Green finance and financial inclusion

Sep 3, 2021 12:00:00 AM

What has happened?

Fintech Week London, held in July 2021, highlighted the key areas of green finance and financial inclusion.

What do you need to do?

The first panel session during Fintech Week revolved around green finance, climate fintechs and how technology can be used to shape a more sustainable world through financial products and services. When the panellists were asked what they believed the role of fintechs was regarding dealing with climate change, Julienne Sloane of Nossa Data explained that “fundamentally fintechs are a reporting platform. It takes a ton of time for organisations to report on different topics like carbon emissions and water usage; it takes a huge amount of their resources, and when they’re spending resources on reporting, they’re not spending resources on actually improving on these topics.” Simon Cureton of Funding Options added to this, saying, “We’re focused on funding green and lending green… If we can make it easier for businesses to focus on the things that are really important to them, then to me, that’s a great thing.”

When discussing investment plans, Thanos Bismpigiannis of Plum explained that many consumers do not fully understand how to consume the data provided, saying “It is our mission to make this data more accessible to users to help them make the right investment decisions… We have seen research that suggests two-thirds of users want to invest in ESG, but they either don’t know how to go about it, how to understand this data or they may not trust the provider that they used real data. In my mind, that’s what’s next – that these services are available at a consumer level. We have seen an interesting trend of users investing in more sustainable opportunities. We saw almost all investment allocations with an ESG strategy attached to almost double between the start of the pandemic and the second lockdown.”

Following the panel, a fireside chat was held which further discussed green finance and its future. Romina Savova, CEO at PensionBee, explained different strategies to encourage green finance such as excluding fossil fuel producers from investments, engaging with fossil fuel producers and encouraging them to change, impact investing and putting money into companies that are actively doing things to make the world better.

Appropriately enough, in its Business Plan for 2021/22, also issued in July 2021, the FCA set out its commitments to driving ESG outcomes across the industry, which will involve “promoting integrity” across the market, including when it comes to ratings and ESG data providers.

The regulator said that financial services and markets play a “central role” in the transition to net-zero, adding that it is committed to ensuring “high-quality climate-and sustainability-related disclosures to support accurate market pricing”.

The FCA is also consulting on new disclosure rules in line with TCFD guidance for asset managers, life insurers and FCA-regulated pension schemes. It is proposing to bring in new rules on climate-related disclosures for listed companies linked to the TCFD from 1 January 2022.

In addition, the regulator’s wholesale priorities include increasing supervision of whether ESG attributes of asset management investment products are fair, clear and not misleading.

Finally, the FCA also said it was committed to driving innovation in sustainable finance through technology to “bring about change and overcome industry-wide challenges”.

Another panel that took place was on the impact of financial inclusion. The moderator opened the discussion by giving the World Bank‘s definition of financial inclusion, that “individuals and businesses have access to useful and affordable financial products and services that meet their needs. Transactions, payments, savings, credit and insurance are delivered in a responsible and sustainable way.”

Guy Kashtan of Rewire said this when asked what financial inclusion meant to him, “I think one thing it is missing [from the World Bank’s definition] is about education on helping populations who are either underbanked or underserved. Building a service and making it accessible isn’t always enough. So payments today are broadly used – making this accessible is fine but when you go into more complicated services like credit, insurance, and savings, in my opinion, the educational cloud and helping customers use it, incentivising them to use it to build a better future for themselves and their families, is a critical part of financial inclusion.”

How can we help you?

If you’d like to know more about how we can help you with your green/ESG finance or financial inclusion arrangements or any other regulatory compliance issues, our expert team is here to help.

Blog