Tackling climate change is an essential component of the global sustainability agenda and one in which financial services can make an important contribution. The FinTech sector plays several important roles in helping consumers and corporates make informed, climate-related decisions.
Rise, created by Barclays, has recently published the latest edition of its Insights report, which focuses on this area of Climate fintech. In this article from Rise, they explore the developments in the corporate space and alternative markets
Plugging the data gap
Climate fintechs are helping to solve one of the main concerns with Environmental, Social and Corporate Governance (ESG) information – the availability, consistency and granularity of the data that’s required to prove how companies and individuals are taking effective climate action. Data providers like Net Purpose are quantifying many of the aspects of company behaviour which, until now, have sometimes been viewed as largely subjective. YvesBlue, for example, has created a platform that merges disparate ESG data sources into a consolidated view of companies’ impact characteristics in any given investment portfolio. And Nossa Data, an alumnus of the 2021 New York Barclays Accelerator, powered by Techstars is simplifying the long and complex ESG reporting process for corporates.
“Fintechs have the opportunity to become the flag bearers for better ESG data.” – Katherine Wilson, VC at Illuminate Financial
Building brand engagement with peer-to-peer programmes
Loyalty peer-to-peer (P2P) programmes turn a commodity produced by customers into a currency that can be exchanged for goods, services or individual recognition. They’re a modern way that brands can engage with customers and build trust. Where technology is concerned, trust is synonymous with blockchain. In the report, we showcase how Power Ledger puts this to good use.
Using Power Ledger’s blockchain platform, Carlton United Brewery (CUB) in Australia allows customers to sign up to a deal supplying the brewery with their excess rooftop solar electricity, in exchange for beer. Participants can log in at any time and find out how much electricity they’ve produced for the brewery and how much beer they’ve accrued. And it’s not long after they’ve provided the electricity that a van pulls up outside to deliver their beer. The brand can cut through the complexities of what being sustainable means, and just start demonstrating it.
“Sustainability goals met. Brand engagement increased.” – Dr Jemma Green, Executive Chairman of Power Ledger
Enabling carbon removal with APIs
Application Programming Interfaces (APIs) are assisting companies with removing carbon from the atmosphere. How? In the case of Patch, developers are able to embed project metadata into their digital experiences, generate emissions estimates for certain activities, and then programmatically order carbon removal from our network of projects across the globe.
There are a number of fintech use cases, such as cryptocurrency, where carbon removal could be embedded into digital asset platforms and products through APIs. For example, Bitcoin mining has been scrutinised for its carbon footprint, but that could change.
“We imagine a world in which crypto exchanges offer their users the option to offset the carbon footprint associated with their Bitcoin purchases.” – Brennan Spellacy, CEO of Patch
Innovation in the insurance markets
The hazards presented by climate change has put pressure on the highly specialist insurance sector. New underwriting solutions and products are emerging.
Platforms like Pega and cloud solutions are driving operational efficiency, but insurtech companies really bring their prowess in designing simple customer experiences and, perhaps most importantly, analytics with cutting-edge products such as ultra-customised policies and using new streams of data from internet-enabled devices to dynamically price premiums according to observed behaviour.
Some insurtech companies are also experimenting with AI to automate the tasks of brokers and find the right mix of policies to complete an individual’s coverage. An example of what’s possible is Lemonade, the US-based insurer, disrupting the real estate insurance model with AI and behavioural economics to evolve traditional insurance.
“For the insurance sector, impact alignment makes perfect ecological and economic sense.” – Cedric Leung, Financial Institutions Group at Barclays International
You can read what these and other companies have to say about Climate fintech in the Rise Insights report, which also contains an in-depth analysis of the enablers in the market – data, policy and technology – and articles on how fintechs are influencing climate-conscious consumers and developing products and services that meet their needs.
To connect with Rise, visit our website where you can contact our Rise sites in London and New York, learn about the work that we do.