If fintech is to reach its potential to advance the global public good, another factor must be accounted for: the environment.
The United Nations Environment Programme (UNEP) recently published a report, “Fintech and Sustainable Development: Assessing the Implications,” exploring how digital finance can be leveraged for environmental gains.
As the report points out, by reducing costs and boosting efficiency, fintech is already mobilizing green finance, enabling poorer people to access clean energy through innovative payment systems and facilitating green savings for rich and poor alike.
The Swedish start-up Trine, for example, enables savers in downtown Stockholm to fund distributed solar-energy systems in rural areas thousands of kilometers away. Kenya’s M-KOPA is leveraging the hugely successful domestic mobile payments platform, M-PESA, to make clean energy available to poorer communities. Other experiments highlight the green potential of blockchain and cryptocurrencies.
ANT Financial Services has a mobile-payments platform with 450 million users in China alone. The organization is now working with UNEP to offer an experimental “green energy” app that rewards users for reduced carbon use.
ANT’s new green energy app translates financial-transaction data into implied carbon emissions. This approach, if extended across more payments platforms, could engage hundreds of millions of individuals in factoring carbon-savings into their daily lifestyle choices.
Fintech should be aligned with the Sustainable Development Goals – an effort that demands new standards, market innovation, and collaboration.
Countries worldwide should integrate digital finance into their sustainable-development financing plans. Coalitions like the Green Digital Finance Alliance can support these efforts, by mobilizing collective action on the part of financial institutions and their stakeholders.
With the right approach, fintech can be harnessed to strengthen economies and societies, while helping to preserve the environment. Fortunately, this could well be the year that green digital finance comes of age.