Financial institutions should utilise their unique positions
GoImpact, an ESG and Sustainability education firm, together with The Chinese University of Hong Kong’s Business School (“CUHK Business School”) released the findings from their working paper, Exploring the Green Fintech Ecosystem in Asia: Insights from Five Economies in APEC. This study finds that government support plays a vital and essential role in facilitating green fintech development, while talent shortage is a common concern in the five economies in the region.
Derived from three elements — environment, finance, and technology — the industry report defines green fintech as financial activities that utilize green technologies that bring better environmental outcomes.
Industry experts from five APEC economies, namely Hong Kong SAR, China (“Hong Kong”), Indonesia, the Republic of Korea (“Korea”), Singapore and Thailand, have urged policymakers to establish a conducive environment for green fintech to flourish. According to them, governments can help through offering incentive schemes for start-ups to develop in this area and spearhead the change by setting sustainable regulatory frameworks and mandating disclosures, reporting, and thresholds.
The study also suggests that financial institutions should embrace the sustainable agenda to achieve the triple bottom line: profit, people, and the planet. Given the current competitive banking environment and the global shortage of green talent, financial institutions should utilise their unique positions in the business ecosystem to develop more in-house sustainability talent to promote the sustainability agenda, the report further explains.
Key findings from the study include the following:
- Green fintech start-ups in Asia have already provided many different types of green fintech, such as green digital payment, green digital investment solutions, digital green analytics, green crowdfunding, green risk analysis, green digital lending, green digital asset solutions, and green regtech.
- Regulations on ESG disclosure play an important role in advancing the green fintech ecosystem. Supporting evidence comes from case examples in Hong Kong SAR that suggest that green reporting start-ups grew at a faster pace since the requirement of ESG reporting for all listed companies came into effect in 2020.
- As the Green FinTech ecosystem develops, cooperation and partnerships will become more mainstream. There are already several successful collaborations in Asia, including Project Genesis in Hong Kong SAR, Climate Impact X and Project Greenprint in Singapore, and a carbon offsetting program by Gojek and Jejak.in in Indonesia.
- Governments in Asia are aware of the importance of a green economy and have set roadmaps and initiatives to help the economy transition into a more sustainable one: for example, The Republic of Korea’s Green New Deal and Thailand’s Sustainable Finance Initiatives.
- Financial institutions have already provided several green fintech services, including biodiversity-screened equity indices, tokenized carbon credits trading platforms, robotic platforms for ESG investment, green certificates, and ESG credit rating systems.
- Sustainability-related education is imperative to building a mature green FinTech ecosystem. It will raise awareness, push the demand for green finance, and cultivate the talent needed for green FinTech Development in Asia.
- The four-pronged approach required to build a well-functioning green FinTech ecosystem is: boost demand for green services; increase supply of green services; mobilize resources; and strengthen policies.
The study examined policies, markets, and opportunities regarding fintech’s role in driving green finance in the five selected APEC economies through desk research, interviews, as well as focus group discussions involving green fintech start-ups, government and quasi-government organisations, green fintech-related associations, and financial institutions, and found that both Hong Kong and Singapore are in the stage of scaling up and accelerating to mature levels in terms of green fintech development compared to the past two years.
Prof. Kalok Chan, Wei Lun Professor of Finance at CUHK Business School, said, “It is our great pleasure to partner with GoImpact to explore the Green Fintech ecosystem in Asia. This research paper offers a glimpse of trends and insights for the five Asian economies in terms of Green Fintech Ecosystem health, government initiatives and supporting institutions. As one of the leading business schools in Asia, we will also continue cultivating talents with a socially responsible mindset and equipping them with the skills and knowledge to make a positive impact for the betterment of the Green Fintech industry.”
Helene Li, CEO and Co-Founder of GoImpact, said, “The intersection of Capital and Technology is the sweet spot driving the adaptation of Sustainability. We are proud to partner with CUHK Business School on this study that aims to bring a better understanding of the diverse landscape in Asia and a more collaborative lens in working together on this timely agenda.”
Li will speak about adopting an active ESG approach for inclusive and green finance at the 2022 Hong Kong Fintech Week on October 31, 2022, to share more insights on the global fintech industry.
