Since the fintech industry really took off in the 2010s, these startups have proven their ability to destabilize traditional companies and innovate beyond them. This year has seen fintechs catalyze new and exciting tends, and now many are turning toward climate change as their next target. As consumers become increasing focused on environmentally conscious behavior, this public policy hot topic will now find its way into more and more fintech offerings as a greener world becomes a world-wide goal. Discerning the idealism into a measurable reality, however, will be the challenge.
In 2020, there was a rise in fintechs adopting green lenses directed at their services. Stripe created a tool that enabled online businesses to funnel some of their takings toward four emerging carbon reducing technologies. Cooler Future, a Finnish fintech is developing a retail stock investing app that will purely focus on climate impact. Carbon Collective builds portfolios as a robo-advisor focused on low climate impact. Carbon Zero claims to take a car off the road for every $10 spent by its customers. The examples are growing daily, demonstrating a rich host of ways in which fintechs, neobanks, and financial companies are striving to address climate change.
Aaron McCreary, climate fintech lead at New Energy Nexus recently published a report examining the intersection of fintech and climate change. His key findings highlighted that the pursuit of climate positive initiatives is one that will positively affect large financial institutions as well as individual citizens. He further elaborated that, “Neobanks are benefiting from the Covid-19 pandemic” and they “can also more easily decouple themselves from the fossil fuel industry, allowing them to offer products and services to customers that are more climate-conscious. These simple financial solutions can have real impact at scale.”
With climate companies taking the pledge to think green, it remains unproven whether or not the initiative itself will be sustainable. Previous attempts to be more socially conscious in the financial industry have been costly in the past. These offerings will need to be underscored by sound business practice to prove profitability beyond positive PR. To be anything beyond a trend, there will likely need to be financial benefits as well. Should this trend succeed, however, companies will be making a concerted stride towards a cleaner world.