Rise, created by Barclays, launches new Insights report on Climate FinTech
The FinTech sector has an important contribution to make in reducing emissions, achieving net zero agendas and enabling climate action. The latest edition of the Rise Insights report explores how FinTechs are shaping a more sustainable world with ‘green’ financial products and services that add value for consumers, clients and corporations.
The report covers the enablers that support innovation and gives Climate FinTech examples from the markets and consumer perspective. There’s also updates from the Rise ecosystem and Barclays teams. In this article, we share some of the highlights.
“I see significant opportunities for innovative, fast-growth companies that are developing financial technology in supporting the transition to net zero,” writes Sasha Wiggins, Group Head of Public Policy and Corporate Responsibility at Barclays. “It’s by collaborating with business and technology teams within banks that FinTechs can understand the real-world possibilities and turn ideas into practical solutions”.
The enablers of Climate FinTech
What factors are driving innovation and creating opportunities for the sector? There are three.
First, new sources of, and ways of treating, climate-related data are being discovered and applied by FinTechs. The data needs to have greater availability, consistency and granularity to provide firm insights into companies’ effective climate actions. FinTechs pursuing this goal include Net Purpose, YvesBlue and Nossa Data, an alumnus of the 2021 New York Barclays Accelerator, powered by Techstars.
Second, emergent government policies and standards addressing climate change present challenges for organisations but opportunities for FinTechs. We’re unlikely to see a single, globally recognised data standard emerge, so being able to compare standards and investments across international markets at the right level of granularity will bring transparency. It’s a massive data modelling and comparison exercise!
Third and last, there’s technology. Blockchain is perhaps most relevant to Climate FinTech. It’s a vital way of tracking the highly connected world of carbon emissions and energy consumption. IoT, 5G and AI are additional technologies that will allow investors to track huge volumes of metrics on physical assets without human intervention.
The effectiveness of any new Climate FinTech value proposition depends on understanding these enablers, which are covered in greater depth in the report.
Climate FinTech in alternative markets
From new asset classes to the adaption of markets, the increasing popularity of green solutions is impacting investments. Here are just two examples of Climate FinTech innovation from the report.
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. 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. The brand can cut through the complexities of what being sustainable means, and just start demonstrating it.
Carbon removal is when businesses redress some of their carbon emissions through solutions, such as reforestation and negative emissions technologies, such as direct air capture, biochar (charcoal produced from biomass) and mineralisation. Patch allow developers in digital banks to embed project metadata into their customers’ digital experiences, calculate carbon footprints for those, and then programmatically order carbon removal from a network of projects across the globe.
Climate FinTech and the green consumer
People care about climate change. They’re adopting new behaviours – how they power their homes, how they travel and what products they buy. They’re also looking to make more informed decisions about their money – by analysing the impact of their spending and investments, and adjusting them to benefit the environment.
FinTechs are supporting these behaviour changes with new products and services that meet the needs and desires of climate-conscious consumers. Here are some companies featured in the report who are doing just that:
- Aspiration has a green take on the shift toward digital banking that fosters consumer action and enhances the trust between customers and banks. Their 'Sustainability as a Service' platform offers ways for individuals and businesses to align their financial needs with their values.
- Envaluate applies research-based behavioural economics, and works with banks to create new technology that provides transaction-level analysis and tips to help lead a greener life.
- OpenInvest is turning the traditional product-centric model of investing on its head, and mainstreaming a socially responsible model that helps individuals seek ethical ways to invest.
- Cushon gives people a more active say in how their pension investments are made, and demonstrates how pensions play a role in the fight against climate change.
"One of the things that I get most excited about when I deal with FinTech is that I don’t know what they’re going to come up with."
-- Mark Carney, Secretary-General’s Special Envoy for Climate Action and Finance, United Nations
- Download the Rise Insights report to learn more about the Climate FinTech enablers and for more on the FinTech companies mentioned here.
- Listen to the latest episode of the Rise FinTech Podcast featuring Patch.
- Contact the Rise team in London or New York to meet any of the companies featured in the report or in the Rise ecosystem of over 100 FinTech startups.
- Learn about Barclays’ climate dashboard, used to track the Bank’s financed emissions and operational emissions performance.