TL;DR: Reviewing practical approaches in fintech to implement green economy and sustainability measures may foster innovative ways businesses can collaborate with national and global organizations. The overall goal is to make a short- and long-term impact on our environment.
We’ve all been facing the challenge of contributing to a sustainable environment for quite some time now.
With sustained climate change concerns at alarming levels across the board, practical planet-conscientious measures in industries such as fintech and commerce have long been urgent. Yet, fintech startups have already been able to assist with the move forward. Here’s a brief update on green economy and sustainability measures from governments to corporate to aid further efforts. But, first, a little context.
Green economy: A brief definition and context
Resource efficiency with decarbonised social inclusion is vital.
The United Nations (UN) Economy Development defines a green economy as one that’s “low carbon, resource efficient and socially inclusive.” In this vision, “growth in employment and income are driven by public and private investment into such economic activities, infrastructure and assets that allow reduced carbon emissions and pollution, enhanced energy and resource efficiency, and prevention of the loss of biodiversity and ecosystem services.” A lot is expected from public to private for the environment, especially in terms of creating a different economy. Fortunately, that’s the case because taking impactful actions is still possible.
Yet, the efforts on this main matter officially go back to 2008. That’s when the UN launched the Green Economy Initiative (GEI), hoping to create research at a global level. They were after new sets of information that would propel countries to push for policies with a solid environmental impact. They also sought corresponding investments for actionable measures.
Seven years after that launch, a publication from the UN General Assembly titled Uncovering pathways towards an inclusive green economy made the necessary interdependence between all relevant stakeholders clearer. The document also drafted measures on how to collaborate and seize related opportunities.
Further down the road, a green economy tied to sustainable development became a critical part of 2012’s Rio+20 agenda.
The efforts around a green economy and sustainability have to do with an improved human wellbeing that stands on equity in social terms. More than 60 countries have adhered to those goals. And, while this may all sound far from technological innovation, there are specific ways in which the latest trends have been able to help. We’ll get to those shortly. Yet, to clarify, one of the main goals here is to considerably cut back on already scarce natural resource use and all related risks for our environment.
The overall intention behind these initiatives is also to reach job, fiscal, and income security as much as health guarantees that are secured by key institutions with the power to drive ecological sustainability.
An expert-driven green alliance
Take the Green Digital Finance Alliance (GDFA) as an example. Straight out of the UN’s Environment Programme (UNEP) and launched by Ant Financial Services, this is a global coalition focused on innovating with greener measures in the digital finance and fintech world.
Together, “experts in nature conservation and climate change with some of the world’s leading digital platforms, financial institutions and consumer goods firms” drive the Every Action Counts Coalition (EACC). The EACC is “a global network of digital, financial, retail investment, e-commerce and consumer goods companies.” It’s also set out to impact at least 1 billion people with online resources for greener actions by three years from now.
What have countries done since 2008 for a greener economy?
Germany took the lead in sustainable finance evolution.
Let’s go with Germany as an exemplary response. Here, the UN’s task force for digital financing of the Sustainable Development Goals (SDGs) is backing us up with data. We’re resorting to its note on fintech for sustainability on the current landscape and opportunities in this country.
Germany is quite simply leading in environmental policy and digitalization. That prestigious position made it the perfect first test pick on the topic of sustainable finance evolution. This is partially the case as this country’s the largest in Europe to issue a blockchain strategy, for example. So, what has Germany done thus far?
By the start of 2020, German fintech startups were taking the lead over other types of banking institutions. They’ve been innovating on renewable energy systems with robo-advisory and algorithmic investing. These young companies have managed to save up on sustainable assets. And they’ve done so with what the report calls “automated portfolio management with a low threshold for minimum investing.”
To all this, of course findings in the country show a “high degree of alignment between the supply side of Sustainable Digital Finance (SDF) fintech and the SDG priorities of Germany.” Fintechs here are basically working off 3 main priorities. Each of those has been listed as a national area of focus in terms of policy. And they refer to SDGs 7, 9, and 13. In the listed order, they translate into affordable and clean energy, industry, innovation and infrastructure, and climate action.
Nothing surprising there, correct? Yet, the test is proof that the SDGs can work in alignment with the youngest of innovative fintech efforts, and vice versa.
The above is not to say that the SDGs properly mapped out fintech’s role in the matter. The study highlights quite the opposite. Fintech just seems to have made the best on several fronts to take up their role in the digitalization part of these global goals that are actually available to all.
Corporate examples of green economic measures
Plenty of companies have already implemented near- and long-term initiatives.
Moving along from the government front, we’ll now look into corporate for a bit. In that sense and in our prior blog entry with Thoughts on solidifying sustainability in fintech, we already described how MasterCard’s carbon footprint tracker is making a difference. The tool lets users keep track of their footprint with every purchase. But, what else can we find?
BlackRock, identified as “the world’s largest money manager” by Reuters earlier this month as it hit $10 trillion in assets, just “invested US$ 589 million to support financial inclusion projects” in early 2020. Led by American millionaire Larry Fink, the firm is playing their part “increasing financial inclusion (SDG 1) and bolstering jobs and economic growth (SDG 8).” This is what the UN’s report on BigFintechs and their impacts on sustainable development has to say.
That same report urges cryptocurrency exchanges to “be included in the macroeconomic and regulatory examination (supra-national level) because of their potential impacts” on what’s termed as least developed countries (LDCs). In that sense, BitPesa is already working on blockchain settlement to bring digital foreign exchange and payments in every major African currency. They’re successfully lowering user costs and increasing service speed in the process.
What we take away from a quick review
What’s clear here is that gaining a competitive edge that seeks to mitigate our current economy’s environmental setbacks has to do with looking into the future. It’s also about taking innovative and collaborative action in the near term for the short and long runs. On this note, fintech has certainly proven to have the technology, resources, and diversity to assist in making these necessary leaps.
All of the above also needs to happen while identifying and thinking ahead of potential bottlenecks; especially those having to do with our limited resources, consumer demand, and global efforts. We need to efficiently remove waste and any possible constraint as we move forward.
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