The continued increase in investment in consideration of environmental, social and governance factors (ESG) has a significant impact on the financial services sector (investment finance and financing).
Recently, the World Economic Forum has identified and articulated that sustainable investment has become the norm and is increasing. Assets under management surged from $ 30.7 trillion in 2018 to $ 35.3 trillion in 2020, setting a new record in 2021 on the next track. It will reach $ 50 trillion by 2025.
From billions of investments in green and sustainable products, institutional efforts to integrate ESG standards into lending and investment processes, zero emission commitments of major banks, and primarily climate-related ones. It shows that the solutions developed by financial technology companies (FinTechs) and the environment and financial services sector can play an important role in achieving a fundamental shift to sustainability.
In a very transcendental environment, there is no time to do anything.
The use of data in the decision-making process and the need for sustainability are also clear. Corporate transformation This is a prerequisite.
Directly intertwined with the organization’s broader sustainability policy is the concept of sustainable finance.
This is increasingly being sought after by investors in financial products and fund investments.
Investors are now urgently seeking to link and coordinate their funding solutions with the overall sustainability strategy of an organization that acts as an issuer, funder, or financial supporter.
The European Union has introduced fundamental regulatory tools solely for sustainability purposes.
The EU Action Plan on Sustainable Finance, adopted in March 2018, is part of the Capital Markets Union (CMU) effort to link finance to the specific needs of the European economy for the benefit of the planet and society. It aims to address this investment agenda (Roadmap for Sustainable Finance).
However, under these circumstances, while most companies and organizations recognize the need to integrate ESG standards with the implementation of the United Nations Sustainable Development Goals (SDGs), the valuable implications and accurate sustainability of ESG factors. It is difficult to understand the definition of possibility.
Therefore, it is already clear that organizations may not properly implement specific targeted policies to implement sustainability standards and goals.
As a result, their strategies often fail or lead to increased costs.
The combination of technology and sustainability can deliver the desired results by actively interacting, creating strong synergies and reducing costs.
Fintech can help implement ESG standards while at the same time driving business transformation.
Technology development is motivating and driving to emphasize sustainability issues and the fact that consumers are already looking for automated technology solutions to carry out (digital) banking transactions. increase.
FinTech companies are in a position to provide solutions to facilitate financial products and investments.
At the same time, the need for financial services to adapt regulatory frameworks and supervisory practices to new data is recognized internationally.
New markets to facilitate the safe entry of new products, new activities and special intermediaries without compromising financial stability, without compromising credibility or endangering risk response capabilities. There is an urgent need for action to monitor participants.
Data-related infrastructure is equally important in the following ways: Cyber security Relationships with excessive concentration, ownership, protection, and data privacy risks.
In this environment, digital technology can lead to innovative innovations to build trust, increase transparency and accurately track financial transactions.
With these developments, the financial system is already becoming more efficient to further revitalize green finance.
At the forefront of these efforts are three technologies: blockchain, machine learning (ML), artificial intelligence (AI), and the Internet of Things (IoT).
All three are at the heart of FinTech solutions and can greatly help financial institutions adapt their business models to an ever-changing environment.
It also helps you stay compliant, increase resilience and adaptability, and increase your business’s growth rate.
It turns out that the contribution of FinTech’s solutions to achieving sustainability is very important.
We have already seen many financial institutions working with FinTechs or acquiring FinTechs to leverage the technology solutions they have developed to reach their goals.
In this way, technology and sustainability are inextricably linked. Combining them in the right way can make the achievement of international sustainable development goals much faster and more structured.
Nicole K. Phinopoulou, Lawyer, Banking Financial Services, ESG & Sustainability Policy, LLB. LLM. LPC, CISL, University of Cambridge
https://www.financialmirror.com/2022/05/11/fintech-achieves-sustainability/ FinTech enables sustainability