In recent years, there has been a global shift toward sustainable economic models, with projections indicating potential economic opportunities worth $12 trillion annually by 2030. Fintech, leveraging cutting-edge technologies such as advanced data analytics, blockchain, and artificial intelligence, is playing a pivotal role in assisting companies to assess and diminish their environmental impact while aiding investors in directing their resources toward more sustainable assets.
The growing significance of meeting ESG criteria (Environmental, Social, and Governance) is evident as companies prioritize these objectives, supported by both investors and consumers. Refinitiv data reflects a 34 percent surge in investor interest in sustainable assets in 2020, soaring to 61 percent among millennial investors. Correspondingly, consumers, particularly from this generation, seek products manufactured under these sustainability criteria.
This heightened interest extends to capital markets, with influential organizations like the International Monetary Fund and Nasdaq reflecting a shift toward sustainability. Projections suggest that sustainable business models by 2030 could generate substantial economic opportunities and approximately 400 million jobs, primarily in developing nations.
However, ensuring the attainment of sustainability goals necessitates robust evaluation methods. Fintech, with its sophisticated technological infrastructure, stands poised to provide accurate assessments through standardized indicators and measurement methods. This complex challenge presents an opportunity for fintech to play a pivotal role.
This surge in technological advancements has led to the emergence of sustainable big data as a significant sector in its own right. Reports, such as KPMG’s ‘Pulse of Fintech H1’21,’ indicate the presence of nearly 200 data providers and numerous fintech startups operating globally within this space.
Fintech Solutions for a Green Economy In the realm of sustainable finance, fintech solutions encompass a spectrum of technologies like Artificial Intelligence (AI), advanced data analytics, tokens, and Distributed Ledger Technologies (DLT). These innovations hold promise in various applications, as highlighted in BNP Paribas’ report, ‘Fintechs and the ESG Data Challenge’:
- Analyzing portfolio exposure to different risk scenarios related to climate transition to establish benchmarks for investors.
- Utilizing AI to analyze real-time public sentiments regarding sustainability, identifying societal debates and concerns for a better understanding.
- Assessing a company’s impact on each Sustainable Development Goal (SDG) using AI.
- Guiding small investors towards sustainable investments through ‘robo-advisors.’
- Developing blockchain platforms to monitor SDG compliance, exemplified by projects like G17Eco.
BBVA, for instance, has pioneered solutions for calculating carbon footprints, aiding companies in registering their emissions and obtaining certification for reducing CO2 emissions. Additionally, BBVA offers tools for private customers in Spain to calculate their carbon footprints, promoting environmental awareness and contributing to a more sustainable world.
Global Collaborations and Standardization International organizations, both public and private, are collaborating through technology to advance a sustainable economy. The banking sector, exemplified by initiatives like the Net-Zero Banking Alliance (NZBA), aims for net-zero greenhouse gas emissions in credit and investment portfolios by 2050.
Moreover, collaborations like the Green Fintech Challenge 2021 and partnerships with entities such as the UK Financial Conduct Authority (FCA) are fostering innovation. These endeavors focus on informing consumers about product sustainability, automating ESG data collection, and promoting transparency in sustainability reporting.
To standardize non-financial reports on sustainability, the World Economic Forum published the ‘Stakeholder Capitalism Metrics,’ encompassing criteria for ethical behavior, diversity, water consumption, innovation, among others. BBVA, among others, has embraced these metrics, reflecting a commitment to international sustainability standards.
As societal and environmental challenges persist, technological innovation remains a critical factor in steering toward a greener and more inclusive future.
