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The Climate FinTech Opportunity

June 21, 2021

The Climate FinTech Opportunity

The panel was held as part of the FinTech Summit at the 4YFN - Four years from now - Conference. We have captured some of the insights discussed below.

What exactly is Climate FinTech and what's the opportunity?

Aaron McCreary While sustainable fintech is digital financial technology that pushes forward the 17 SDGs, Climate Fintech is more specific – digital financial technology solutions catalyzing decarbonization.

10 years ago, the GreenTech industry suffer a rapid rise and fall. Now we see an impressive increase in investment into Climate Tech, into things like battery technologies or solar tracking systems. Climate Fintech is an even more attractive subset of Climate tech, because these are digital platform, SaaS programs which are capital-light and easier to scale.

Francisco Benedito Global warming is a problem that is going to affect all of us. Carbon and climate markets are one of the solutions to tackle this problem. It is a way to funnel funds to promising projects in that space.

What are the challenges for adoption of Climate Fintech today?

Shawn McKell In the case of carbon markets, we see a lack of standards. We need to standardize data analytics and methodologies, standardize what we measure, how you quantify impact, and the price (true cost) for offsetting environmental impact. This will make it easier to understand and easier to adopt by all parties involved.

Geilan Malet-Bates A lot of us are working in the Green Fintech space, because we want to make a real positive impact. However, regulation is not standardized and leaves much room still for ambiguity. Scope 3 emission reporting is also still not mandatory.

When it comes to working with financial institutions, the situation is quite challenging for Climate FinTechs. Financial institutions tend to look for startups that address very specific needs at a corporate level. Large institutions are also not agile in infrastructure, nor sometimes in true entrepreneurial thinking. This makes it even harder to achieve a successful collaboration and especially when the process of establishing a proof of concept (PoC) can take an unnecessarily long time.

For financial institutions it is therefore important to realize an internal culture that really embraces innovation more holistically. For Climate FinTech startups it is integral to quickly cultivate champions within these large institutions, which they've hopefully duly and diligently qualified as partners.

Is ClimateFintech just a hype?

Francisco Benedito There is hype, yes, but in its most positive sense. We have three decades to create the necessary change in the climate crisis. It will become more and more relevant.

There are some companies who do Greenwashing, but I believe the startups are trying to solve real problems. It is a good investment; they bring solutions to a very critical problem.

Geilan Malet-Bates It shouldn’t be treated as a hype - there is a definite need for intelligent innovation in order to help protect our natural world. Greenwash however is a big challenge, not so much in the startup world - but certainly in larger companies and certain industries.

It's problematic when as a company the majority of your net-zero strategy relies on carbon capture, instead of reduction of emissions, for example. We also need to mitigate the risk of any climate technologies being harmful in future given the potential risk of leakage and contamination which would have huge ramifications not only on the air we breathe, but also on agricultural land, water and food supplies -ultimately our health.

What should we all take away from this panel?

Shawn McKell It’s a collective effort. It’s important for everyone to realize that artificial demand (for unnecessary goods and services) drives the (over) production of goods and services, and to understand as well as question our individual consumption choices.

But the only way to make this tangible to consumers is to have a common understanding of what the key impact factors are, use standardized metrics for measuring and communicating these factors and to communicate them in a way that they become relevant to consumer's lives. Adoption is less about precision than about simplification.

Francisco Benedito We need to be very exigent every day in our actions – as customers, as companies, as a society. We are also working on a very exciting project: We have helped BME (SIX group) to create the first blockchain registry for carbon footprint in Europe.

Aaron McCreary We need everyone in the ecosystem to work together. Startups, corporates, investors, regulators and society. We are building a global Climate FinTech Accelerator to foster such exchange and empower collaboration.

Geilan Malet-Bates Collaboration, collaboration, collaboration: if you are a large institution, be open-minded.

Collect big data and share it - it needs to be made accessible for startups - data is a real view of the world, integral to identifying where funds need to be truly committed to affect the positive change that ultimately benefits us all.

‍‍Thank you to our panelists for sharing your experience and expertise on the topic:

Francisco Benedito, CEO of Climatetrade

Shawn McKell, Head of Platform Strategy at Doconomy

Geilan Malet-Bates, Green Fintech Entrepreneur and Chair of Green Fintech Forum at P27

Aaron McCreary, Climate Fintech Lead at New EnergyNexus

Photo credits: Alena Koval from Pexels