On the penultimate day of UK Fintech Week, a webinar titled “Going Green: The Pivotal Role of Finance” took place. In the past decade, many fintechs have taken a stronger stance on the green initiative, increasing their ESG regulations to make their companies more sustainable and in turn, more attractive to investors. The webinar explored a subsection of ESG concerns, namely, green finance and what role regulators will play in encouraging environmentally sustainable business practices, whilst also discussing what was next for the industry with COP26 quickly approaching.
Moderated by Tom Graham, Managing Director in Accenture’s Banking practice and Programme Director for Accenture’s FinTech Innovation Lab, the panel consisted of Charlotte Wood, Head of Innovation at Schroders, Duncan Grierson, CEO & Founder of Clim8, Francesca Hopwood Road, Head of RegTech and Advanced Analytics at the FCA Innovation division, Sopnendu Mohanty, Chief FinTech Officer at the Monetary Authority of Singapore, and Dr. Vian Sharif, Head of Sustainability at FNZ.
The main themes the panel aimed to discuss were:
- What could the fintech industry do in the green finance space and how it could make an effective difference.
- What things were proving to be problematic to the fintech industry and how it would achieve real change, not just greenwashing.
- What toolings and bits of infrastructure were needed in order to affect a proper change.
The panel began by discussing what green finance was to them. Duncan Grierson kicked off the conversation by saying, “Green finance is making a difference, putting money into companies that are either taking sustainable action on emissions or on the use of resources on the planet. It is about putting money into clean energy, cleantech, electric mobility, sustainable food and a range of other sub-themes. It is not using ESG as a screening filter to screen out just fossil fuels – green finance is something much, much deeper.”
Charlotte Wood added to this by talking about the role investors have in green finance by “mitigating the negative impact companies can have. So investing into improving companies’ activities even if they’re not currently in a great place from an environmental perspective. Green finance is about encouraging projects that have a positive impact.”
“Asia is at a very different starting place because millions of people don’t have electricity, and fossil fuels are not adequate to the demand which the nation needs,” said Sopnendu Mohanty, based in Singapore. “There has to be a transition process from where you move from a carbon economy to a green economy, rather than a switch, otherwise the socio-economic challenges are enormous.”
Tom Graham then moved the panel’s focus onto what fintechs were doing to help consumers change their behaviours and think differently about the problems of unsustainable energy. Francesca Hopwood Road answered this by referring back to a speech made by FCA CEO, Nikhil Rathi. “Our CEO made a speech towards the end of last year where he talked about three really key things – transparency, trust and tools. In terms of transparency, one really thinks about the role of promoting good disclosure on the investment chain. In terms of trust, we’re thinking about how we ensure that the market really delivers sustainable finance instruments and products that really genuinely meet the investors’ preferences.”
Graham made a link between Hopwood Road’s comments and a solution that Duncan Grierson had previously suggested where he described a standardised colour coding to put companies into bands and help people understand how green a company really is. Hopwood Road answered by highlighting that “consumers understanding how they engage with companies is really important,” as they need total transparency and trust from the company. “The way that information is presented and enables engagement is really important.”
The final point of discussion was on the things the panellists were optimistic and worried about, in terms of the direction green finance was heading. Grierson highlighted his concerns by saying, “There’s greenwashing and there’s a tonne of conscience washing too. Lots of people are saying they’re planting trees and that’s great, but we need lots more than that. If your company says they’re going to plant x number of trees that’s great but you need to look at the products you’ve got, and whether you’re truly moving your business model in the right direction. There’s a great opportunity for fintechs to help democratise access but people have to be aware there is a lot of greenwashing.”
The webinar was concluded with a call to action from Vian Sharif: “Let’s ask, where are our savings invested? Where are our pensions invested? Ask your financial advisor. Do you have an environmental outcome you want to achieve? How can they help you do it? If every single one of us were able to ask that question then we could actually have a very significant impact. Technology increasingly will give us the answer to these questions, the visibility, the transparency, the democratisation of that information will be in the palm of your hands very, very soon.
“The thing I’m most worried about is that we’re not going fast enough. We’re here in 2021 and we’re still questioning what we need to be surfacing and what information we need. I think we’ve got to accelerate if we’re going to make a difference. We’ve got eight years to achieve the sustainable development goals – we’re running out of time.”