Green Fintech: Sustainable Finance Meets Innovation and Technology
In our previous infographic “Green FinTech – How Is FinTech Going Green,” we discussed why it is necessary for the financial sector to become sustainable and how they tackle the environmental issue with the use of technology. As the emphasis on sustainability in finance grows, the financial industry increasingly integrates green and innovation as a driving force of its development. Demand for this so-called “green fintech” is thriving to fight against climate change.
The infographic above first further elaborates detailed services and products green fintech companies may offer. Then it takes Ireland as an example of a state-led initiative to promote green fintech.
Green Fintech Services and Products
With the use of technologies such as AI, big data, IoT, etc., financial institutions invent new services and products to help achieve a greener future. Here are some examples.
Rewarding Clean Energy Producers
Tech-driven services, such as crowdfunding platforms or peer-to-peer exchange network, channel financial resources into environmentally sustainable firms. These services reward clean energy producers, incentivizing others considering clean energy.
Assisting in Carbon Offset through Purchases
Green fintech companies can assist corporates and individuals to reduce carbon emissions by analyzing data on their financial activities. They then automate carbon offset purchases based on the analysis.
Planting Trees through Services
Some services are literally ‘green’; customers can actually plant trees by using tech-based services such as digital wallets. Although tree planting may not be their primary product, they help users offset carbon footprint.
Investing in Better Environmental, Social and Governance (ESG) Ratings
With the use of artificial intelligence, equities are given real-time ESG rates, which helps investors make a greener investment decision. This also helps companies to improve ESG standards. For example, Arabesque’s S-Ray is a tool to help filter such information.
Several countries including Ireland, the UK, Switzerland, and Singapore have already announced initiatives to facilitate these green transformations in the industry.
Green Fintech and Ireland: How It Contributes
The world is moving towards green fintech and Ireland stands out for its pioneering role in shifting the economy from high-carbon to low-carbon. Being a relatively smaller country with a population of less than 5 million, Ireland actively seeks for green economic growth through boosting green fintech.
Prioritizing Sustainability Both in Public and Private Sectors
Ireland’s commitment to the environment was exemplified when the country became the first nation to divest from fossil fuel. The Fossil Fuel Divestment Act 2018, signed in December 2018, requires complete divestment worth €68 million from 38 companies involved in oil, gas and other fossil fuels.
In addition to enactment of the law, the country launched a whole-of-government strategy in 2019. This strategy called Ireland for Finance aims to make the country an ideal location for overseas financial businesses to 2025. Ireland for Finance is assisted by Action Plan , whose main focus is on sustainable finance with the use of technology and innovation. These initiatives has been developed in collaboration with public and private stakeholders across the country.
Focusing on Innovation and Technology
With the initiative of Ireland’s most prestigious university Trinity College Dublin, Dublin will be home to international techs such as Google and Meta, as well as to early-stage start-ups in 2022. The Irish government advocate this plan, Grand Canal Innovation Hub. If successful, the plan will be a great showcase for the future development of the city; Dublin may become the innovation capital of Europe. The total cost of the development will be €1 billion over a period of the coming 10 years.
The Irish government has funded €4 million to Trinity College, out of which €2.5 million was from Enterprise Ireland. Enterprise Ireland is the government agency to support growth of Irish businesses. The agency provides fund to start-ups in fintech as well as hosting global events specific to fintech. Moreover, Enterprise Ireland encourages Irish businesses to plan for a green future. It provides various supports such as vouchers and funds on businesses’ actions against climate change.