Sustainability has become a top priority for many green finance companies who want to streamline financial services while opposing climate change. New fintech startups often form partnerships to help traditional financial institutions adopt sustainable finance practices.
The green fintech revolution provides exciting new career opportunities for product managers, product designers, app developers, and other tech freelancers who want to make a positive environmental impact with their skills.
What is green fintech? This term refers to eco-friendly financial technology. It gives environmentally conscious financial institutions the tools to make their financial services more accessible while supporting conservation and sustainability.
The broader fintech industry creates technology for streamlining financial transactions. Green fintech focuses on benefiting the environment by reducing fossil fuel usage and sponsoring renewable energy.
Many organizations in the financial sector seek environmentally conscious new technologies that reduce their carbon footprint. At the heart of this rising green economy is the fintech industry.
How are fintech and sustainability connected?
What makes a fintech company sustainable? A sustainable fintech business minimizes adverse effects on the environment. Their operations encourage sustainable finance choices among their partners while leading by example in their practices.
Fintech and sustainability go hand in hand by giving green finance companies the tools to promote green investing, banking, bonds, loans, and other green finance practices.
Green fintech is not the same as green finance. ESG green finance is money used to address environmental, social, and governance issues. Green financing aims to channel funds into initiatives that support the environment.
The difference between green finance and sustainable finance is that sustainable finance is a sector of ESG green finance that prioritizes environmental concerns.
Green fintech provides the products to make eco-investing and sustainable finance efforts possible.
Why Emerging Fintech Should Prioritize Being Eco-Friendly
Why is green fintech important? More and more people prefer investing their money in environmentally ethical companies that minimize harmful ecological impacts. Green fintech helps foster that low-carbon economy. The green finance industry needs fintech to achieve sustainable development goals.
To thrive, startup fintech companies must enter this evolving financial ecosystem with conscientious business models. They must provide financial products that promote sustainable investing and ethical asset management. In other words, successful fintech must promote green finance.
What are some benefits of green finance?
Take steps toward U.N. Sustainable Development Goals (SDGs)
Foster viable long-term economic development, including creating jobs
Stimulate financing from agencies and investors to pursue environmental causes
Nurturing the environment through climate action like, reducing carbon emissions and improving energy efficiency
Green Fintech Companies Taking the Lead
Want to know how other fintech companies have found success in promoting sustainability? Here are some examples of fintech providers who have helped the finance industry pursue a sustainable future.
This “impact-first business” produces a unique wooden payment card that Sutton Bank issues. This Mastercard® debit card is made of sustainably sourced FSC wood and recycled plastic bottles. Treecard uses the majority of transaction fee funds to plant trees.
If an organization wants insight into its carbon footprint, CarbonChain can provide it. They use artificial intelligence to assess supply chain data and report emissions risks. Then, companies can use CarbonChain to set benchmarks toward net-zero emissions.
CarbonChain supports organizations in many industries beyond finance, such as manufacturing and trade.
Treelion is a leading name in the fintech industry that has already revolutionized blockchain by providing a digital finance infrastructure for green initiatives. They offer finance solutions like green digital assets to support environmental and social harmony.
Even mobile banking can benefit from the sustainable fintech revolution. Tomorrow’s founders desired to make positive environmental and social change through typical banking practices, so they partnered with Solaris SE to provide digital banking services.
The Tomorrow app presents sustainable alternatives, tracks carbon emissions for transactions, and uses funds for initiatives like restoring habitats in South Africa.
Stripe is a very familiar name in the finance industry, but you may have yet to hear of their recent launch Stripe Climate. This new initiative allows companies to contribute funds to carbon removal operations and receive eco-conscious endorsement status from Stripe.
Stripe Climate is an excellent example of how widely established financial companies can embrace fintech successfully, as it has already committed $15 million to carbon removal technology.
Trine is a model for success in the sustainable fintech industry. This Swedish company facilitates green investments and uses the funds to produce and manage solar energy products.
Trine has helped millions of households receive electricity by accepting temporary loans from users to distribute solar products and repaying that amount with interest. It’s like a bank CD but guaranteed to go to a sustainability cause.
Aspiration calls itself a “purpose-driven climate action company.” The company was founded in 2013, and offers financial services like checking, savings, and investment. They use customers’ deposits to support climate action initiatives.
One of these initiatives, Our Plant Your Change program, rounds transactions to support reforestation.
Future Challenges for Sustainable Fintech
While the green fintech sector shows much promise, companies face some hurdles in pursuing true sustainability. The biggest obstacles facing fintech are:
Clean fintech has a tall mountain to climb, which is even more towering due to resistance by large corporations.
Many enthusiastic startups face opposition rather than cooperation from establishments that favor profit over sustainability. This hinders their efforts to make infrastructural changes that satisfy the United Nations’ target regulations by the decade’s end.
Some of the world’s largest financial institutions resist making renewable energy investments. That’s because they see clients’ assets in fossil fuels declining in value in pursuit of clean energy. So, they’re hesitant to lose investors.
Fintech needs more accurate projection data from sources like AI to encourage embracing green investments.
Lack of funding
Sustainable financial technology isn’t cheap. It requires significant funds to develop feasible solutions. Unfortunately, many startup fintech companies don’t receive the funding they need. Large companies with more clout gobble up climate finance dollars.
Some financial businesses want to give lip service to sustainability without actually taking the work to achieve that. Green fintech firms must keep themselves and their financial partners accountable — instead of just cashing in sustainable investing.
A company’s roadmap must point toward sustainability first and foremost.
A shortage of talent
Many tech professionals don’t realize how much green finance companies need help developing products and managing projects. With the numerous jobs opening in the fintech industry, there is a massive talent shortage.
Seeking a job in sustainable fintech? Look no further.
The green fintech industry needs your expertise to promote global and local sustainability. Enter this emerging field using your technical skills to build a greener future.
Green finance companies are seeking professionals like you to develop fintech. Join MVP Match as a freelancer and take your career to greener pastures.