There are growing calls for the finance industry to champion sustainable business practices – but companies and investors are finding the task no easy feat.
The need to factor in complex environmental, social and governance (ESG) considerations has made it difficult for investors to identify genuinely sustainable ventures. Increasingly stringent requirements for listed companies to provide detailed sustainability reports, and the need to analyse huge non-financial datasets and metrics across multiple ESG reporting frameworks, come at the cost of additional time and effort. Greenwashing presents another obstacle that both companies and financiers must navigate.
Tools such as artificial intelligence, big data analytics and distributed ledger systems are potential solutions to these challenges. Such instruments are already making an impact in the green fintech space by automating the collection of ESG data from various sources, helping companies to provide more accurate and timely disclosures, spotting trends and opportunities more rapidly, and supporting better scenario analysis and risk management needs.
With VC and PE investment into ESG fintech companies reaching $6 billion in 2022, the sector is poised to continue expanding exponentially. It is imperative for the finance sector to understand upcoming trends and leverage new tools to advance sustainable finance and manage uncertainties such asclimate risks. Doing so can also future-proof organisations, strengthen bonds with key stakeholders and investors, and enhance enterprise value in the long term.
What could be the future applications of fintechs in driving sustainable financing decisions? What impacts and opportunities would they present? As climate risks grow, what new tools are urgently needed, and how can we support their development and deployment?
Join Eco-Business at Catapult @ Rochester Commons, as we take a deep dive into these questions with leading experts in the sustainable fintech space.
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