Impact

Australian Fintech Innovators Are The Key To A Sustainable Tomorrow

Australian Fintech Innovators Are The Key To A Sustainable Tomorrow

Ready to underpin global efforts to reach net zero, Australia’s fintech innovators are forging ahead of legacy banking when it comes to building the foundations of a sustainable future.

As the world strives to meet net-zero goals by 2050, sustainability efforts are in the spotlight. Labor’s commitment to on-ground environmental outcomes, such as The Climate Change Authority’s $42.6m boost in funding, provides a great initiative for businesses to engage in innovative, environmental management and financing.

Fintechs are far better-placed than legacy banking players to lead the way on sustainable economic models. Now is the time to support Australian fintech innovators as they begin to transform their own sector and the economy at large.

Writing a new social contract

Businesses in every sector enjoy strengthened brand reputation and trust when they take advantage of innovative financial technologies to improve their sustainability efforts. This trust forms the foundation of that new social contract, where business is trusted to play their part in building a sustainable future.

Fintechs can make sustainability their unique selling proposition, plus they can set an example for others to follow – strengthening their own brand reputation along the way.

Fintechs already have a natural advantage over legacy banking players when it comes to their much smaller carbon footprint. This is thanks to their significantly reduced reliance on head offices, branches, staffing numbers, and all the trappings of a traditional physical workplace such as energy, water, and paper consumption.

Building on this, the fintech sector’s inherent use of real-time information, big data, machine learning, and artificial intelligence makes it a perfect role model for other sectors looking to implement environmentally friendly and sustainable practices, from overhauling their logistics and supply chain to their sales and marketing.

Financing the sustainable revolution

Along with setting the example of sustainability-focused businesses, fintech can also reshape the economic fundamentals required for the sustainability efforts of others to succeed.

Fintechs have the power to assist their business and consumer customers with making enviro-friendly financial decisions. This includes providing access to and certifying green banking, finance, and investment products which help customers meet their own environmental and sustainability goals.

This is one area where legacy banking is holding the world back. The world’s 60 largest banks invested a total of $3.8 trillion in fossil fuels between 2016 and 2020, according to the 2021 Banking on Climate Chaos report.

Despite this, there is clearly an appetite for change. For example, investor interest in sustainable assets increased 34 per cent in 2020, rising to 61 per cent amongst millennial investors, according to Refinitiv data. There is also demand for sustainability-focused lenders so businesses can build themselves on environmentally-sound foundations.

Fintechs are in a strong position to meet this demand by creating their own green-friendly products and services, from green banking products to sustainable investment options.

The UK’s green neobank Tred has introduced a green Mastercard debit card, made from recycled ocean plastic, which offers users the ability to track, reduce and offset their carbon footprint as they spend. Tred also contributes to reforestation with every purchase.

Closer to home, WLTH has teamed up with Parley for the Ocean to offer customers Visa debit cards made from recycled Parley Ocean Plastic®. WLTH is also working with Parley for the Ocean to offer green-friendly home loans. For every home loan which is settled, WLTH assists Parley for the Ocean teams with cleaning up 50m2 of coastline throughout Australia and around the world.

Underpinning sustainability efforts

The technology that powers fintech can also allow businesses in other sectors to improve their sustainability efforts and monitor compliance.

Working with big data enables businesses to measure the true environmental impact of their assets, from carbon emissions to ethical sourcing. Meanwhile, blockchain platforms can monitor compliance with sustainable development goals.

This technology supports not just internal reporting, to measure the impact of environmental, social, and governance [ESG] initiatives, but also reporting to external stakeholders and regulators.

For example, many businesses need the capability to measure, disclose and improve their sustainability levels according to the new EU Sustainable Finance standards. This includes EU Taxonomy, which is a green classification system that translates the EU’s climate and environmental objectives into criteria for specific economic activities for investment purposes.

Between helping to write a new social contract, financing the sustainable revolution, and underpinning the sustainability efforts of others, the fintech sector is at the forefront of the global struggle to achieve net-zero goals. While legacy banking is stuck in the past, Australia’s fintech innovators are laying the foundations for a sustainable future.

Source: Australian Fintech