Marianne Haarh, director of ”Sustainable Digital Finance Alliance.

Finance Lags behind Other Sectors, but It Could Be the Solution for a Greener Future

A Chinese app that gamifies carbon footprint tracking has already shown that fintech has the potential to cut carbon emissions. According to the director of the ­Sustainable Digital Finance Alliance, a new wave of ­green fintechs could help achieve the United Nations’ sustainability goals.

Wildly popular in China, the app ‘Ant Forest’ enables users to earn green points by walking, using public transportation, paying bills online, and other low-carbon activities that – over time – feed into a virtual tree. Eventually, the virtual tree in the app is converted into an actual tree in the world, further reducing carbon emissions.

Undeniably, the app serves as a promotional programme for the Chinese payment service Alipay, but it also does a public good by nudging users’ behaviours. In this way, Ant Forest has become the world’s largest unofficial carbon market. Broadly speaking, the developers have managed to scale green fintech like no other, and that’s what makes it a compelling case – and “part of the reason why we initiated it,” explains Marianne Haahr, director of Sustainable Digital Finance Alliance.

Indeed, the non-profit organisation, Sustainable Digital Finance Alliance helped give birth to the programme, in partnership with Ant Finance and the United Nations. Combining the internet, finance, and a low-carbon lifestyle has attracted (and hooked) 400 million users. As of August, 2017 the programme had planted more than 10 million trees.

According to Haahr, green fintech projects like this can really make an impact:

“Money is what makes things happen. Money builds roads and determines whether companies live or die. And we want money to focus on more than just a narrow, financial return – but also recognized green and societal returns.”

The financial sector is lagging behind on sustainability

“At this point, the sustainability goals have been around for several years, and many sectors have started embracing them – emitting less CO2 in their value chains and doing good for society. However, if you look at the financial sector, it has moved relatively slowly,” Haahr advises.

Her organisation’s mission is to get the sector to move faster. As a case in point, Haahr pointed towards green bonds, which only account for 1 per cent of the bond market today.

“There’s plenty of capital available, which could be used for green projects through bonds. It’s all about re-allocating the capital. And if we don’t do this, we will never meet the Paris Agreement or the United Nation’s sustainable development goals,” Haahr says.
Nevertheless, Haahr regards green bonds as a success story. After all, they have scaled relatively fast, and, with the help of fintechs and tech companies generally, the growth could continue to accelerate.

“Today it’s a little more cumbersome to design a green than a traditional bond, because you have to collect more data than you’re used to. You don’t just have to look at the earning and asses if it’s realistic. You also have to know the green return over the next five years and assess the data proving it – otherwise it won’t be a green bond,” Haahr explains.

Data remains a major barrier to green investments becoming mainstream. For Haahr, fintechs can play a pivotal role in overcoming those barriers through emerging technologies, such as blockchain, automation, and the internet of things.

A new wave of fintech is poised to make an impact

Fintechs are already bringing new business models to the market. It stands to reason that green add-ons could be incorporated with relative ease. Crowd-investing in real estate could become crowd-investing in green real estate. Technologies and new payment infrastructures allow scaling of sustainable energy in novel ways. And the accessibility of tech allows projects to fertilise for change from below.

“If you look at the carbon wallet, it’s a fintech which corrects a regulatory mistake. Carbon isn’t taxed to any large degree. As individuals, we cannot monetise our carbon savings or trade them in the marketplace, so the wallet offers individuals access to a carbon market by granting rewards for carbon savings. It is not a punishment for polluting behaviours as a carbon tax, but a rewards system for climate positive behaviours. It all happens in a gamified universe, with personalised feedback loops as guidance – and it helps you change,” Haahr says.

Above all, fintechs need to drive a change in mindset. “Saving is for sure something we would love someone to make a solution for in Denmark. If we just moved all of our savings into the sustainability goals, we wouldn’t have a financing gap,” Haahr points out.

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”Sustainable Digital ­Finance Alliance”
  • The overall objective of the Alliance is to leverage digital technologies & innovations to enhance financing for sustainable development.
  • The organization was founded by ANT Financial Services and UN Environment to harness digital technologies for sustainable finance.
  • Today Sustainable Digital Finance Alliance is spun out as a non-profit organization.
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