks. The firm claims to use its €15.5 billion (2018) in assets to create social, environmental and cultural value in a transparent and sustainable way. According to Triodos, it has provided 2.5 million households worldwide with green electricity from 513 energy projects in 2018.
InsureTech are technologies and platforms set up to optimize any of the principles for success or requirements of insurance. The area is one of growth with insurtech investment reaching an all-time high in 2019, according to a new report from Willis Towers Watson. Total worldwide funding commitments in the sector totalled $6.37 billion in 2019.
Global Parametrics launched in 2016 and brings together a team of experts in alternative risk transfer, emerging market finance and climate and seismic modelling among other areas of expertise. Their platform aims to use the latest information and financial tools so that communities can respond and recover quickly in the face of disasters.
Earling is an innovative solution offering to transfer earthquake risks to risk takers in the insurance industry. The platform uses AI algorithms to monitor earthquake patterns.
RegTech is the management of regulatory processes within the financial industry through technology. The main functions of regtech include regulatory monitoring, reporting, and compliance.
RepRisk has a decade of experience providing financial institutions and corporates with ESG and due diligence data on a daily basis. The company utilises risk management and compliance tools to work with asset managers, banks and insurance providers to help reduce blind spots and expose potential business conduct risks.
RIMES is a fintech data management firm delivering its services data via cloud services and avoiding any potential issues around data management and storage space. RIMES offers ESG data and modelling support including the collection, assembly and distribution.
Blockchain, many argue, is one of the three transformative technologies shaping multi-sector business model transformation with AI and quantum computing close contenders.
“[Blockchain] has the potential to revolutionise currency, government, and corporations – and the climate as well, through facilitating renewable energy grids, accelerating international climate finance, and empowering consumers to make climate-conscious decisions. It can cut bureaucracy and create the trust and verification necessary for effective climate investment.”Transforming Climate Finance and Green Investment with Blockchains, Elsevier, Editor: Alastair Marke 2018
The use cases in finance are many and significant. From a green fintech perspective, blockchain has a significant opportunity to serve a greater need for transparency in monitoring the deployment of capital, eliminating cost from value chains and promoting greater collaboration between participants in the supply and demand for a good or service.
Pylon Network uses blockchain technology to offer a neutral database where data from stakeholders in the energy market space is stored and shared. The technology allows the user to take ownership of their data and decide who this is shared with. Consumers can choose which third energy service company can access their data, then offer digital services back to save on their bill.
Sun Exchange acts as a crowdfunding platform to attract investment to small-to-medium solar projects in developing countries. Investors can fund renewable energy projects using national currency or Bitcoin. The firm uses its rewards currency SUNEX to fund various projects including a solar project insurance fund.
As Governor of the Bank of England, Mark Carney, recently said regarding the journey to a low-carbon world, “the task is large, the window of opportunity is short and the risks are existential.”
As climate change continues to be the hottest topic dominating our headlines, it is also becoming an equally important issue for the financial services sector.
The 2020s will be a defining decade in whether we can bring together governments, technologies and key stakeholders to implement the greener way of living demanded by the Paris Agreement, the UN’s Sustainable Development Goals and, increasingly, consumers. Unsurprisingly, experts believe that the synergy between fintech and green finance will be one of the most important developments in helping the world realise its aims.
At Redsand, we are passionate about the potential of financial innovation to create a greener planet. With our market leading technology solutions alongside the work of our partners and the wider fintech sector, we are proud to play a role in helping us make this transition to sustainable living and achieving net-zero by 2030.
We have now launched a call for entrepreneurs and innovators to connect and collaborate with us.
We hope you’ll join us on what should be a life-changing journey…