Aldo Agostinelli

Technological and digital innovation in finance often matches a marked interest into social and environmental issues. Such changes mirrors European and global policies aimed at fighting global warming and tackling social iniquity. Here are some examples

The world of Fintech startups has become increasingly sustainable both socially and environmentally. In 2020, 27%, of 2.541 companies scattered all over the world achieved at least one of the so-called SDGs, the sustainable development targets set by ONU 2030 Agenda.

More specifically – the Fintech & Insurech Obesrvatory has revealed – the most popular topics are the reduction of inequalities (10%), the support to financial development (9%) and the attempt to fight global warming (4%). 18% of Fintech startups focuses on one SDG only, 9% on more than one of them, with cross picks. The location of Fintech Green & Social startups is actually surprising: 54% are in Africa, 40% in Asia,  26% in Europe, 22% in the United States. And it is not only due to a widespread sensitivity among new generations. Indeed, sustainability attracts investments and generates revenues: startups which prove to be more receptive and reactive –  according to the Fintech Observatory – get 25% more funds than their competitors (Fintech e sostenibilità: a livello globale un quarto delle startup sono Green & Social/Fintech and sustainability: one fourth of global startups are Green & Social).

“Climate neutral” Europe

The great majority of development strategies by industrialized countries are based on investments made into the digital world and which are also sustainability oriented. Europe is no exception to this, since these two elements are the main drives of the Next Generation EU and of another less famous act: the EU Taxonomy Climate Delegated Act, designed to push investors to implement more sustainable processes and technologies aimed at making Europe “climate neutral” by 2050.

In other words, the idea is to make Europe the first climate neutral continent. We are talking about a really ambitious target: to achieve it, greenhouse gases emissions are to be cut down by 55% by 2030. New regulations will be needed while companies and investors will be expected to make strategic choices with regard to renewable energies and energy efficiency. But the greatest challenge is decarbonizing production plants across several different industrial sectors without impacting on productivity and employment rates (Fintech e sostenibilità: le startup Green & Social e i modelli di business/ Fintech and sustainability: Green & Social startups and business models).

Green Fintech examples

Established in Milan in 2013, and run by a woman, Laura Oliva – a rarity in the Italian Fintech scenario – eKuota offers rating services and aims at contributing to the creation of a sustainable financial environment. Its mission is to “democratize business finance, making information deriving from the use of complex tools available to all businesses and not only to the big financial organizations, banks and insurances”.

ESGs (Environmental, Social, Governance), a set of parameters measuring environmental, social and governance activities of businesses in compliance with European policies, are its starting point and also offer an operative standard based on sustainability.  eKuota has consequently decided to add to its original package of services (including information about exchange rates fluctuations, raw materials prices and interest rates ) a second offer focusing on ESGs criteria, allowing companies to monitor their sustainability status through the analysis of measurable criteria (Sustainability, eKuota, an Italian Fintech company, is working on a rating process based on specific criteria).

Plug and Play (Pnp), instead, is a Californian incubator and an aggregator which has contributed to the development of companies such as Google and Paypal. Operating in Italy since 2019, over the past year, it has been working on the sustainability-oriented digital transformation of the financial world. For instance – Andrea Zorzetto, managing partner of Plug&Play Italy, told Repubblica– the partnership with Nexi open banking platform started a survey of the supply chain based on ESGs and the analysis of suppliers’ performance rates. The idea is to find “not only products or services sustainability but also a whole value chain”. What is still to be understood – claimed Zorzetto – is whether “the rules of the startup world and venture capitalism can be applied to cleantech, i.e. the technologies designed for the development of sustainable models”. And also, whether small and medium companies will be able to digitalize their organizations within a market like the Italian one (From Fintech to cleantech: sustainable finance targeted by Plug & Play).

Will Fintech Green & Social start up be able to provide a significant contribution to the achievement of the targets entered in the 2030 Agenda and to the climate neutral? Tweet  @agostinellialdo

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Giulia Foschi