Over the last few years, some of the largest and most influential banks globally have committed to reducing emissions attributable to their operations.
A compelling example of a fintech using ESG to market as well as to address environmental issues is Aspiration Bank, a US-based, online-only fintech which offers a ‘Spend and Save’ cash management account where the deposits are not used to fund any oil and gas projects.
The bank is set to go public in a $2.3bn SPAC transaction this year.
In addition to these bonds and loans that are promoted by large financial institutions, specialised fintech lending companies are emerging that focus on sustainability and have developed dedicated lending platforms and products to address the ESG objectives of their consumer clients.
Climate fintechs in the payments segment focus on influencing the spending and shopping behavior of consumers towards embracing brands, companies, and practices which both are more sustainable and help reduce their consumer carbon footprints.
Ecountabl is a US-based, purpose-driven tech company that helps consumers shop and spend with brands and companies that align with their social and environmental goals.
Raise Green is one of the first green crowd investing portals in the US that offers investors a marketplace for local impact investing.
Climate Impact X is a Singapore-based global carbon exchange and marketplace for carbon credits jointly established by DBS Bank, Singapore Exchange Limited , Standard Chartered Bank, and Temasek.
Jupiter Intel, on the other hand, measures physical risk of climate change at the asset level by using satellite data, artificial intelligence, machine learning, and Internet-of-Things connectivity.
Banks, asset management firms, and other financial services companies can leverage this data to manage risk and allocate capital to assets that maximise positive climate impact.
While much of the ESG focus of investors has been on renewable resources and recycling to date, financial services firms have many ways to advance ESG goals while providing valuable services to consumers and businesses.